Necsa’s annual report delayed to 2019 owing to auditing complications
9TH NOVEMBER 2018 BY: REBECCA CAMPBELL – CREAMER MEDIA SENIOR DEPUTY EDITOR
The South African Nuclear Energy Corporation (Necsa) has confirmed, in a press release, that the completion of its 2017/18 audit has been delayed. Parliament has granted the corporation an extension to February 15, to present its 2017/18 annual report. “I am proud to say that, in the previous financial year, Necsa was awarded a trophy by the auditor-general for having a totally clean financial audit,” highlighted Necsa Group CEO Phumzile Tshelane.
There are three main reasons for the current delay. One is the extended shutdown of operations at Necsa subsidiary NTP Radioisotopes, which has seen its production of radioisotopes halted twice since November, affecting nuclear medicine activities in more than 60 countries. “We are hoping to return our nuclear medicine production to full capacity soon,” he assured.
“In the meantime, our international customers are being accommodated via our agreements with our international collaborators.”
As a result of these problems, Necsa concluded it had to redesign its management and operating systems. This is currently being done in cooperation with the National Nuclear Regulator.
A second concern is “the positioning of [Necsa fluorochemicals manufacturing subsidiary] Pelchem and its product in the markets”, in the words of the media release. Over time, the global market conditions regarding these products have changed, affecting Pelchem. But the capabilities of this subsidiary represent a strategic asset to South Africa and give the country a strong position in global markets. A sustainable solution is required and Necsa is talking to the relevant government departments about this.
The third is concerned with the Safari-1 nuclear research reactor – its decommissioning and decontamination (D&D) plan. Necsa must have such a plan now, even though it currently intends to operate Safari-1 for at least another 20 years. “It is important to emphasise that the nuclear industry is the only one with legislated prescripts that obligate licence holders to produce a D&D contingency plan before an installation is even commissioned,” stressed Tshelane. “This is also done for nuclear power stations.”
But there is no way that Necsa can forecast how much effort and money would be required for the D&D of Safari-1, nor can they be certain when the process will start. “The issue is that the accounting standard does not easily fit with this unknown set of factors,” he pointed out. “Over a year ago, we came to a satisfactory agreement with the auditor-general, but the agreement was temporary, pending ratification by Cabinet. I must say that all discussions with the auditor-general have been most cordial and constructive.”
Cabinet has decided that the National Treasury and the Department of Energy (DoE) should financially support Necsa so that it can recognise an asset against the liability of the D&D obligation. The required negotiations and preliminary work are currently continuing between the corporation and the departments.
Talks are under way between Necsa, the National Treasury and the DoE to achieve an alignment on the issue and set out the guidelines for the completion of the audit. There is also urgent need to address the issue of unfunded mandates imposed on Necsa in the past. This is necessary to strengthen the corporation’s financial situation.
For the future, Tshelane cited the agreement of intent signed between Necsa and Rusatom Health (a nuclear healthcare company and part of Russia’s Rosatom Group) in July. This covers the construction of two new, latest-technology medical radioisotope production nuclear reactors, as well as Cyclotron (a nuclear particle accelerator), at Necsa’s Pelindaba complex, west of Pretoria. “This initiative combines the skills and experience of Necsa with those of the Rusatom family,” he affirmed. “With this, we hope to bring nuclear medicine to new outlets in African countries.” The Necsa board already has a target of increasing Necsa’s medical radioisotope/radiopharmaceuticals production by 100%.