Koeberg Nuclear Power Plant

There is no need to panic about a secret nuclear energy deal President Jacob Zuma may or may not have signed with the Russians, says AngloGold Ashanti chairman Sipho Pityana. There is growing concern about the destructive electricity costs such a deal could impose on South Africans for the foreseeable future, not least on the local mining industry.

"My reading of the constitution is that those kinds of deals can only be made following a lengthy process", says Pityana, former chairman of the Council for the Advancement of the South African Constitution. "The constitution is quite clear about that. So there is no room for arbitrary conduct on the part of any leader in government, including the president."

Westinghouse challenges Eskom's decision

Westinghouse Electric Company on Monday launched an expedited review application in the South Gauteng High Court challenging Eskom’s decision to award a R4.3-billion contract to Areva for the replacement of steam generators at the Koeberg nuclear power station in Cape Town.

Westinghouse, which won an order on September 5 to secure documentation from Eskom relating to the basis of its decision to award the tender to Areva, continued to argue that the contract award was “flawed on various levels and should be set aside by the court”.

The company was also continuing with its attempts to secure outstanding documentation from Eskom, which it claimed the State-owned utility had failed to provide, notwithstanding an instruction stipulating that the documents be handed over within five calendar days of the court order.

Disputed contract includes six new steam generators

The disputed contract with Areva included the manufacture of six new steam generators, which Eskom planned to install at Koeberg in 2018. Eskom acting group executive for technology and commercial, Matshela Koko, stated at the time that the utility saw no impediment to signing the contract with Areva, arguing that Westinghouse had never been identified as the preferred bidder throughout the tender process, which began in 2011.

He also gave assurances that there had been no discrepancies between the recommendation of a 25-person-strong technical team set up for the contract and the recommendations of the executive procurement committee and the board subcommittee, which made the final procurement decision.

Allegations that acting CEO Collin Matjila and Public Enterprises Minister Lynne Brown reversed the board subcommittee's decision in favour of Areva were also denied. Based on documentation that Eskom had provided, however, Westinghouse maintained that there had been “fundamental breaches of Eskom's obligations to administer a fair and transparent tender process”.

Evaluation criteria in question

In its latest press statement, the company argued that, while Eskom had well-documented procurement processes, “these processes were departed from to take into account certain ‘strategic issues’, which allegedly favoured Areva”. It added that these issues were never part of the evaluation criteria and Westinghouse was, thus, not given an opportunity to comment in line with a fair and transparent tender process.

News of the court action came as South Africa’s Department of Energy (DoE) continued with a damage-control exercise following an announcement that an agreement had been signed with Rosatom for new nuclear power plants incorporating Russian VVER reactors.

Response from the Department of Energy

The DoE indicated in a statement released on 27 September that the Inter-Governmental Agreement regarding Nuclear Energy Co-operation between South Africa and Russia was but one of over 60 co-operation agreements signed by the South African government addressing different aspects of energy and usage of different energy sources.

The statement continued that the “process of engaging with the thrust of the agreement with the Russian Federation, as represented by Rosatom, and the South African government, as represented by the DoE, will be subjected to the normal process of internal government and legislative scrutiny, as well as the public, media, civil society and political parties will have an opportunity, through such processes, to fully comprehend the full details of the agreement.”

In conclusion it was stated that “the Department of Energy wish to assure all South Africans and interested parties that nothing will be withheld from them with respect to this agreement, as in the case with all other agreements previously entered between our government and other governments. We however do appeal that the necessary due process, as stipulated in our country's statutes be allowed to run their normal course.”