Picture: REUTERS/PETR JOSEK
Picture: REUTERS/PETR JOSEK

Eskom will apply to the Treasury for a series of waivers and exemptions from procurement regulations as it forges ahead with its plan to build a fleet of six to eight nuclear plants to generate 9,600MW of energy.

President Jacob Zuma is determined to proceed with the nuclear build programme, despite critics saying it is not necessary and beyond the means of a fiscally constrained government. His stance led to the removal of Tina Joemat-Pettersson as energy minister and her replacement by Zuma supporter Mmamoloko Kubayi.

The government’s nuclear plans have been red-flagged by credit ratings agencies, which downgraded SA to junk status.

The draft 2016 Integrated Resource Plan (IRP) says SA will not need new nuclear power plants before 2037, but until it is finalised Eskom is operating on the basis of the 2010 IRP, which proposes the construction of 9,600MW in nuclear plants.

In December, the power utility issued a request for information, which closes on April 28, and by the end of June plans to issue a request for binding proposals from potential vendors, provided it obtains the approvals to do so.

Vendors will then have three months to make their submissions and Eskom envisages it will have a list of preferred vendors by the end of 2017.

After approval by the Cabinet, negotiations with the preferred vendor could possibly start from March 2018. However, this time frame could be altered if the final 2016 IRP slows down the process.

Eskom chief nuclear officer Dave Nicholls said on Thursday the motivation for the application for exemptions from the procurement regulations of the Public Finance Management Act was that Eskom had done a lot of the work prior to the promulgation of these regulations over the last year.

Nicholls said Eskom wanted assurances from the Treasury that the work already completed would be accepted as being in compliance with the regulations. Without this it would have to go back to square one.

"We believe the work that has already been done is adequate and is equivalent to what Treasury is asking for."

There was nothing inappropriate about the request — Eskom’s planning for the nuclear build programme had been under way for several years, Nicholls said.

The application for exemptions could include one relating to the need for a feasibility study as this work had already been done, he said. Others would relate to the nature of the project, for example the length of time during which tenders could remain open.

This would be a significant exemption and mean Eskom is embarking on the country’s single biggest public procurement without fully assessing associated risks and consequences for SA’s economy
Gordon Mackay
DA energy spokesman

The regulations stipulate that a tender is only valid for a maximum of 12 weeks, which Nicholls said was unrealistic for the acquisition of a nuclear power station, which could require tenders to be open for a year or more.

DA energy spokesman Gordon Mackay said the DA — which is strongly opposed to the nuclear build programme — would object to any "unacceptable" attempt to rush through the procurement process. The application for exemptions was an "apparent bid to accelerate the nuclear new-build programme". The DA planned to apply, in terms of the Promotion of Access to Information Act, for access to copies of the relevant correspondence between Eskom and the acting chief procurement officer in the Treasury, Schalk Human, regarding Eskom’s application.

Mackay said he had been "very reliably" informed that Eskom had applied to Human for an exemption from the standard for infrastructure procurement and delivery management. "At present, sources suggest that Eskom may be seeking an exemption from the requirement to provide a full feasibility assessment for its proposed nuclear new-build programme.

"This would be a significant exemption and mean Eskom is embarking on the country’s single biggest public procurement without fully assessing associated risks and consequences for SA’s economy," he said.

"All state entities are bound by specific procurement standards and requirements. If procurement standards cannot be met, procurement should not commence. It is difficult to imagine circumstances under which an exemption of this nature might be justified."

It will be up to new Finance Minister Malusi Gigaba to fill the vacancy of chief procurement officer. The appointment will be closely watched as an indication whether procurement will be tightly controlled under his watch. The post was advertised by the Treasury on Monday.

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