Study outlines current and future role for Koeberg

31 March 2017

South Africa's only nuclear power station has an important role to play in the country's economy now and in the future, a study by KPMG has found. Through investments and operations, economic activity supported or stimulated by Eskom's Koeberg plant is currently worth an estimated ZAR53.3 billion ($3.9 billion).

Koeberg (Image: Eskom)

The report, Economic impact assessment of Koeberg nuclear power station, was prepared for Eskom by KPMG Services (Pty) Ltd. Its authors measured the broader economic impact of Koeberg's investment spending and operations expenditure in the Western Cape region and the rest of South Africa. Using the so-called SAM methodology, they estimated how the plant's activities in one or more parts of the economy could affect other sectors, and looked at the distribution of industry investment and operational impact in the economy. This enabled the study to highlight the economic linkages within the economy and to show the direct, indirect and induced effects of a given expenditure.

The researchers used data from a variety of sources including capital investment values and generation capacity, operational expenditure and income, average electricity prices, national accounts, income and expenditure surveys, labour force surveys, and GDP statistical releases. The data was then analysed to yield information on Koeberg's contribution to economic growth, including direct, indirect and induced contributions to the economy; its contributions to public finances through tax revenue; its contribution to employment creation, through direct employment at the plant and indirect employment through the plant's suppliers; and the impact of the plant's investment and operations on alleviating poverty.

The study estimated Koeberg's current combined impact, through investment and operations, to be ZAR53.3 billion over the period 2012-13 to 2015-16 - ZAR30.2 billion in Western Cape and ZAR23.1 billion in the rest of South Africa. In that period, the plant sustained, on average, 1786 direct jobs and created nearly 35,000 indirect and induced jobs per year, earning a total estimated revenue of ZAR 16.4 billion for the government.

Investigation into official

Eskom's board yesterday announced it will undertake a "forensic and legal investigation" following the publication of allegations against its interim group chief executive, Matshela Koko. Legal firm Cliffe Dekker Hofmeyr will carry out the investigation, in respect of allegations concerning a potential conflict of interest relating to Koko's stepdaughter's shareholding in South Africa-based multinational engineering and project management consultancy and technical service provider Impulse International. South African Minister of Public Enterprises Lynne Brown, who is Eskom's shareholder representative, said yesterday that the investigation must be completed within 30 days.

In the longer term, every ZAR1 of new capital investment in the plant would potentially add ZAR1.20 to the South African economy and 36 cents to the national government revenue. Each ZAR1 million invested would imply four jobs - three in the Western Cape and one in the rest of South Africa. With 14% of the household income thus generated in the Western Cape and 17% of that generated in the rest of South Africa flowing to low-income households, this would also potentially contribute to poverty alleviation.

Through day-to-day operations, every ZAR1 spent on operational cost would potentially add ZAR1.47 to the South African economy and 45 cents to national government revenue, with four jobs for every ZAR1 million spent on operational costs. An estimated 12% of household income generated in the Western Cape, and 15% of the income generated in the rest of the country, would flow to low-income households.

Lullu Krugel, KPMG director and economist and the report's lead author, said the methodology used to conduct the review was based on internationally accepted standards using detailed information supplied by Eskom as well as official statistics. "Electricity is a key input for the majority products and processes in our economy, making Koeberg a direct contributor to economic growth, both in the Western Cape and South Africa," she said.

With a total capacity of 1860 MWe Koeberg's two pressurised water reactors can supply the equivalent of about 5.6% of South Africa's national energy needs, and currently about half of the energy demand of the Western Cape. South Africa's Integrated Resource Plan calls for the construction of 9600 MWe of new nuclear capacity - supplying 23% of the country's electricity - with the first reactor to come online by 2023. Eskom has been designated by the South African government to procure that new capacity.

"While we understand the significance of Koeberg within Eskom in terms of the generation of electricity, we needed a substantiated independent view on the added benefit of Koeberg's investment spending and daily operations," Eskom's interim group chief executive, Matshela Koko, said yesterday. "We therefore briefed KPMG to conduct a study on the impact of Africa's only nuclear power station on the socio-economic status of the province and South Africa."

South African Minister for Public Enterprises Lynne Brown said it was important to understand the impact of power stations on the economy and society. "They generate jobs, and they generate work for the construction industry, for maintenance teams, and for the producers or a multitude of goods and services. They stimulate - and sometimes carry almost single-handedly - entire local economies and communities," she said.

Researched and written
by World Nuclear News