Back to the coal age: South Africa has dumped the atom and reset its sights on fossil fuels to generate almost all of its energy for the next two decades.

Author:Nevin, Tom
Position:ENERGY
 
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The decision by the South African government to sideline its new-generation nuclear build has wiped clean the energy canvas painstakingly crafted by state utility Eskom of what the region's electricity landscape could have looked like in 20 years' time.

Now that the nuclear component has been painted over, at least 95% of the picture is a study in coal, for it is on fossil fuels that southern Africa will depend almost exclusively for its future electrical power requirements, due to double just two decades hence.

In hindsight, the nuclear course was strewn with obstacles. The fact that the atom was destined to shoulder at least half of the region's power-generating burden within 20 years set it on a collision course with organised labour, fearful of probable joblessness in the coal sector--an employer of over 300,000 people.

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In truth, the worst of nuclear's cost escalation came on South Africa in a rush. It followed a year of parlous politics that saw Thabo Mbeki dumped first as ANC party leader and then as state president in a party putsch and political implosion that split the venerable ruling party and completely rearranged the political landscape, knocking the stuffing out of the economy along the way.

Before South Africans could catch their breath, the global credit crunch set upon them with a vengeance. It gave the lie to the perception that the subcontinent would be spared the worst effects of the global financial tempest. Rating agencies suddenly decided South Africa was a bad risk, the bottom dropped out of the rand, and property owners couldn't give their homes away, so radical was the collapse in land values.

In this economic and political roughhouse, finding the wherewithal to fund $35bn in new electricity-generation, half of it nuclear, was a doubtful starter.

South Africa's credentials were good enough, however, for the World Bank to ante up $5bn to get the ball rolling, with the African Development Bank chipping in another $500m (See box). It helped when the government said it would underwrite $6bn of Eskom's new-build debt. It was the timing of the World Bank offer that made the financially savvy and politically aware sit up and take notice.

The World Bank insists that its money can only be used for renewable and clean power-generating facilities and, with South Africa's declared intention to have atom-powered energy for at least half of its planned 40,000MW in new-electricity production, the World Bank...

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