South Africa’s Nuclear Plans Stall as Process Ruled Unlawful

JOHANNESBURG (Capital Markets in Africa) – South Africa hasn’t complied with the constitution in seeking bidders for a nuclear-energy program and must cancel any deals that have already been signed, the Western Cape High Court ruled.

The government must hold public hearings and debate the estimated 1 trillion-rand ($76 billion) program in Parliament, according to a ruling read out on Wednesday by Judge Lee Bozalek in a case brought by civil-society groups Earthlife Africa and the Southern African Faith Communities’ Environment Institute. Agreements set aside include those with Russia, the U.S. and South Korea.

“The process by which the nuclear build program is proceeding on is unconstitutional” and any request for proposals or requests for information regarding the plans should be set aside, according to the ruling. A government decision in December 2015 to procure 9,600 megawatts of nuclear energy was also found unlawful and set aside.

State power utility Eskom Holdings SOC Ltd. notes the judgment, spokesmanKhulu Phasiwe said on Twitter. “We’ll study the ruling and, if need be, Eskom will make comments thereafter.”

South Africa’s nuclear investment plans have become a focal point for critics of President Jacob Zuma’s policies, with opposition parties and civil-society groups questioning the use of funds even before S&P Global Ratings and Fitch Ratings Ltd. downgraded the nation’s international credit rating to junk. The affordability of the new plants was a key point of dispute between Zuma and former Finance Minister Pravin Gordhan.

“The nuclear deal has obviously been a big concern for the markets given the potential costs” and a lack of clarity about the process, Elena Ilkova, a Johannesburg-based analyst at FirstRand Ltd.’s Rand Merchant Bank unit, said by phone. “The market wants to know how much nuclear is needed, when it’s needed and how much it will cost. ”

Eskom started a process to build 9,600 megawatts of nuclear power capacity byissuing a request for information from vendors in December, with a closing date for responses of April 28. The court ruling has the potential to delay the utility’s ability to issue a request for proposals, Ilkova said.

“Eskom will have to stop its procurement process right now,” Adrian Pole, attorney of record for Earthlife Africa Johannesburg, said in an interview.

Source: Bloomberg Business News