South Africa should optimise its funding model in the procurement of its 9 600 MW nuclear build programme to ensure cheaper electricity costs, according to Rosatom’s Nikolay Drosdov on Wednesday. By Matthew le Cordeur
Drosdov, director of international business for Rosatom, told Fin24 that South Africa should “optimise the model to decrease the price of electricity, because … the proportion between investments and loans depends on the … levelised cost of electricity”.
“You have to pay interest rates from your price of electricity if you’re using a lot of debt money,” he said on the sidelines of the Nuclear Africa conference. “We can help to optimise the model, but it’s also the subject of commercial negotiations.”
The Department of Energy will release its Request for Proposals by the end of March, after a year-long process of signing up vendor countries through inter-governmental agreements regarding the peaceful use of nuclear energy.
To speed up the programme, South Africa should follow the engineering, procurement and construction (EPC) procurement model, which would be signed by the existing state-owned company (Eskom) or a newly created company, according to Drosdov.
“This company shall sign an EPC contract … with the scope closed to a turnkey base with one of the global nuclear vendor selected based on the competitive and transparent procedure during the procurement process,” he said.
“In nuclear, we have different financial models that you can invest some money in the equity, you can attract some money from the market, from the government resources, from export credit agencies/banks (entities that provide government-backed loans),” he said.
While many economists have spoken about the value add to South Africa’s economy with large nuclear localisation, Drosdov said the exact size will depend on the interest local business has for the nuclear procurement programme.
“If local business is interested to participate in the nuclear programme, we can increase it (localisation),” he said. “If not, we can supply 100% by our sources, but economically it’s not efficient. We are trying to use local partners … (due to) lower costs, but it’s the subject for negotiation.”
“What could be a solution is a global partnership,” he said. “For example, you would take a Russian nuclear island (the heart of the nuclear plant) and we will integrate your local competencies and local technologies.”
“We can have for example Russian/South African technology that can be exported to other countries in Africa.”
Several media outlets challenged Drosdov this week over the programme, asking him whether a secret deal had been signed with South Africa. Fin24 has on numerous occasions asked this question to Rosatom officials including Drosdov, with the usual reaction that no such deal had been signed. – Fin24