……may 15 2020……
A damaged NECSA plans its energy future
….. The South African Nuclear Corporation (NECSA), with an employee role beyond its capacity as a result of waiting for a R750bn nuclear programme which never arrived, might be getting back on track with the possibility of nuclear down the track. Having lost some extremely valuable and experienced, government is attempting, it seems, to be breathing life into this once highly successful operation nearly destroyed by political interference.
NECSA is a valuable but largely ignored nuclear component in the stable of the now combined Department of Mineral Resources and Energy (DMRE), an entity which for the last ten years has been subjected to mismanagement, patronage, lack of management appointments and a considerable number of ministerial financial scandals.
After the years of waiting during the Zuma era, NECSA then lost and additional two years with the integration of the departments of mineral resources into energy but appears that DMRE , its parental department, has appointed a new board with new ideas on a NECSA future.
The DMRE this year presented a plan to Parliament for an estimated budget of R9.3bn for the current financial year, 95% of which will be transferred as usual to its entities.
These will be Council for Geoscience National Energy; the Regulator of South Africa (NERSA), Central Energy Fund (CEF) (including PetroSA and the Strategic Fuel Fund or SFF): the National Nuclear Regulator’s office(NERSA); NECSA itself; the National Radio-Active Waste Disposal Institute; Mintek and other smaller entities such as the Mine Health and Safety Council, the State Diamond Trader and the Diamond and Precious Metal Regulator.
Parliament therefore had to consider recently the period ahead covering 2020-2024 in the form of the Medium-Term Strategic Frameworks, or projections, for all these DMRE bodies. This is no mean task in the light that may have suffered from the perambulations, thievery and in some cases, sheer ignorance resulting from the switchback ride of ten successive ANC ministers of energy and and ministers of mining.
Himself a somewhat confusing and at times erratic Minster of Mineral Resources and Energy, Gwede Mantashe is now trying to put back the combined pieces of the jigsaw representing DMRE into some sort order but until now he seems to have been dealing with the edges and corners pieces of the puzzle but not dealing with the centre section where the working parts are.
Nobody is ever quite sure, it seems, in the case of NECSA, what actually is going on in this somewhat secretive corner of government. In this area, now that the Zuma myth of the “New Build Nuclear” has been dispelled thanks to a court order to this effect, the re-tasking and consolidation of Minerals Resources and Energy department has been mostly completed.
The magic word
However, the question of nuclear energy has once again arisen, mainly due to a passing comment from the Minister that nuclear was indeed to become at some time part of the energy mix.
Ears pricked up in the environmental lobby camp and energy experts said in aghast that the energy mix after years of debate was now fixed. One must remember, of course, that the nuclear energy issue never really goes away in the light of Koeberg power station operations in Cape Town and and medical isotopes from Pelindaba, Pretoria.
Half a billion in the red
The NECSA subsidiaries are NTP Radio Isotopes, Pelchem, Pelindaba Enterprises and Safari-1. NECSA overall has suffered cumulative losses of R257.78m in the 2016/17 and 2017/18 financial years and is expected to announce an even larger loss of R294.27m for 2018/19, resulting in cumulative losses of R552.05m for the three-year period.
This was more than evident in NECSA recent presentation to Parliament which, as it turned out, was just an interim report and more of a wish list than anything else. Nevertheless, the ‘plan’ does indicate a complete change of direction.
In the case of NECSA the return to “normality” might be a little faster than the other problem child of Department of Mineral Resources and Energy (DMRE), PetroSA. Sadly, in NECSA’s case, many excellent scientific brains have gone elsewhere and an opportunity to establish SA excellence in the field of isotopes lost.
The frightful track record of losses came to a head in 2019 when it was stated in the NECSA annual report that “ the significant delay in any new nuclear power plant programme to be undertaken by NECSA had become irrelevant”. This was established to be for experts hired but never deployed. “Irregular and wasteful” as the Auditor General put it.
The NECSA board filed a report in 2018, signed by former chairperson Dr Rob Adam and former acting CEO Don Robertson, which attempted to return NECSA to its original mandate of to promoting radiation sciences and technology research which included a programme of the retrenchment of valuable staff as part of the process of slimming down.
Both Dr Adam and CEO Robertson then left NECSA having filed the report with new DMRE department but this gathered dust, it appears, since other priories in gas development and Eskom dramas must have occupied the mind of Minister Gwede Mantashe. However, he subsequently and eventually appointed Ayanda Myoli as acting CEO of NECSA.
In his first attendance at Parliament, 19 May 2020, Myoli told Parliament that NECSA that for the coming year, NECSA would have a turnover of more than R2bn in the 2020/21 but still carrying a projected net loss of R61m on its shoulders.
Myoli told MPs last week that the key financial objective in the short term was to reduce losses and to rehabilitate the balance sheet to enable it to fund its growth and expansion strategy. Looking ahead he further told the Portfolio Committee that for year five of the plan ahead, NECSA expected to make R550m in net profit and by 2030, R1.4bn net profit.
Over the next 12 months, he said the group’s objectives included commercial subsidiary NTP Radioisotopes regaining its 20% share in the global market for Molybdenum-99 (Mo-99) medical radioisotopes, lost due a hibernation period when the station at Pelindaba was closed down in terms of UN requirements. In the future NECSA is to increase its range of medical radioisotopes from three to four, Myoli added and continue support services include irradiating target plates from the SAFARI-1 research reactor.
Competing with China
Another objective is to re-gear NECSA’s other subsidiary, chemical manufacturer Pelchem, who produce fluorochemicals in competition with China, and increase its revenues by R78m by building the necessary plant to enter the commercial hydrogen fluoride industry, Myoli said.
With sister subsidiary Mintek, Pelchem would enter the antiretroviral drug market working with “international partners” Myoli then said, aiming to achieve a 35% share in the local ARV market and targeting to earn revenues in excess of R721m per annum.
Ayanda Myoli stated that NECSA was not only to be responsible for the recreation of a nuclear fuel cycle in South Africa, protecting and maintaining the Koeberg installation but was proposing a new multi-purpose 2,500 GW nuclear reactor direction for the future.
In questioning NECSA, Kevin Mileham (DA) said he was particularly concerned that Ayanda Myoli had talked about a about 2 500 gigawatts nuclear reactor, small as that maybe compared with previous plans of past president Jacob Zuma. This would fall, Mileham presumed, under the mysterious Pelindaba Enterprises, which according the, had hardly been mentioned in the framework plan at all for the next period. He asked for confirmation
Conflict on statements
DA’s Mileham said any nuclear reactor did not align with the IRP, which made no provision for 2 500 gigawatts from any new build projected. He said that NECSA must be working off the wrong version of the IRP and said CEO Ayanda Myoli had simply repeated what Minister Mantashe had announced a week ago when he spoke on this to the media. Mileham, as shadow minister of energy for the DA, wanted an official explanation in writing as this was the first time the issue had been raised in Parliament.
CEO Myoli responded that the IRP had delineated what plant ought to be commissioned up to 2030. He said the IRP does not list what goes beyond 2030. He added that even assuming DMRE, on behalf of NECSA, placed contracts in 2024 for any relatively small and supplementary new build nuclear programme, there would be nothing online before around 2030/32, after the current IRP period had expired.
Commenting as an individual, Myoli said that he felt that the current IRP had a weakness in this area as it now considered inputs in process nine years from now, and for mega projects in energy nine years was absolutely nothing.
Further nuclear questions
Myoli said any ARV’s with Pelchem would be produced under licence from Macleod Pharmaceuticals Limited from India, currently the largest producer and supplier of ARVs and TB pharmaceutical products. Currently, they were awaiting the final concurrence from the Minister of Finance and the Minister of Health on this.
It seems Macleods it is one of the ten largest pharmas in India owned by Dr Rajendra Agarwal & family producing generics for a range of diseases including asthma, osteoporosis and diabetes. Agarwal’s older brothers Girdhari Lal Bawri and Banwari Lal Bawri are chairman and joint managing director respectively.
In conclusion, the presentation said that the new strategy was intended to make NECSA “a world leader in nuclear radiation and related technologies and chemicals by 2030”. The strategy set targets for the next 12 months, the next five years and the next ten years.
Although the meeting time was limited (the main problem with parliamentary virtual meetings) it was quite apparent that by no means had NECSA close to explaining its full programme for the future, nor in fact was it ready to disclose this in detail.