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Thyspunt nuclear build links to Eastern Cape economic development

By Rob Jeffrey is an independent economic risk consultant

The Eastern Cape Province is a depressed area with unemployment running well above the national average. While it is essential to increase South Africa’s economic growth and that of its regions, secure electricity at competitive prices is a necessary condition to achieve that growth.

A nuclear power station at Thyspunt in the Eastern Cape would fill all these requirements. It is a long term project starting almost immediately after it is approved. Being a sizeable long-term project, it would lead to employment and a substantial improvement in the entire region’s infrastructure. 

Finally, it would increase the supply of reliable electricity not just regionally but also nationally. It would therefore bring about the economic transformation of the area, creating opportunities for growth for existing and new business. This would immediately increase employment and reduce unemployment in the area.

The only question that needs to be asked is why are the national and regional governments dragging their feet over such a crucial and obvious decision.

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Megaprojects are essential to economic development

There are many energy experts and even economists who debunk megaprojects, saying they are too complicated, capital intensive and take far too long to build. The focus, they say, should be on short-term labour-intensive businesses or projects. Nothing could be further from the truth.

Major projects or megaprojects are the lifeblood of the economy. They become the hub around which smaller successful businesses and other projects are built. They are essential for the full development of the Eastern Cape.

Megaprojects, such as a significant power station project, meet many of the economic development policy needs of South Africa and Southern Africa. Based on economic arguments and facts, major power station projects will make a substantial positive economic and socio-economic impact with particular regard to the development needs of South Africa and supporting current economic development in the country. 

While power station build programmes are capital intensive, with a high capital cost per job created, such projects offer South Africa considerable benefits. 

A nuclear power station at Thyspunt offers South Africa and the Eastern Cape Province significant advantages.  Fundamentally, such capital-intensive megaprojects will not in themselves solve Southern Africa’s under-employment problem. An essential part of the solution results from the fact that upstream and downstream development promotes labour-intensive manufactured supply and exports. 

Capital-intensive projects help in supporting the infrastructure required for the development of such labour-intensive projects. Ultimately, South Africa’s agricultural and industrial growth would increase, positively impacting living standards and long-term employment growth. 

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The role Thyspunt nuclear build in the economic development in the Eastern Cape

The Eastern Cape Province is a depressed area. Its unemployment rate is higher than the national average. Clearly, it is a national and regional objective to decrease these unacceptable figures and increase employment in the region. This can be quickly and easily done by building a nuclear power station at Thyspunt.

The significant impact would be felt in the Nelson Mandela Bay region. This would increase electricity supply to the Eastern Cape Province and enhance economic growth. There would be a substantial reduction in the necessity to import electricity from the North through the national grid. The reduction in electricity “exports” from the interior would increase electricity supply to Gauteng and enhance that region’s growth prospects.

Business improvements could immediately be anticipated in the Humansdorp, Coega and Port Elizabeth areas. The local municipalities would get substantial support for their planned infrastructure expansion, including roads, water provision, electricity for construction, housing for workers etc.  In this regard, the improvement programme could begin virtually immediately after approval is granted.

The government’s role is to prioritise the engine rooms of existing and future growth and employment in the economy. Electricity is the foremost necessity for the business and associate development required for future economic growth. The government of South Africa must repair the considerable damage the electricity disruption has caused to investor confidence in the region. 

This means that adequate future supplies of secure dispatchable electricity must be introduced to support future economic growth, and this must be supplied at reasonable and globally competitive prices. Unless this is done, investors, foreign and domestic, will seriously question the economic management of the economy. This must not be achieved by closing down existing electricity-intensive industries or by charging excessive and effectively globally uncompetitive electricity prices, that effectively slow down development.

Rob Jeffrey is an independent economic risk consultant. He is the former MD of Econometrix and continues to consult for various companies and forums. He was MD of Dorbyl Structural Engineering, Chairperson of the Constructional Engineers Association (CEA), the CEA representative on SEIFSA, and an executive member of the Association of Steel Merchant Stockholders. Rob graduated with a B.Sc. in Mathematical Statistics and Applied Mathematics at the University of the Witwatersrand and has Masters Degrees in Economics from Cambridge University and Business Leadership from the University of South Africa. 

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