French nuclear vendor Areva says its value proposition for South Africa’s proposed new nuclear build programme remains intact, despite far-reaching restructuring initiatives being undertaken at the troubled State-owned company, which reported a €4.8-billion loss for 2014.
Areva has announced plans to cut costs by €1-billion by 2017, dispose of noncore businesses and strengthen relations with State-owned utility EDF in an effort to realign the business to a weaker-than-anticipated outlook for the global nuclear market.
The company, which is also dealing with several “difficult projects” and lower prices and demand for enriched uranium, expects the global installed nuclear base to grow by only 2.5% a year between now and 2030.
The project pipeline is being reprioritised, with Areva indicating that it will be far more selective in the market opportunities it pursues outside of Europe and China, with the latter expected to have the largest installed nuclear base by 2030, ahead of the US and France.
However, Areva South Africa MD Dr Yves Guenon confirms that South Africa, which is considering a 9 600 MW nuclear build programme, remains a key target market and that the restructuring will not fundamentally alter its bid package, should the country eventually launch a procurement process.
South Africa has signed Inter-Governmental Agreements on nuclear with China, France, Russia, South Korea and the US, and is expected to conclude similar deals soon with Canada and Japan. It has also hosted several so-called vendor parade workshops in an effort to glean information that can be used to guide Cabinet’s nuclear decision-making processes.
Government’s support of nuclear is informed by a desire to bolster non-coal baseload capacity so as to diversify the electricity mix and lower power-related carbon emission in line with its international climate-change commitments.
But critics question whether South Africa has the financial, technical, human-resource and safety capabilities and frameworks in place to implement the programme, while reservations linger about whether the multibillion-rand programme can be pursued in the absence of political interference and corruption. Government has committed itself, however, to running a “fair, transparent, and competitive procurement process”.
Guenon tells Engineering News Online that Areva, as part of a larger “French Team”, remains confident that South Africa will indeed move ahead with its nuclear plans and is optimistic that the process will be well managed.
He also stresses that, while underlying composition may possibly include partners who have previously been a part of EPR reactor projects, such as the Chinese, Areva’s technology, experience and localisation value propositions will remain central to any future bid.
Areva’s plan to “capitalise” on its industrial assets will also not dilute its localisation offering, which Guenon describes as extensive and well canvassed with South African industry.
Another key priority in South Africa will be to deliver on the R4.3-billion Eskom contract for the replacement of steam generators at the Koeberg nuclear power station, in Cape Town.
Guenon says work is advancing against a “tight” delivery schedule and has not been affected by Westinghouse Electric Company’s review application to the South Gauteng High Court challenging Eskom’s decision to award the contract to Areva.
Westinghouse is seeking an order “reviewing, correcting and setting aside” the contract award and Judge Zeenat Carelse is currently deliberating on the matter, following three days of hearings in February.
The current ‘manufacturing phase’ is being carried out for six new steam generators to be manufactured for the retrofit. During the ‘replacement phase’, which will take place mostly in 2018, the company will be have as many as 700 workers deployed on Koeberg site.
“We are confident of meeting the 2018 deadline,” Guenon says.