Nuclear bid had funding - Areva

johannesburg - areva, one of two bidders in south africa's stalled nuclear power programme, said yesterday that 85 percent of the financing for the country's second nuclear plant would have been forthcoming as part of the french group's tender.

areva's business development director, yves guenon, spoke at the energy 2009 conference on energy solutions for africa as eskom struggles to fund a massive programme to build more generating capacity.

fani zulu, an eskom spokesperson, confirmed that areva's tender had included the fact that it had funding for 85 percent of the cost from export credit agencies of the organisation for economic co-operation and development (oecd).

but even with that funding, zulu said, eskom's board had decided that the potential cost of a new nuclear power station was too high and that the utility would not have been able to shoulder the amount of debt required to fund its construction.

zulu declined to say how much the plant would have cost to build. independent sources estimated the cost of a new nuclear station at r120 billion.

guenon told the conference: "the problem in south africa is how to build coal-fired plants because you need the money. it would have been easier today to build nuclear rather than coal."

areva had access to export credit available to oecd countries, he noted.

the global credit crunch has restricted access to funding, simultaneously making it more expensive. eskom faces the additional financing burden of a credit rating cut by moody's investors services last year.



many development finance institutions have stepped into the void created by risk-averse commercial banks. the world bank is in talks with eskom about a $5 billion loan.

of its r343 billion capital spending plans, two-thirds is required for eskom's three biggest projects: the medupi and kusile power stations and the ingula pump storage scheme.

last month eskom said it was cancelling the plan to build a new nuclear plant.

areva and toshiba's westinghouse had been competing for the tender. areva proposed two 1 650 megawatt reactors; westinghouse planned to build three 1 140mw reactors.

the department of minerals and energy subsequently said it expected south africa's next nuclear power plant to come on stream by 2019, two years later than first planned by eskom.

guenon yesterday would not comment on the two-year delay.

asked whether areva had considered entering the south african power market as part of an independent power producer bid, he said: "the answer is yes, it's clear."

guenon said that the capital costs of building nuclear power were between 150 percent and 170 percent of the costs of building the equivalent coal-fired power.

but organisations such as environmental group wwf believe the costs of nuclear are underestimated. last week, wwf said nuclear continued to pose risks from highly radioactive waste and plutonium leaks.