HomeMagazine ArticleBuilding localisation into South Africa’s nuclear programme

Building localisation into South Africa’s nuclear programme

Figure 1: In order to maximise the benefits of mega-projects such as New Nuclear Build programmes, national governments must invest time and energy in developing a successful localisation strategy.

The establishment of a civil nuclear power programme in South Africa dates back to the 1950s when the SAFARI research reactor was designed/built and later in the early 80s with the construction of Africa’s only nuclear power plant (NPP) in Koeberg in the Western Cape. Nuclear power has, therefore, been part of South African life for more than 50 years without incident.

There are several trends associated with the rhetoric around any new nuclear project. Pertinent questions have been raised about nuclear versus the use of alternative energy (e.g. solar and wind), but the overriding issue is that of affordability of the proposed programme (to comprise at least eight reactors delivering 9.6GW of electricity): which raises a number of questions including where the money will come from, how it will be paid back, and how much of the investment will stay in South Africa to help develop the domestic economy.

One key factor in this proposed new nuclear build programme to counter these questions is to adopt a ‘localisation’ process: i.e. to ensure that as much as possible of the manufacturing and services for the project are actually delivered by local companies. This concept is already being developed by the South African government and is being implemented in its IPP programme.

Developing a localisation strategy

Before starting the procurement process for a country’s Nuclear New Build (or Nuclear Expansion) Programme, a detailed analysis of the economic consequences for significant involvement of the national industry is mandatory in order to develop an optimum strategy to select the most appropriate localisation scenario(s) for that country. Therefore, a specific economic model should be developed to assess the consequences of localisation giving the necessary criteria to define the right strategy, which is most likely to have wideranging effects on the country’s economy, employment and industry. Nuclear build programmes have been successfully used as a tool to reignite or expand industrialisation in several countries, with notable examples being South Korea, China and the UK in the 60s and 70s.

An essential part of this localisation strategy, as well as the selection of the most suitable localisation scenario, is the pre-qualification of local companies in accordance with international standards.

The willingness to participate in the localisation programme and the actual status of existing technology and qualifications are evaluated by gap analysis. This serves as the basis to determine the up-front investment, the overall level of localisation and the milestone time schedule to ensure the on-time delivery of the product and/or services.

The most effective way (in terms of cost and time schedule) to do this is to have the NPP supplier (i.e. the main reactor vendor) a part of the localising of the nuclear industry. The level of localisation, know-how/ technology transfer and eventual licence agreements, as well as the respective terms should be part of the purchasing contract of the entire NPP supply contract. In addition, the NPP supplier including its specialised subcontractors should be part of the selection process.

The complexities of technology and know-how transfer are other key selection criteria. In most cases, countries planning the implementation of…

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