IT WOULD appear that SA will be expanding its nuclear power generating capacity, based on reports that an intergovernmental agreement on a strategic partnership and co-operation in nuclear energy has been concluded with the Russian Federation.
According to media statements issued by the Department of Energy, a framework agreement has been signed and the procurement will go ahead even though the Treasury has yet to conduct an affordability assessment.
The department has stressed that the procurement process has not started.
The pros and cons of nuclear energy itself are not the subject matter of this article, nor is the number of years it will take to deliver the eight nuclear power stations in question. Those topics are for other authors in other articles.
What is of concern is the process that was followed in concluding the agreement with Mother Russia.
Unfortunately, and contrary to the foundational value of “openness”, no one has seen the agreement at this stage, so speculation is rife. At some stage, hopefully not in the distant future, we should have sight of the agreement. If section 231 of the constitution is considered, the agreement must either be tabled in Parliament or it must be approved by a resolution of both the National Assembly and the National Council of Provinces.
It would be reasonable to conclude that the agreement is more than a technical and administrative agreement and that, given the significant budgetary and financial implications involved, the agreement will require formal approval in Parliament.
The department has indicated that no information of relevance to the public will be withheld, although certain proprietary information may not be made publicly available. Time will tell what we are to be shown.
Aside from the contracting formalities, how should procurement be undertaken? Section 217 (1) of the constitution requires that when an organ of state contracts to acquire goods and services, it must do so in accordance with a system that is “… fair, equitable, transparent, competitive and cost-effective”. Section 217(2) permits the implementation of preferential procurement for categories of preference in allocating contracts and for the protection or advancement of people or categories of people disadvantaged by unfair discrimination. Section 217(3) requires that national legislation prescribe a framework within which preferential procurement must be implemented. The Preferential Procurement Policy Framework Act of 2000 was adopted for this purpose.
The act is a fairly straightforward piece of legislation, with the real detail being contained in the regulations.
The act applies to any organ of state in the course of procurement and provides that a preferential procurement policy must be determined and implemented within certain specified parameters.
It is interesting that section 3 permits the minister of finance, on request, to exempt an organ of state from any or all provisions of the act in three situations. First, in the interest of national security. Second, that the likely tenderers are international suppliers. And third, in the public interest.
Accordingly, is the public to be shut out of any details of the nuclear deal? The simple answer is no. Whatever approach the department may adopt, the fact is that section 217 applies. That is, the details of any deal cannot simply be buried.
However, even if exemption is sought by an organ of state, and granted by the minister, that exemption applies only to the act.
An organ of state cannot be exempted from the essential requirements of section 217(1) of the constitution.
This view is further supported in section 76 (4) (c) of the Public Finance Management Act, which provides that the Treasury may make regulations concerning “… the determination of a framework for an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost-effective”. Thus the regulations to the Public Finance Management Act include express provisions dealing with supply chain management. As would be expected, an institution (which includes any department and public entity) may be exempted from any provision of the act for a period of time.
According to the Department of Energy, a tender for nuclear power does not have to be an open tender; it could be closed or a government-to-government agreement.
Further, there will be a procurement process, but which process will be followed will depend on the models under consideration.
Apparently, so we are also told by the department, the procurement process decision will be made in the national interest.
This seems to be an indication that there will be a request for exemption from the Preferential Procurement Policy Framework Act. However, section 217 of the constitution is not an optional or occasional provision applicable when convenient. So, the fact that the department may, in terms of the act and the regulations, seek exemption from compliance, fails to deal with the real issue.
Section 217 is the benchmark and there is simply no way around it.
Accordingly, is the public to be shut out of any details of the nuclear deal?
The simple answer is no. Whatever approach the department may adopt, the fact is that section 217 applies. That is, the details of any deal cannot simply be buried.
The department is accountable. It may be necessary to extract the detail through the courts, but then so be it. All of the details need to be made public.
Why should we be concerned? The answer is simple: the “arms deal” experience. All of the allegations of backhand deals and corruption remain fresh in our minds, years after the event. The public cannot really be certain what happened — not yet anyway.
Maybe the Seriti commission will finally shed some light on exactly what happened, although by all accounts this appears to be unlikely. So we may never know. This is despite cogent evidence that all was not as we are led to believe it was. There is too much smoke around so there must be a fire somewhere. Who got what from whom remains to be determined. It is against this background that many are asking whether the nuclear deal is anything other than a replay of the arms deal. That is, did someone receive something to slip the nuclear deal through?
We know from the department at this time that some deal with Russia has been concluded in questionable circumstances. We do not know the terms of the deal. We need to know the costs and ensure that the prescripts of section 217 are strictly adhered to so as to avoid another procurement scandal. Of course, obfuscation being as it is, the chances of full, voluntary disclosure are limited. And already opposition parties are calling for disclosure. No doubt this is going to be another lengthy battle.
That is a start, but others need to ask the difficult questions and dig for the detail. This is not a difficult exercise and one that the department should be able to answer. Put the details of the agreement and all the costs in the public domain so that all concerned can evaluate and comment. At the same time, place the alternative power solutions in the public domain. Nuclear power has many benefits, but it also has a significant number of disadvantages. Have these all be considered? If so, volunteer the information.
It all comes down to this: assuming nuclear power is appropriate, has SA done the best deal available? Absent full disclosure we will never know. And if there is an attempt to bury the deal in an exemption, then the logical assumption is that the reason is that there is something to hide. Time will tell.