Pravin Gordhan. Picture: REUTERS/SUMAYA HISHAM
Pravin Gordhan. Picture: REUTERS/SUMAYA HISHAM

The R1-trillion initial estimated cost of the nuclear deal in 2011, which former president Jacob Zuma was pushing for, was equal to SA’s entire expenditure budget for that year — something completely beyond the country’s financial capacity.

This is according to public enterprises minister Pravin Gordhan’s testimony at the commission of inquiry into state capture on Monday.

Gordhan was finance minister when Zuma began showing interest in the nuclear-build project and in entering into a deal, which would have led to Russia supplying nuclear power capabilities to SA.

The former president was pushing for the deal with Russia despite experts warning that nuclear was neither needed nor affordable.

The reluctance of two finance ministers — Gordhan and Nhlanhla Nene — played a role in them getting fired. Their axing shook investors’ confidence in SA, fuelling a drop in the rand and wiping billions off the value of the JSE.

In October, Nene told the inquiry that he believed Zuma fired him in December 2015 because he had refused to sign off on projects such as the nuclear-build programme.

Gordhan told the commission that in 2011 it was evident that Zuma wished to procure 9.6GW of nuclear power generating capacity from Russia. This is roughly equal to the planned capacity of Eskom’s new coal-fired megapower stations Medupi and Kusile.

The cost estimate for the nuclear transaction had been more than R1-trillion, if not more, Gordhan said. The initial costs of big projects never were the ultimate costs as these and even the scope of projects always escalated.

Putting it into perspective for the commission, Gordhan said in terms of the 2011/2012 budget figures, the nuclear-build project would have cost more than the budget for that fiscal year. According to budget figures from that year, total expenditure was R979bn of which R154bn was borrowed and R824bn came from tax revenue. Gordhan said the net debt the state owed at the time was R1-trillion, while debt service costs were estimated
at R76bn.

During his testimony at the Zondo commission, public enterprises minister Pravin Gordhan relayed incidents that led him and other concerned parties into questioning the actions of the powers that be, and to try and reconstruct when the alleged state capture began.

One of the issues raised around nuclear was that it had to be done at a pace which the country could afford. "This project became quite central for whatever reasons and ‘come what may’," he said.

"The cost implication, if it was not managed in a fiscally responsible way for South Africans as a whole and our social programmes and housing programmes and so on, could have been quite serious," Gordhan said.

There has been a fightback against Gordhan by Zuma-aligned ANC members as well as the EFF, which has been leading the charge.

The EFF protested outside the state-capture inquiry premises on Monday, promising to rid the country of "liars", referring to ANC leaders.

EFF deputy president Floyd Shivambu, addressing protesters against Gordhan outside the inquiry, said a deal had been brokered with Zuma to make Gordhan finance minister in exchange for the alleged spy tapes, which led the National Prosecuting Authority at the time to drop corruption charges against Zuma.

Shivambu said the EFF would "liberate the country from liars", and that the ANC would not be in government in Gauteng, North West and Mpumalanga after the 2019 general elections.

With Itumeleng Mokoena

quintalg@businesslive.co.za