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Projects and Energy Weekly Snippets

28 October 2016

South Africa

Weekly projects and energy updates in South Africa

Eskom's nuclear aspirations draw Gordhan's guarded ire

The 80-page medium budget policy statement mentions the word nuclear only once and that is to refer to the shifting of a small amount of money into the programme to deal with the management of nuclear waste.

This Department of Energy programme was supposed to establish a National Radioactive Waste Disposal Institute more than two years ago to deal with nuclear waste, but due to budgetary constraints, this had not been done. 

However, the big nuclear issue - the building of a fleet of nuclear power stations - did not get a mention. Finance Minister Pravin Gordhan raised it once only to state that "it is now confirmed that Eskom will take the lead in the nuclear power initiative". 

Business Day, 28 October 2016

Investment in infrastructure remains government priority

Government has budgeted ZAR987.4 billion for infrastructure over the next three years, with large investments continuing in energy, transport and telecommunications, Finance Minister Pravin Gordhan said during the presentation of the 2016 Medium-Term Budget Policy Statement on Wednesday.

He highlighted that, since 2009, the public sector had invested more than ZAR1.6 trillion in network infrastructure and that investment in infrastructure remains a policy priority.

“Public-sector infrastructure investment plans total ZAR987.4 billion over the medium term, of which ZAR334 billion is in transport and logistics and ZAR137 billion in water and sanitation.

Engineering News, 26 October 2016

IPP programme “will continue”, as government seeks confidence-building partnerships

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) “will continue and expand”, the Medium-Term Budget Policy Statement asserts, describing it as “an example of the kind of partnerships needed for national development”.

The competitive auctions associated with the REIPPPP have attracted investments of ZAR194 billion in mostly wind and solar plants, with a combined capacity of over 6000 MW.

However, doubt has been cast over the future of the programme, owing to resistance from state-owned electricity producer Eskom to the signing of new power purchase agreements (PPAs). This resistance continues despite backing for the REIPPPP from the Department of Energy (DoE), the National Treasury and even the Presidency.

Engineering News, 26 October 2016

Lessons from new coal stations will help in nuclear build, says Eskom

Power utility Eskom maintains that while constructing a fleet of nuclear power stations would be costly for SA, the running expenses would be lower than if other energy sources were used.

The government was pushing for the construction of nuclear power plants to add 9600 MW to the national grid.

Critics argue that the country cannot afford a nuclear build programme.

Business Day, 24 October 2016

SA's coal habit hurts carbon budget

South Africa will have to close either all its coal-fired power stations or Sasol's coal-to-liquids plant by 2050 to stay within its carbon budget of 14 gigatonnes, Jesse Burton, a researcher at the University of Cape Town's Energy Research Centre, says.

In any event, South Africa cannot build more coal fired power stations if it is to meet its commitments under the Paris agreement to reduce its share of emissions of greenhouse gases to keep the increase in global temperatures below 2°C above preindustrial levels by 2100, she said on Monday at a seminar on Life After Coal hosted by the Centre for Environmental Rights (CER).

Recently, the Department of Energy announced two successful bids in the coal-fired independent power producer programme (IPP) and Eskom, the country's biggest carbon emitter, is studying the feasibility of extending the lives of its ageing coal-fired power stations.

Business Day, 25 October 2016

Treasury: Nuclear can’t undermine fiscal integrity

Treasury will ensure it protects South Africa’s fiscal integrity with regard to South Africa’s nuclear procurement plan.

Finance Deputy Minister Mcebisi Jonas told media on Wednesday that Treasury will continue to play a role in the planning of the nuclear procurement programme.

“We take a view that whatever happens with the nuclear project, it … won’t undermine the interests of the country as a whole,” he said. “As custodians of fiscal integrity, we will continue to play a critical role.”

Engineering News, 26 October 2016 

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.

For more information contact Charles Marais or Mahashini Govender.

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