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French nuclear envoy expects ‘spring’ release of South Africa’s much-debated RFP

EDF project director for the South African bid Olivier Bard (left) with special nuclear envoy of the French President Dr Pascal Colombani

Photo by Duane Daws

Special nuclear envoy of the French President Dr Pascal Colombani

Photo by Duane Daws

1st June 2016

By: Terence Creamer

Creamer Media Editor

  

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The French remain optimistic that South Africa’s nuclear request for proposals (RFP), which was initially expected for release before the end of March, will be issued before the end of the year, probably during South Africa’s “spring”, or France’s “fall”.

Special envoy of the French President for the French-South Africa nuclear partnership Dr Pascal Colombani says he remains convinced that the RFP will indeed be issued in line with statements made by President Jacob Zuma in February and by Energy Minister Tina Joemat-Pettersson in May.

Zuma said the controversial nuclear programme would proceed, but at a scale and pace that the country could afford, while in her Budget Vote address, Joemat-Pettersson said the RFP was required to secure “binding commercial and financial information”, which would inform the price, affordability, pace and scale of the programme. She also promised that the process would be “above board and free of any potential for corruption”.

Nevertheless, much scepticism remains, with critics of the programme questioning whether a 9 600 MW nuclear programme will pass a rigorous affordability test by the National Treasury, as well as whether the procurement will be fair, particularly in light of a Rosatom announcement in September 2014, which gave the impression that the Russian nuclear company had been awarded the contract.

However, both Rosatom and the Department of Energy continue to insist that no deal has been concluded, with government having signed, or planning to sign, intergovernmental agreements on nuclear with France, South Korea, Canada, Japan, China and the US.

Briefing the media during his most recent visit to South Africa, Colombani was sanguine about both the delay in the issuance of the RFP and France’s competitive position in an eventual bid process.

He said delays were typical with nuclear programmes and that France was ready to sustain the resources it had dedicated to bidding for the South African programme.

Colombani was flanked at the briefing by EDF’s Olivier Bard, who has been appointed as project director for the South African bid. Bard previously worked on the Taishan EPR project, in China, which is expected to begin producing in 2017.

The French bid would be a combined EDF-Areva effort and could include other partners, should the South African bidding rules allow for such tie-ups. However, at this stage, it appears that South Africa will be seeking separate bids from each vendor country.

It was premature to offer details on either the pricing or the financing of the bid, with Colombani stressing that it could only make such assessments once the contents of the RFP were released. He would also not comment on the R1-trillion price-tag typically quoted, saying only that South Africa was unlikely to procure all 9 600 MW in one go.

The French bid would include a combination of debt and equity, with the debt portion likely to include export credit support from Coface as well as funds from public financing facilities.

The equity portion was a “work in progress”, but would be aligned to Eskom’s aspiration to be the owner and operator of the new nuclear plants. The French will also be canvassing energy-intensive businesses to assess their interest in participating in the project.

Colombani acknowledged recent financial stresses at both EDF and Areva, but said recent interventions by the French government meant that the “financial situation of EDF is sound”. The French government was supporting a €4-billion move to increase the utility’s capital and would subscribe to up to 75% of the injection. Likewise, a capital increase is planned for Areva along with a restructuring programme.

“So I am not concerned about financial capabilities,” he said, adding that should the EDF-Areva bid emerge as South Africa’s preferred option it would then “discuss seriously the issue of money”.

Besides financing and its 1 650 MW EPR reactor technology, the French bid would include commitments on localisation, operations and maintenance, research and development and skills development. The offer would be targeting localisation of between 40% and 50%, as well as the development of a new research reactor, should that be included in the RFP, as expected.

“We are in a position where we expect the RFP to go forward – there will be an RFP. We know that we have competitors. We respect those competitors very much, but we believe we are much better and much more comprehensive,” Colombani said, concluding that the French team was in a position to build, in phases, six EPRs in South Africa.

Edited by Creamer Media Reporter

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