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UPDATE 2-S.Africa's Eskom backs nuclear build amid cost concerns
September 4, 2015 / 2:43 PM / 2 years ago

UPDATE 2-S.Africa's Eskom backs nuclear build amid cost concerns

(Adds acting CEO quotes, Glencore coal)

By Wendell Roelf

CAPE TOWN, Sept 4 (Reuters) - Eskom supports South Africa’s plans to build more nuclear power stations because the benefits outweigh any cost concerns, the utility’s acting chief executive said on Friday.

Facing electricity supply shortages, Africa’s most developed economy plans to add 9,600 megawatts (MW) of nuclear power in the next decade and a half, estimated by analysts to cost as much as $100 billion.

“My instinct, and looking at Koeberg for example, is that it is likely that the future benefits will far outweigh the costs of building now,” acting Eskom CEO Brian Molefe told reporters at parliament.

Koeberg nuclear power plant is the continent’s sole nuclear power plant, managed by Eskom.

Energy Minister Tina Joemat-Pettersson said this week that the nation will only go ahead with a nuclear deal if it proves affordable, deflecting criticism that the expansion would be costly and done not face proper public scrutiny.

Molefe also said the utility would seek 2 billion rand ($146 million) in compensation from global mining and trading firm Glencore Plc after business rescue administrators at its struggling local unit stopped coal supplies to Eskom’s Hendrina power plant after a contractual dispute.

Optimum Coal resumed deliveries on Friday.

Regarding the dispute with Optimum Coal, Molefe told Reuters that Eskom would pursue compensation as a “matter of principle”.

“We need to recover that money and we will push for this,” he told Reuters. “I think the long-term solution really is that they must continue supplying, live through this contract. It was a bad contract, there will be a good one in the future,” he said, referring to a contract ending in 2018.

The utility said it expects the first 800 MW from its Kusile power station to come online from August 2017, and an additional 5,532 MW of total new power to come online by 2019.

Molefe said despite rating downgrades which many feared would impact Eskom’s ability to borrow in the markets, the firm managed to raise 72.4 billion rand in commitments, and was confident it could go to markets in the future.

Public Enterprises Minister Lynne Brown said South Africa was not “out of the woods” yet, despite having had 25 days without power cuts.

Eskom has had to cut power to consumers almost daily for months, pushing the economy into a contraction and dragging business confidence to a 16-year low.

$1 = 13.6875 rand Editing by James Macharia and Keith Weir

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