Now that the energy department has gazetted its updated energy plan and revised downwards the need for new nuclear electricity infrastructure, you would expect the executives at Eskom to relax and concentrate on fixing what they have broken.
But alas, they have come out guns blazing, forging ahead with their plans to build nuclear power stations that the company, and the country, cannot afford at present.
Eskom insists that it will build 2,400MW-3,200MW of nuclear power by 2026. This directly contradicts government’s stance in the integrated resource plan (IRP), which said last week that extra nuclear capacity would be needed only by 2037.
Says the IRP: "The economic growth projection assumptions made during the development of the IRP2010 have not materialised and the economic growth outlook has been revised downwards. This has had a downward impact on projected electricity demand."
The IRP says the first unit of the nuclear, and additional capacity, must be implemented at a scale and pace that will not have a negative impact on the economy.
Last week rating agency Standard & Poor’s also sought to drill some sense into the executives of Eskom, when it spelt out that the utility cannot meet its liabilities without resorting to government for help.
Eskom finance chief Anoj Singh says the company has used R162bn of the R350bn loan guarantee. Its total debt stands at R362bn, for which it has to pay interest of more than R30bn/year. This is before any of this new infrastructure starts generating revenue.
To put this figure into context, the Medupi and Kusile power stations are costing R120bn and R128bn to build, at the last update last year. Therefore it would take Eskom four years of interest payments to build a Medupi.
Yet it now wants to build nuclear power stations it knows only too well that it cannot fund. Not for them to worry about cost and affordability, it seems. Never mind that the same Eskom decided, in 2009, that it could not finance any nuclear infrastructure build.
It abandoned the project after obtaining quotes from the industry, and handed it over to government.
I asked Eskom recently what had changed since 2009, when it realised it could not afford to pay for this infrastructure.
Singh mumbled something to the effect that Eskom "now has confidence to execute projects of this magnitude". It derives that confidence from the infrastructure programme it has managed so disastrously since it turned the first sod at Medupi in 2007.
Downgraded to junk
What Singh did not admit is that Eskom’s finances have deteriorated since 2009, when it realised it could not afford nuclear. In that period it has had to tap the taxpayer for a R23bn cash bailout and a R60bn debt write-off. It has been downgraded to junk status — even with government support — making it prohibitively expensive to borrow.
So you have to ask yourself: why is Eskom rushing to commit funds it does not have, to a nuclear programme that is not necessary at this point?
The answer has to be found in Saxonwold, where it appears the real bosses of Eskom live and drink at the secret shebeen.
That is where the most important decisions about the future of our country are being taken.
So what kind of person commits hundreds of billions to a project they neither need nor can afford? It can only be he who has imbibed the confidence-booster found at the shebeen.