Will economics sink the Nuclear Deal?

5 September 2015

While the Russian economy is seemingly in a state of free fall, seeing the rouble plunge even deeper down the bottomless pit, its financial help is anticipated optimistically at the other end of the world.

How is South Africa going to pay for the nuclear deal?

How is South Africa going to pay for the nuclear deal?

South Africa seems to be seriously counting on Russian federal budget funding to finance an ambitious nuclear build program experts estimate will cost between $40 billion and $100 billion.

Rosatom is offering to build eight nuclear reactors in the country. South Africa is rich in deposits of uranium, a commodity whose reserves in Russia are limited.

The intergovernmental agreement that the Russian Federation and the Republic of South Africa signed in September 2014 is unusual for its degree of elaboration.

The document mentions several locations for future nuclear power plants, the reactor technology expected to be used there, and the total combined capacity of the reactors proposed for construction – equivalent to eight reactors of the VVER-1200 type.

It also contains a very specific limitation of liability for any damage that may arise from a nuclear accident, and gives Russia veto power to enjoin South Africa from cooperating with any other country on nuclear issues.

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Meanwhile, public disapproval of President Jacob Zuma’s nuclear energy development initiative is getting ever more vocal.

Opposition against the program has already been sounded by the influential South African trade union association COSATU, a number of business associations, environmental groups, renowned journalists and experts.

Even the government lacks unity on the matter, with the Ministry of Finance saying it cannot give its go-ahead on the program without a clear understanding of what the sources of financing will be.

No money has been spoken for by this program in the national budget.

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