S. Africa Considers $78 Billion Nuclear-, Coal-Power Spend
By Mike Cohen - Feb 22, 2012 5:03 AM PT
ï¿½ South Africa is considering spending more than 600 billion rand
($78 billion) on nuclear plants, another coal-fired plant and a
hydropower project in the Democratic Republic of Congo to stave off
power shortages in Africaï¿½s largest economy.
Proposals to spend 300 billion rand on nuclear plants with the
capacity to generate 9,600 megawatts of energy by 2029 are in the
ï¿½final stages of consideration,ï¿½ the National Treasury said in the
2012 budget statement today. The government may also build a 111
billion-rand coal-fired plant, in addition to the Medupi and Kusile
plants under construction by state-owned utility Eskom Holdings SOC Ltd.
The Treasury has allocated 844.5 billion rand to energy, transport,
housing, telecommunications and water projects in the three years
through March 2015. It lists 43 infrastructure programs worth a total
of 3.2 trillion rand that are in progress or under consideration for
implementation by 2020.
ï¿½No good project will be short of funding,ï¿½ Finance Minister Pravin
Gordhan told lawmakers in his budget speech in Cape Town. ï¿½South
Africa has deep and liquid capital markets through which long-term
capital can be raised at competitive rates.ï¿½
President Jacob Zuma announced plans for a ï¿½massiveï¿½ infrastructure
drive in his Feb. 9 state-of-the-nation speech to help spur investment
and support growth in the continentï¿½s biggest economy.
South Africa is expanding its electricity generation base to avoid a
repeat of power shortages that halted mines for at least five days in
January 2008. Itï¿½s looking to nuclear and hydropower to help reduce
its reliance on coal to reduce negative effects on the environment.
Areva SA, EDF SA, Toshiba Corp.ï¿½s Westinghouse Electric Corp. unit,
China Guangdong Nuclear Power Holding Corp., Korea Electric Power
Corp. and Rosatom Corp. are potential bidders for nuclear plants, the
Johannesburg-based Mail & Guardian newspaper reported Oct. 7.
An investment of 200 billion rand in Congoï¿½s 40,000- megawatt Grand
Inga hydropower project is at the ï¿½assessment stage,ï¿½ while a study
into a 200 billion-rand solar park is due for completion this year.
BHP Billiton Ltd., the worldï¿½s biggest mining company, on Feb. 15 said
it shelved plans to build an aluminum smelter that would have
underpinned the Inga III plant in Congo.
Transportation projects being considered include a 37 billion-rand
upgrade of Transnet SOC Ltd.ï¿½s rail line transporting coal from the
eastern Mpumalanga province to the port of Richards Bay. A 300 billion-
rand high-speed rail line between Johannesburg and the eastern port of
Durban is still at a conceptual stage, the Treasury said.
The government is also considering a proposal for state petroleum
company PetroSA to build a 200 billion-rand, 360,000 barrel-per-day
refinery at the eastern port of Coega.
Public-sector borrowing will start ï¿½rapidly risingï¿½ after 2015 as
infrastructure investment accelerates, Gordhan said.
The government has been struggling to implement capital projects,
spending just 68 percent of the 260 billion rand allocated in the year
through March 2011, Gordhan said.
ï¿½In addition to long delays, we have often experienced significant
cost overruns,ï¿½ he said. ï¿½We shall step up the quality of planning,
costing and project management so that infrastructure is delivered on
time and on budget.ï¿½
The government is reviewing its investment in a number of state-owned
companies and may sell non-priority assets, the Treasury said.
New regulators may also be established to oversee the water and
transport industries, to ensure the services they provide are
correctly priced, while the Department of Energy is reviewing of its
power-pricing policy, it said.
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