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Zuma says nuclear deal would’ve solved our power crisis, would it?

President Jacob Zuma reportedly said that the nuclear deal would have solved South Africa’s ongoing power crisis according to EWN.

The country has been going through load shedding for a while now, and it is a particularly nasty disadvantage to local business.

According to ENCA multi-national companies and large retailers have deals in place with Eskom to provide reliable power – but most local producers don’t.

What’s the problem here? Well, lets go to PWC:

A South African (SA)-resident company is subject to corporate income tax (CIT) on its worldwide income, irrespective of the source of the income. Non-residents are taxable on SA-source income.

So it is better for us to advantage our business, and disadvantage multinationals because we can tax our guys on worldwide income, we can only tax the multinationals on the money they earn here.

But, instead we’re advantaging the multinationals over our local producers when it comes to power supply. That means we’re getting less taxes in.

And that’s just one of the ways the current crisis is harming our economy. According to The South African, Chris Yelland, an Energy expert put the cost of load shedding to the economy at a billion rand per stage, per day. We’ve frequently hit stage 4.

So would going with the nuclear deal have prevented this?

So, in Nuclear Costs SA has a timeline for the nuclear deal.

7 September 2016 – The Minister of Energy announces that the DoE will put out requests for proposals on a nuclear procurement process on September 30

So lets take October 2016 as our starting point.

I’m’ going to look at Energy Matters, a blog run by Euan Mearns. He’s one of the academics featured on The Conversation and you can see his bio there.

He’s basically pro nuclear, so he’s not going to paint as dark a picture on this as possible. I am also pro nuclear, but I want to be as straight on this as possible.

According to Mearns, if well run a nuclear power plant’s construction can be completed in 3 years – if it is run very, very well, and there aren’t any political barriers.

The mean for how long it takes to build one of these things is about 7 and a half years. The record for the longest its taken is 33 years.

So at its fastest, without any problems, if we had gone with the nuclear deal, the first nuclear power plant – would have come in later this year, and we’d still be suffering from load shedding now.

If our build was on the mean, that puts it forward to 2023/24, and if you look at Kusile and Medupi and their long history of labour unrest and general overruns, it would probably have taken longer than that.

That is without even getting into the issues around finding finance for this deal, that’s without dealing with environmental issues and finding locations for these plants, that’s without even really getting into the impact of corruption.

Zuma, is doing what Zuma does, and that’s telling a “good story” that has about as much relation to reality as Harry Potter.

  • Picture courtesy of GCIS via Flickr.
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