South Africa to Respond to $126 Billion Nuclear Bid Report (07 October 2011)

October 10, 2011 4:02 AM

(Updates with Areva comment in fifth paragraph.)
Oct. 7 (Bloomberg) -- South Africa will respond today to a report it's poised to seek bids for a record 1 trillion rand ($126 billion) tender to build six nuclear plants by 2030.

The Department of Energy submitted its plan to Cabinet last month, the Johannesburg-based Mail & Guardian newspaper said. The department said in a reply to e-mailed questions it will release a statement on the contents of the report, which cited unidentified people in government and industry. Energy Minister Dipuo Peters last month said bids will be sought next year.

French and Chinese companies may prepare a joint proposal, the Mail & Guardian said, citing the people. The article listed the potential bidders as Areva SA, EDF SA, Toshiba Corp.'s Westinghouse Electric Corp. unit, China Guangdong Nuclear Power Holding Corp., Korea Electric Power Corp. and Rosatom Corp.

South Africa plans to diversify energy sources away from coal, which makes up more than 90 percent of generation capacity of about 40,000 megawatts. It also aims to prevent a repeat of power outages in 2008 that temporarily shut most of the nation's mines and smelters, its biggest source of foreign exchange.

“Areva is hoping to be part of the nuclear bid program in South Africa,” an external company spokesman said in an e- mailed response to questions. Areva and Bouygues SA jointly bid for a project in a tender that South Africa canceled in 2008.

EDF will consider any tender, Carole Trivi, a spokeswoman for the French company, said by telephone from Paris.

Cost Estimates
“It is fairly clear the nuclear build program will go ahead,” Cornelis van der Waal, an analyst at Frost & Sullivan, said by phone from Cape Town. “The question is how much, when and where plants will be built,” decisions the government will probably make on a project-by-project basis, Van der Waal said.

The “overnight cost” of South Africa's planned nuclear program, which excludes finance costs, will probably be closer to 600 billion to 700 billion rand, he said. “There is no tender out, so there can't be any frontrunners,” he added.

Areva has been lobbying the National Union of Mineworkers, South Africa's biggest labor union, to end opposition to nuclear power, the Mail & Guardian said, citing an unidentified union official. Areva officials attended two union meetings, the company said in response to questions from the newspaper.

Lesiba Seshoka, a spokesman for the union, declined to comment when called by Bloomberg News today.
The country has one nuclear power plant, the 1,800 megawatt Koeberg plant near Cape Town, built by Areva and which is now operated by South African power utility Eskom Holdings SOC Ltd.\

The nation also has an atomic research station, Pelindaba near Pretoria, and is a former nuclear power that destroyed its weapons toward the end of the apartheid era in 1994.

--With assistance from Franz Wild and Jana Marais in Johannesburg and Tara Patel in Paris. Editors: Tony Barrett, Stephen Cunningham

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