See the evil, hear the evil, speak the truth.
23 October 2017 11:56 (South Africa)
Opinionista Wayne Duvenage

The Nuclear Build Risk is not yours to take, Mr Molefe

  • Wayne Duvenage
    Wayne Duvenage
    Wayne Duvenage

    Wayne is an entrepreneur, businessman and activist harboured in one soul. He is the Chairman of OUTA and has served as a Board member of the Tourism Business Council of SA. His recent activities include Chief Executive at Avis and President of SA Vehicle Renting and Leasing Association. Family, travel, a dram of Scotland's finest and some erratic golf makes him smile.

I find it quite alarming and disturbing when Eskom’s CEO, Brian Molefe, issues statements that “South Africa’s nuclear build programme doesn’t need to be funded by the fiscus, and that there are potential financiers who would be willing to take the risk”. Add to this, Eskom’s Executive for Generation, Matshela Koko’s comments that “Eskom can pay for the nuclear programme from projected future cash pile of R150bn over the next 10 years”.

We’ve seen this situation play out before, when Sanral thought it could sidetrack the need for Treasury to support the Gauteng freeway upgrades, hatching a privatised funding mechanism supported by an expensive e-toll scheme to suck money from the users to pay for the expensive (overpriced) roadway. The fact that Sanral botched their numbers and expectations has given rise to a failed scheme and this has ultimately become Treasury’s problem to fix. Our problem.

The nuclear deal has all the hallmarks of similar failure and it is disingenuous for Molefe and company to think that Eskom can sidestep the need for Treasury’s consent, or guarantees from the state’s coffers. The nuclear plan is the largest capital expenditure project ever contemplated for this country and the simple fact is this: Eskom is a state-owned enterprise and it is answerable to the people of South Africa. The failure of a project of this magnitude will have catastrophic consequences on the country. Eskom has no choice, this decision and the funding thereof is not theirs alone to make.

I find it strange in this day and age of inclusive governance, as has been espoused by the ANC leadership for many decades, that the leaders of SOEs overtly overlook the need to make enormous capital expenditure decisions in a transparent and inclusive manner. This is more worrying when an SOE like Eskom carries a lot of baggage relating to many blunders and excessive projects, which have cost the nation dearly.

More concerning is Eskom’s leadership speak of funding a nuclear programme with projected profit reserves, as if these reserves and profits are there to be squandered on irrational nuclear or other projects. Eskom’s profits come from a fleeced public, by overcharging them through massive over-claims from a dubious MYPD regulatory process and excessive electricity tariff scheme.

Before the nuclear decision can ever be entertained, Eskom must demonstrate clearly their exhaustive assessment of options for a broader future energy mix and why renewables and gas, along with current and new coal projects, will not be sufficient to negate the stagnant energy requirements of South Africa. The country’s energy dynamics are rapidly changing and the solutions for the nation’s energy requirements must be supported by the people.

Mr Molefe needs to explain why it is that Eskom has not increased its energy output production (relatively static between 215 and 237 GW between 2006 and 2016), yet its electricity prices have shot up by over 300% from 20c/kWh to 80c/kWh over this period. Add to this a gross increase in staff from 31,500 in 2006 to just under 50,000 today, indicating a shocking reduction in productivity. On top of this, Eskom’s debt has risen from R30bn in 2006 to over R320bn today, and we are told this will more than double to around R700bn in the next five years. Let that sink in. Yes, it’s that bad and Eskom wants the people to trust them with the nuclear build decision?

When the chips are down and the potential consequences of a trillion rand nuclear deal are placed on the table, Mr Molefe, Mr Koko, Ms Joemat Pettersson and the rest of the merry nuclear crew have no right to tell the public or Treasury that they don’t need Treasury oversight or the public’s consent on the nuclear decision. It is one that has every potential to bankrupt this country.

We cannot allow Eskom to introduce foreign funds with which to further shackle this nation. Eskom’s leadership must begin to understand that they work for and serve the people of South Africa, not other governments and foreign funders from other nations. Eskom is a South African state-owned enterprise, and no matter how much money they are able to convince the Russians or anyone else to throw at us, they cannot escape the need for oversight and consent from our Treasury.

There is a saying that good leadership engages with their critics. If Molefe is the good leader that his chairman purports him to be, why then has the Eskom leadership team not eagerly engaged with SAFCEI and Earth Life Africa, the very respected organisations who are trying to halt a shoddy roughshod decision by Cabinet to rush the nuclear decision into place. Why has Eskom’s leadership not openly invited and engaged with those who encourage other competing primary energy sources and generation technologies, from both Eskom and independent power producers, such as clean coal, wind, solar, gas and hydro, before hastily thrusting the nuclear option down our throats.

Molefe might want to imagine for one minute that South Africa doesn’t need the nuclear option. Imagine that the projected electricity needs of South Africa will not reach the high levels purported in Eskom’s RCA and MYPD applications. Experts tell us that the way of the future is that most new houses within the next decade will be off the grid, and millions of existing homes and small businesses will follow suit. Imagine now a stable to declining Eskom energy requirement for decades to come, and the ability to introduce an effective maintenance programme to extend the life of existing coal plants. Add to this the new coal and hydro plants due to provide another 10GWs to our grid, increasing Eskom’s generation capacity by another 24%. The picture emerges of a nation that no longer has a need for nuclear energy. And all of this is before one adds the extra input we could source from an ever-improving array of renewable and gas energy options.

Against this backdrop, Molefe needs to explain why the need for nuclear energy exists? For a minute, imagine what Eskom could do to the current electricity prices. Imagine the reduced need for high profits and future reserves which Eskom could set aside for a “no-longer-needed” nuclear build programme. Can you imagine Molefe announcing Eskom’s decision to reduce the price of electricity for the people of SA? Has it become that foreign for Eskom’s leadership to realise a new vision of minimising its reliance of excessive revenues and tariff increases from the people?

We are tired of the bland assurances, devoid of a participative and updated Integrated Resource Plan for Electricity, lacking in substance, due process and all the necessary information.

We are tired of Eskom’s leadership hurriedly leaping to the defence of exposés of poor governance, maladministration and wasteful expenditure. What the people want to see instead is Eskom’s leadership leaping to the defence of the people by announcing independent enquiries and audits of the many problems that surface on a regular basis. We need to see greater accountability and transparency on these matters.

Molefe should not for one minute forget that when Eskom fails, it is the people and Treasury that will have to foot the bill of a misguided nuclear programme, and not he or his cronies, who will have long since bailed out, leaving the public to hold their burning baton. Eskom will not get the blessing of the people on the nuclear decision and we trust the same will approach will ensue from National Treasury.

It’s time that Molefe and company climbed down from their high horses, down to the level of their customers and changed their approach and arrogant stance on the nuclear issue. DM

  • Wayne Duvenage
    Wayne Duvenage
    Wayne Duvenage

    Wayne is an entrepreneur, businessman and activist harboured in one soul. He is the Chairman of OUTA and has served as a Board member of the Tourism Business Council of SA. His recent activities include Chief Executive at Avis and President of SA Vehicle Renting and Leasing Association. Family, travel, a dram of Scotland's finest and some erratic golf makes him smile.

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