Government has decided to no longer invest in the Pebble Bed Modular Reactor (PBMR) project, says Public Enterprises Minister Barbara Hogan told the National Assembly on Thursday.
"Without going into too much detail right now, government, after careful deliberation, analysis and review, and mindful of the fiscal constraints in these hard economic times, has had to make a decision to no longer invest in this project," Minister Hogan said.
Hogan said the scale and size of the company was now being reduced to a few people with the focus now being on the retention of its intellectual property, and of certain skills, and the preservation of its assets.
She said government's decision had not been taken lightly and that government was mindful of the impact this would have on the future careers and livelihoods of the PBMR employees.
"Nor have we lost sight of the significant investment already made by government in this project and the impressive scientific advances already achieved in pioneering this particular form of nuclear technology," she explained.
The minister said government had to consider the fact that the PBMR has not been able to secure an anchor customer or another investment partner and that further investment in the project could well be in excess of an additional R30-billion.
The project has been missing deadlines constantly, with the construction of the first demonstration model delayed further and further into the future. Additionally, the opportunity afforded to PBMR to participate in the US's Next Generation Nuclear Plant (NGNP) programme as part of the Westinghouse consortium was lost in May when Westinghouse withdrew from the programme.
Should the country embark on a nuclear build programme in the future it will not be using the PBMR technology, which was still in the research and design phase.
"Finally, the severity of the current economic downturn, and the strains that it has placed on the fiscus, as well as the nature and scale of government's current developmental priorities, has forced government to reprioritise its spending obligations and therefore, of necessity, to make certain tough decisions - this being one of them."
Government had commissioned an independent high-level review of the project, and an inter-Departmental Task Team (IDTT) was set up under an Inter-ministerial Committee (IMC) to carefully consider and evaluate various options available.
The company will be downsized by 75% and approximately 600 employees have already left the employ of the company in terms of prescribed procedures. The retrenchment of the remaining staff will also continue while the Fuel Development Laboratory (FDL) on the NECSA premises will be decommissioned under the auspices of NECSA and the Helium Test Facility (HTF) while it will also be mothballed.
Several recommendations of the IMC have been approved by Cabinet including that the PBMR will be placed in a ‘care and maintenance mode' to protect the intellectual property and the assets in PBMR.
The HTTF facility at Northwest University will only be mothballed should the university not wish to continue to utilise the facility.
The Department of Higher Education and the Department of Energy will seek to ensure that nuclear graduate programmes at universities such as the University of the North West are maintained and supported. A review and audit will be done of the PBMR project, which will also assist in capturing the lessons learnt from such an undertaking. It will also identify any outstanding course of action still needed to be undertaken, with a particular focus on corporate governance aspects.
Over the last years a total R9,244-billion has been invested in the PBMR project, government having contributed an amount R7,419-billion or 80,3% of that amount. Eskom also contributed 8,8% with Westinghouse and the Industrial Development Corporation (IDC) accounting for 4,9% each.
A feasibility study on the project started in 2000 and in 2003 the National Nuclear Regulator (NNR) reported a positive view on the possibility of the licensing thereof. In 2005 PBMR's focus shifted to work needed for the licensing of a Demonstration Power Plant and the detailed design work required for manufacturing long lead-time items of plant for PBMR.
The funding given by government was intended to ensure the continuation of the project while providing a firm foundation for the acquisition of additional private sector investment into the project and an anchor customer.
Originally, it was envisaged that Eskom would be the PBMR's anchor customer, with a possible purchase of up to 24 reactors as part of the country's expansion of its electricity generation capacity to meet increasing demand with a first demonstration PBMR to be constructed on the Koeberg Nuclear Power Station site in the Western Cape.
"However, between 2005 and 2009, it became increasingly clear that, based on the direct-cycle electricity design, PBMR's potential investor and customer market was severely restricted and it was unable to acquire either; hence government has been constrained to make decisions about the future of the project.
"It is absolutely clear from all the high-level reviews that have been undertaken that there is no doubt about the validity of Pebble Bed Technology itself. The main feature of the Pebble Bed Reactor is that its safety features are inherent in the physics of the design, as opposed to add-on engineered safety features as found on current Light Water Reactor (LWR) nuclear plants," said the minister.
Hogan said that some of the universities had benefitted from this investment and were able to offer courses related to nuclear research and training that would not have been possible without such an investment.
However, the closing of the project will result in a leakage of skills, which is regrettable but unavoidable. "We do envisage the further up-skilling and training of a younger generation of scientists and technicians who have benefitted from our investments in PBMR." - BuaNews