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Dear Corruption Watch,
I am confused. I thought that procuring a nuclear power plant required a public tender process, but then the Russian company selling us the goods issues a press release saying it's a done deal? What exactly is the deal? And is it possible or desirable to undertake a procurement exercise on this scale without an open tender?
Heated
Dear Heated
Given the amount of secrecy shrouding the process, you are right to be confused.
In September, the Russian state-owned nuclear company Rosatom and the South African Department of Energy announced an agreement which they said "lays the foundation for the large-scale nuclear power plants procurement and development programme of South Africa based on the construction in South Africa of new nuclear power plants with Russian VVER reactors with total installed capacity of up to 9.6GW".
The simultaneous and identical press statements strongly suggested we were buying eight state-of-the-art Russian nuclear reactors. But the questions flying at President Jacob Zuma, who appeared to be primarily responsible, resulted in some urgent back-pedalling.
Zuma reportedly negotiated directly with Russian president Vladimir Putin, in secret, and then instructed our minister of energy, Tina Joemat-Pettersson, to sign the deal.
The department quickly issued a follow-up statement, saying that the agreement merely "initiates the preparatory phase for the procurement for the new nuclear build programme" and "similar agreements are foreseen with other vendor countries that have expressed an interest in supporting South Africa in this massive programme".
Of course, this didn't explain why the department's initial press release had stated that "these will be the first NPPs [reactors] based on the Russian technology to be built on the African continent".
Nevertheless, some credence has been given to the claim that a Russian deal is not finalised by the fact that, last week, South Africa signed an agreement on co-operation in the development of peaceful uses of nuclear energy with the government of France.
If the Russian deal is simply a co-operation agreement, it seems that our government may now accept that it is an "international agreement" contemplated by section 231 of the constitution. If the announcements around the French agreement are anything to go by, it has also accepted that the agreements will only bind South Africa after they have been ratified in both houses of parliament.
So what next? Before South Africa can start building nuclear power plants, such a mega-procurement contract should be subjected to a proper tender process.
Quite apart from the tender requirements, two regulators, the National Electricity Regulator and the National Nuclear Regulator, must also approve certain aspects of any deal. Moreover, the flow of vast sums of money to foreign suppliers is subject to financial regulations.
While the scope for impropriety appears to be limited, a whiff of corruption unfortunately already surrounds the deal.
• This article was first published in Sunday Times: Business Times
