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‘No firm decisions’ on nuclear, Gigaba insists as he seeks to soothe post-junk anxieties

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‘No firm decisions’ on nuclear, Gigaba insists as he seeks to soothe post-junk anxieties

Finance Minister Malusi Gigaba

4th April 2017

By: Terence Creamer
Creamer Media Editor

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Finance Minister Malusi Gigaba has reiterated South Africa’s stance that the proposed nuclear programme be implemented only at a “pace and scale” that is affordable and denied that any “firm decisions” had been made on the issue, besides Cabinet’s endorsement of a plan to add 9 600 MW of new nuclear capacity to the electricity mix in line with the current Integrated Resource Plan (IRP).

Speaking in Pretoria after S&P Global Ratings’ downgrade of South Africa’s sovereign rating to junk and following a handover meeting with former Finance Minister Pravin Gordhan, Gigaba said various processes were still required ahead of any final procurement decision, including an update of the IRP.

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Earlier, the National Treasury had been forced to refute social-media allegations suggesting that the Minister had signed-off on the nuclear deal only hours after being sworn into the position, following President Jacob Zuma’s highly controversial reshuffling of his executive in the early hours of March 31.

Gordhan, whose axing precipitated the ratings action taken by S&P, learned, but has never been told, that he had been recalled from a post-Budget road show to the UK on March 27 partly on rumours that he and his team had reportedly told investors that the nuclear programme would not proceed. He described the rumour as a “lie” and also slammed as “absolute nonsense” a so-called intelligence report suggesting that he planned to use the road show to plot against the government.

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Gigaba, who admitted to knowing about S&P’s downgrade four days prior to the April 3 announcement, went to great lengths to offer assurances that he had no intention of veering from the fiscal-consolidation framework outlined by Gordhan in February, or from existing policy, including the government’s stance of new nuclear power plant builds.

“We will implement the [nuclear] programme at the scale and pace the country can afford. That is exactly what my predecessor also said.”

The programme, he added, arose directly from the IRP, which was adopted by Cabinet as part of plans to diversify the energy mix and integrate “environment friendly” generation technologies. The choice of nuclear was also made to ensure new baseload generation capacity was in place when some of the older coal-fired power stations were decommissioned.

“At the present moment, we are at that stage where no firm decision has been taken except to say that we will have 9 600 MW generation capacity. Where those nuclear stations will be built, whether they will all be built at the same time, whether you will break this up into different chunks, all of that, the pace and scale, will be determined by what the country can afford.”

He also stressed that the IRP still had to be revised, while the Inter-Ministerial Committee on Energy would undertake various proccesses before any final procurement decisions were taken.

State-owned power utility Eskom is current running a request for information (RFI) process, responses for which are due on April 28. Eskom has confirmed receipt of 27 ‘acknowledgement forms’ formally notifying it of an intention to respond to the RFI, with notifications received from major nuclear vendors from China (SNPTC), France (EDF), Russia (Rusatom Overseas) and South Korea (Kepco).

“So we will pace ourselves according to that. So to ask whether the country will afford nuclear is a bit premature. We will answer the question at the right time . . . once all of the work has been done,” Gigaba said.

Meanwhile, he said he would be reaching out to both Fitch Ratings and Moody’s in an effort to convince them to hold off from further downgrades and indicated that he intended building on the collaboration entered into with business and labour by Gordhan – a partnership formed primarily to avert a ratings downgrade.

“I take the [S&P] announcement seriously and will react accordingly,” Gigaba said, describing the downgrade as a “setback”.

“While the executive leadership of the finance portfolio has changed, government’s overall policy orientation remains the same. As I indicated during the press conference on Saturday April 1, 2017, ‘government has been, and will remain, committed to a measured fiscal consolidation that stabilises the rise in public debt’.”

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