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Photo: Eskom
The only African nuclear power plant to date, in South Africa. Egypt is about to go nuclear, and Nigeria is one of many African countries that have signed agreements with Russia.
By Precious C. Akanonu
Nigeria and Russia have signed agreements on the establishment of four nuclear power plants and a center for nuclear science and technology in Nigeria. This article examines the prospects of building nuclear power plants in Nigeria by mid-2020, with the objective of objectively badessing its financial implications and feasibility.
Given Africa's low levels of access to energy, its supply shortfalls and its low contribution to climate change, it can be badumed that energy sources (clean or dirty) are not a matter of substitutes but of complement. Abundant energy that can be deployed at a lower cost is essential to meet the energy challenges of the region. Two sources of clean energy – nuclear and solar – have become a revolutionary source for strengthening energy supply worldwide. Solar energy, on the one hand, has become the cheapest and fastest growing source of electricity since 2011, due to the rise of silicon photovoltaic power. Made in China, which has reduced costs by a third. Nuclear energy, on the other hand, provides at least five times more electricity than solar energy.
However, occasional symbolic spin-offs around nuclear energy raise concerns about its adequacy, especially for third world countries. The merger of the three reactors of the Japanese Fukushima Daiichi nuclear power plant in 2011 after an earthquake and the resulting tsunami is one of two significant nuclear symbolic repercussions. Opponent activism, accidents and rising production costs have negatively affected the receptivity and growth of nuclear energy. As a result, many developed countries such as Germany, Belgium and the United States are cutting back or abandoning their plans for new nuclear reactors.
Despite the fallout, confidence in nuclear energy has steadily improved due to the constant development of security technologies, including new designs, such as Generation IV reactors, which take into account the "Fukushima Daiichi lesson". . Currently, 56 nuclear power plants are under construction worldwide compared to 449 in operation. In Africa, the only nuclear power plant in operation is in South Africa. It produces 1,860 MW of electricity, or 4% of the country's generating capacity. The country's energy and treasury minister, however, opposes plans to expand South Africa's nuclear capacity, because of its implications for public debt. However, more and more African countries such as Egypt, Ghana, Ethiopia, Uganda and Zambia are entering into agreements with Russia's State Atomic Energy Corporation (Rosatom) to develop nuclear technologies for peaceful purposes.
The Nigerian Atomic Energy Commission (NAEC) has also signed agreements with Rosatom, in 2017 and 2016, for the creation of four nuclear power plants and a center for nuclear science and technology, after a decade of development of the framework. The nuclear project, which is expected to cost about US $ 20 billion and produce 4,800 megawatts by 2035, will initially be operated by Rosatom before the transfer of responsibilities. (Figure 1 – see the original).
In the light of the development of nuclear energy, two key questions call for an objective badysis:
- What are the financial implications of nuclear energy for addressing the energy deficit in Nigeria?
Although the construction of nuclear energy is relatively more expensive, its maintenance cost is considered low; as it can work for about 60-80 years with very little maintenance. As such, it is considered more profitable and more profitable to provide long-term energy, compared to other sources, including gas and solar. However, the prospects of repaying loans used in the construction of nuclear power plants can be discouraging for African countries.
Although information on the Nigeria-Rosatom nuclear project is scarce, an badogy can be drawn from the Egypt-Rosatom agreement in which Rosatom granted a US $ 25 billion construction loan for the 4-nuclear project, 5 gigawatts. The loan should bear an annual interest of approximately 3% as of 10th at 13th year after the loan is granted for a period of 22-28 years. Upon repayment, the annual interest of 3% could have increased the debt by 40%.
The implication is that the country receiving the nuclear power plant may pay only very little in the beginning, but the fiscal space and the country's electricity consumers could face a huge burden when the Reimbursements will come into play. It is claimed that most African economies will never be able to meet these obligations, as the ability to recover funds from electricity sales is low. In addition, the nuclear sector has long experienced cost overruns due to delays in construction, suggesting that the recipient country of nuclear power plants is likely to face a higher than expected debt service cost. This raises fears that future debt may lead Russia to exert a disproportionate influence on the debtor country's long-term business.
The costs of the nuclear project should be a concern for Nigeria, given the cost recovery difficulties currently faced by power generation companies (Gencos), mainly due to low electricity tariffs. which has proved difficult to meet politically and structurally. In addition, the country's fiscal balances remain highly sensitive to oil price and output shocks, so affordability could be a major concern.
- To what extent is nuclear energy feasible and safe in an economy characterized by inefficiencies?
Nigeria has nuclear facilities for purposes other than electricity generation. The multi-billion naira gamma irradiation facility within the National Nuclear Technology Center (NTC) is a typical example. However, existing nuclear facilities are barely functioning due to several challenges, including government financial constraints, lack of priority in energy programs, corruption and cynicism about the risks of nuclear waste and radiation for health and the environment.
Despite the difficulties, the nuclear power plant project in Nigeria has been deemed feasible and secure by several stakeholders. The positive evaluation reports of the Interministerial Committee on the Feasibility of the Deployment of Nuclear Power for Electricity Generation in the Country led to the activation of the NAEC in 2006. In addition, Reports from the International Atomic Energy Agency (IAEA) as a result of the Integrated Nuclear Infrastructure Review (INIR) in Nigeria, has been rather optimistic. Several missions conducted between 2015 and 2018 concluded that Nigeria 's emergency preparedness and response framework complied with IAEA safety standards. The review team often sees significant progress in strengthening the infrastructure of new research reactors. In addition, much work has been done to establish an appropriate legal framework and to train NTC specialists.
Although the standards seem high at the beginning, maintenance can be a problem especially after the transfer of the project, due to historical and current inefficiencies. For example, Nigeria's existing thermal power plants are operating below capacity due to poor maintenance and frequent disruptions in fuel flow (gas). In addition, the current installed thermal capacity of the country is 12,500 megawatts, but in practice it represents only 3,200 megawatts. Such inefficiencies add to the potential costs of the nuclear project.
Go from the front: For nuclear power plants to be effectively operated in Nigeria, the following considerations need to be incorporated into the regulatory and operational framework of the project. These included:
- An informed, evidence-based arrangement for cost recovery and repayment of the loan must be concluded.
- Practical enforcement measures, with sanctions, must be put in place to ensure compliance with the future tariff schedule / tariff for nuclear electricity. This is important to guarantee repayment of the loan.
- A well-designed plan for securing the financial and human resources needed for the maintenance of nuclear facilities and safeguarding uranium for long-term supply to nuclear power plants should be developed.
- Legal clauses that would ensure the commitment of successive government regimes to the plan should be incorporated into the framework.
- Any nuclear power project in Nigeria, even decades after construction, must be subject to ongoing public awareness of the health and environmental consequences of nuclear energy and the need to maintain security measures at the highest level.
- Durable measures to ensure the safety of workers and residents of nuclear sites must be guaranteed and must never be compromised.
Precious C. Akanonu is a research fellow at the Center for the Study of Economies in Africa (CSEA).
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