Dancing with the Russian Bear

Has South Africa already entered into a $10bn nuclear deal with Russia? Mystery surrounds the cryptic announcements made by Russia’s nuclear authority and South Africa’s energy department. But, perhaps more worryingly, is this yet another example of the sort of opaque procurement deals that seem to have mushroomed under the Zuma administration? Report by Tom Nevin.

South Africans woke up to the news, in late September, that they had just spent R111bn ($10bn) in a nuclear energy deal with Russia. That explained why President Jacob Zuma, without much notice, had hopped on a plane to Moscow for “talks with President Vladimir Putin”. The reason for his trip was kept under wraps and only came to light when South Africans put two and two together and got $10bn and 9,600MW of nuclear power.

The deal was communicated separately by the South African Presidency and the Russian state-owned Rosatom nuclear agency with variations on the nuclear theme.

The ink had hardly dried on the deal – the details of which are still secret – when Rosatom announced that an agreement had been reached “on a strategic partnership in nuclear energy” and that it had been signed by the Russian and South African governments. The statement was also published on the Rosatom energy website. Up to that point, the South African Department of Energy had been tight-lipped on the deal.

South Africans understood that their government had lashed out on $10bn worth of Russian nuclear reactors with generating capacity of 9,600MW without the formal procurement processes.

In quick order thereafter, both the Russian and South African nments issued media statements with corresponding information that insisted the aforementioned deal was merely a framework, and not a binding, agreement.

The Moneyweb business news site quoted a South African Rosatom representative as saying “South Africa is not bound to buy it from Russia and will be free to buy it from competitors, should it decide to do so”. In response to queries from website BizNews, Rosatom confirmed “that further agreements will have to be signed (surely after further negotiations) in each field of cooperation stipulating all the details”.

The public outcry that followed the initial Rosatom statement was an indication of how short South Africa’s fuse has become regarding the government’s procurement of expensive resources without following stipulated procedure in part or at all.

After 15 years, allegations of fraud and other corrupt action continue to bubble away in parliament and the courts. E-Tolling the expressways in Gauteng Province, without due public participation, brought about open rebellion; this has not only between motorists and the government, but has split the ruling ANC with the party leadership in Gauteng openly defying the national elite.

South Africans understood that their government had lashed out on $10bn worth of Russian nuclear reactors with generating capacity of 9,600MW without the formal procurement processes

The province showed a swing away from the ANC of more than 10% in the recent general election, e-tolling being a major factor for the change. Municipal elections are due early next year and ANC Gauteng fears more of the same unless e-tolling is abandoned.

Another storm still tossing the ship of state around in very turbulent waters concerns alterations and upgrades to President Zuma’s private residence in KwaZulu-Natal province. Approval was sought and given for a security upgrade and a budget of around $2.5m to be footed by the taxpayer was agreed.

The gloves came off when the final bill amounted to just under $23m and included such items not mentioned in the initial procurement plan as swimming pool, cattle kraal, chicken run and a list of other non-security amenities. The matter is being fiercely debated in parliament and will no doubt end up in the appellate and Constitutional Court.

Stuff of intrigue

The Russian nuclear deal is the stuff intrigue in an intrigue-ridden country is made of. A cloak-and-dagger secret flight by the President to Moscow on a mission, the details of which must not be spoken about, stirs more mud into the public sector waters.

The sudden move to involve Russia in South Africa’s nuclear makeover cut across an exercise by top nuclear industry players to ensure a carefully considered, step by step and measured decision on new nuclear energy installation.

This team was led by the former Minister of Energy, Ben Martins, and comprised the department of trade and industry, national treasury and department of public enterprises, among other entities associated with nuclear build decision making. The investigation included knowledge update visits to several nuclear club countries, taking in technology, manufacturing, engineering and construction sectors and nuclear build project management.