China’s State Nuclear Power Technology Corporation (SNPTC) is prepared to take a minority or majority stake in South Africa’s proposed nuclear project, depending on South Africa’s needs, SNPTC vice president Li Su told Moneyweb on Wednesday.
Speaking on the sidelines of the Nuclear Africa conference outside Centurion, Su said the split between debt and equity in the funding model really depends on the needs South Africa expresses in its request for proposals (RFP).
Moneyweb earlier reported that government plans to issue the RFP before the end of March, which might be the precursor to formal procurement. In 2008 the nuclear procurement process was however abandoned when the RFP failed to produce a proposal acceptable to government.
Su told Moneyweb that various funding models could be considered. He said in countries that introduce nuclear for the first time, it could be beneficial to encourage equity investment by local construction or manufacturing companies.
He said the Chinese government is fully supportive of the SNPTC bid. Regarding loans, Su said SNPTC “is capable of working with the Chinese government to suit the needs of its South African client”.
He added that in China there is a saying: “If you want to achieve something, have the right time, the right people and the correct cooperation model”. In this regard the political environment is conducive to a successful agreement thanks to the strong links between South Africa and China, as both are Brics members.
He said the top leaders of both countries have a very good relationship and the financial institutions have existing mechanisms to implement an agreement that will build on strong existing trade relations between the two countries.
Su said the project could take the form of engineering, procurement, and construction (EPC) or build, own, operate (BOO) – depending on what the RFP requires.
Based on previous interaction with South African officials, Su expects four key elements in the RFP: namely a requirement for advanced technology (generation 3 reactors), funding, localisation and competitive life-cycle cost.
These elements are interrelated, he said.
Su said it is theoretically not impossible to split the contract per island – awarding the nuclear island, the conventional island and the balance of plant to different vendors. That however places more risk on the owner, who will have to ensure proper coordination between the different contractors. It will be complicated and the owner will carry the risk of cost and time overruns.
It will be easier from the owner’s point of view to appoint one contractor who in turn appoints subcontractors, he said.
China will be offering its CAP1400 reactor, which features passive safety features and can withstand a 72-hour power failure without danger of the nuclear core melting.
Su said there are currently 28 nuclear reactors in commercial operation in mainland China, with a total generating capacity of 58 000MW. A further 24 units are under construction that, once completed, will have a total generating capacity of 30 000MW.
Delivering an address on behalf of Eskom CEO Brian Molefe, the utility’s nuclear head David Nicholls said Eskom would be the owner and operator of the proposed nuclear fleet. It would also manage the development sites and programme, he said.
He said Eskom and Nuclear Energy Corporation (Necsa) together have about 3 000 staff members with nuclear skills and building a nuclear fleet will open career opportunities for more.
Nicholls said cost is the foremost issue in the nuclear debate and a fleet approach will reduce the cost for the country. Government and the relevant state-owned companies are currently looking at funding options, he said.
He acknowledged that nuclear power plants are sometimes delivered way over budget and after long construction delays. The Chinese and Russians as well as South Korean projects in Abu Dhabi are however performing better in this regard, he said.
On the sidelines of the conference Nicholls told Moneyweb that, in his personal view, it is possible to place the nuclear contracts by the middle of next year. He said the previous nuclear RFP was issued in November 2007 and submissions were in by the end of January 2008.
That corresponds with the timelines followed in Abu Dhabi, he said. “The norm is eight years from the day the winning bid is announced to the beginning of commercial operations,” he said.
He said the average cost of new Chinese units is around $2 000/kW locally, which translates to about $4 000/kW in other countries, including import cost. That could come down to $2 000/kW for the later units in the fleet, he said.