By Linda Ensor
CAPE TOWN — An international expert on energy has warned that the biggest threat to a nuclear programme of the nature that SA is about to embark on is construction delays which can result in the doubling or even tripling of initial estimated costs.
The warning by Boston Consulting Group MD Philipp Gerbert came ahead of the budget vote speeches‚ on Tuesday (14/05/2013)‚ of Public Enterprises Minister Malusi Gigaba and Energy Minister Dipuo Peters‚ which could shed further light on the progress made in government’s decision-making about the plans for new nuclear power stations.
Gigaba recently reiterated government’s firm intention to proceed with the programme.
Gigaba may also use his budget vote speech to pronounce on further state funding for the troubled state-owned airline South African Airways and the mooted incorporation of the South African Broadcasting Corporation and Sentech into his portfolio of state-owned companies.
Speaking on the sidelines of the World Economic Forum last week Gerbert‚ who has advised several governments on their energy plans‚ warned about the cost of delays which had been worsened in Europe by the Fukushima disaster in Japan‚ which had prompted a reassessment of the risks. More security had to be introduced and account taken of third generation technologies‚ he said.
"All the European power stations have reached two or three times their original budget‚” Gerbert said. The Finnish plans were three times over budget and the French were two and a half times over budget. Given the enormous cost of a power station‚ the escalation has significant implications for the fiscus.”
On the other hand Korea had been successful in its nuclear programme which had by far been the most cost effective in terms of on-time delivery‚ he said.
"Delays can be extremely painful. What is critical is that you project the costs accurately because it is a very large project. The less idiosyncrasies (special requests) you impose the better‚” Gerbert said. The builders of the various components needed to be a well-oiled team that had completed similar projects elsewhere.
Gerbert said there was no universal move against nuclear energy in Europe. Germany had decided against it but France and some Eastern European countries were strongly committed to continuing with it as was the United Kingdom.
"Clearly nuclear has some risks as was highlighted by the tsunami disaster in Japan. It also requires long term commitments which always makes it very difficult for the private sector to take it on as no one would be prepared to underwrite the risk.
The big advantage of nuclear was that it was carbon neutral and once built was rather cost effective as the cost of fuel was low. Gerbert believed it made "perfect sense” as part of a total energy mix.
He said the entire energy plans of Southern Africa would change if the massive Inga hydro-electric project‚ in western Democratic Republic of the Congo‚ came on stream but he said it was so complex and had been on the drawing board for such a long time — about 20 years — that no country could build their plans around it. Also water was not fully reliable as Vietnam and Brazil had experienced and back up power was sometimes required. © BDlive 2013