The rising electricity tariff path outlined for South Africa over the coming years would be sufficient to pay for the Nuclear 1 loan package that has been extended by the French nuclear consortium that is in the running to develop the project, which currently lies idle, Areva South Africa's chairperson Mohamed Madhi asserts.

In fact, he tells Engineering News that the consortium and the offer remain mostly intact and stresses that the package, which is largely funded, would not place an unsustainable debt burden on either Eskom, or the South African government, which would probably have to provide some guarantees.

French utility EDF has identified South Africa as one of five key markets, outside France, where it is prepared to take an equity position in nuclear programme. The other markets are China, the US, the UK and Italy. It is also supported by French credit insurer Coface.

However, Madhi refuses to be drawn on a possible final price tag for the 3 200-MW to 3 500-MW pressurised water reactor-based project, save to say that, over its 80-year life, the cost would be comparable to those of a coal-fired power plant. The key advantage is that the facility will support Eskom's diversification away from carbon-dioxide emitting coal, which currently comprises about 90% of all the utility's production.

In December 2008, when Eskom announced that the Nuclear 1 project had been placed on hold, owing to its material funding constraints, which persist to this day, it was speculated that project could cost close to R200-billion.

However, neither the Areva, nor the Westinghouse consortiums, which are competing against one another for the Nuclear 1 project, have ever confirmed the figures. In fact, Engineering News understands that neither consortium is allowed to comment, owing to the conditions and confidentiality that still surround the bids, which effectively remain active, albeit delayed.

But Madhi believes that there are again signs of a revival, arguing that the process to establish a second integrated resource plan (IRP2), which will define the generation mix for South Africa for the next 20 years, is a positive development for the nuclear build programme.

He stresses, though, that it would be vital for South Africa to ensure that the IRP2 process is not compromised in any way, while keeping it tightly within the schedule announced. The publication of the IRP2, currently scheduled for midyear, will also have to be followed by swift implementation programmes for the nuclear capacity to be implemented in time for the expected tight conditions that will prevail in 2018.

"From our perspective, it is vital that the Nuclear 1 investment decision is made during 2010.

"But we also think such a decision needs to be made from a national perspective, owing to the supply constraints and given the fact that nuclear, at this stage, offers the only noncarbon base-load alternative to coal," Madhi asserts.

He describes the funding packages associated with the nuclear build as "low risk" and "favourable", indicating that only a small portion of the funding would have to be sourced domestically.

"As long as the plant is producing electricity and there is demand for that power, there will be enough cash being generated to pay for that power station."

Also emphasised, is the French consortium's recent project experience in Europe and Asia, which, he says, will lower the overall South African project risk, including the threats of cost overruns and construction delays.

Further, Areva has continued to build its capacity in South Africa to the point where it can "immediately" proceed to implementation, should the investment decision be formally made.

The period of Nuclear 1 hiatus has also created the space for the French company to further consolidate its black economic-empowerment strategies, as well as to engage with those firms that could supply components into the build programme and potentially into the group's global supply chain.

Moreover, the company, which is also now officially the world's largest miner of uranium, has intensified its Southern African exploration programme and has also advanced with its plans for the development of a new mine in Namibia.

In fact, output at Areva's Trekkopje, in Namibia, mine is expected to start in 2012, with an initial output of 3 000 t/y. The group also holds a broad portfolio of mines in Canada, Kazakhstan and Niger and in 2009 produced . . . . . . t of uranium.

"We believe 2010 is a key year for nuclear in South Africa . . . and once we have the IRP2 in place, it will be important to move to an investment decision so that flat-out implementation can follow," Madhi concludes.

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.