Is the Russian-South African Nuclear Deal at the Heart of the Zuma’s Political Crisis?

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Allister Sparks made some interesting observations in BusinessDay last week:

Last week, all four of SA’s big banks closed Oakbay’s accounts, KPMG announced it would no longer audit the company’s books, and the family’s stock exchange sponsor abandoned them.

This was followed by Atul and Varun Gupta resigning their directorships of Oakbay, and Duduzane Zuma, the president’s son, from his nonexecutive chairmanship of Shiva Uranium, an Oakbay subsidiary.

 

There is something fishy going on here. The critical thing is that Oakbay, and particularly Shiva, a uranium mine in the North West, is central to Zuma’s eagerness to do a deal with Russia to build and operate a series of nuclear plants capable of providing Eskom with 9,600MW of electricity.

 

It is a deal that would make both the Guptas and the Zuma family a fortune, since Duduzane Zuma owns a sizeable slice of Shiva’s shares.

 

But it is a deal two finance ministers, Pravin Gordhan and Nhlanhla Nene, have blocked because they deemed it unaffordable.

Sparks goes on to allege that it was Nene’s resistance to the nuclear deal prompted his sacking, directly contributing to South Africa’s current political crisis.

It is interesting to note that a few hours before firing Nene on that critical night, Zuma had persuaded the Cabinet to approve the 9,600MW deal — in itself an illustration of how he has packed his administration with toadies. He must have been furious when Nene refused to okay it, thus obstructing his grand plan.

I have always thought that investing in nuclear power was the worst idea ever for South Africa’s power sector. There is not a single nuclear power plant in the world that has ever been cost effective. Adjusted for government incentives, research and development and waste disposal, nuclear is way more expensive than large-scale solar or wind power, not to speak of hydro, all of which have substantial potential in South Africa and the wider region.

Is now the time for Vesuvius of Zupta scandals to erupt? via Martin Plaut

Africa Progress Report – 2015 edition

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This year the report focusses on renewable energy. This is a pet topic of mine, so I’ll read it closely and advise you to do the same:

For Sub-Saharan Africa, 2015 is a turning point. The summits on sustainable development, financing and climate change are swinging the spotlight not only onto Africa’s needs to accelerate development and adapt to global warming, but also onto the region’s urgent energy crisis. Two in three Africans lack access to electricity.

But this crisis is also a moment of great opportunity, as we demonstrate in the Africa Progress Report 2015, Power People Planet: Seizing Africa’s Energy and Climate Opportunities. Demand for modern energy is set to surge, fuelled by economic growth, demographic change and urbanisation. As the costs of low-carbon energy fall, Africa could leapfrog into a new era of power generation. Utility reform, new technologies and new business models could be as transformative in energy as the mobile phone has been in telecommunications.

Source: Africa Progress Report 2015 – Africa Progress Panel

Brookings on the limits of the new “Nile Agreement”

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Nice recap of the issues at hand.

The Khartoum declaration, which was signed by the heads of state of the three countries—Abdel Fattah al-Sisi (Egypt), Omar al-Bashir (Sudan), and Halemariam Desalegn (Ethiopia), has been referred to  as a “Nile Agreement,” and one that helps resolve conflicts over the sharing of the waters of the Nile River. However, this view is misleading because the agreement, as far we know, only deals with the Blue Nile’s Grand Ethiopian Renaissance Dam project (GERDP) and does not tackle the broader, still contentious issues of sharing of the Nile River waters among all riparian states. Thus, the new agreement does leave the conflict over the equitable, fair, and reasonable allocation and utilization of the waters of the Nile River unresolved.

[…]

Over the years, especially as the populations of the other countries of the Nile River Basin have increased, and these countries have developed the capacity to more effectively harvest the waters of the Nile River for national development, disagreements have arisen over the fact that Egypt has insisted that the water rights it acquired through the 1929 and 1959 agreements (collectively referred to as the Nile Waters Agreements) be honored and that no construction project be undertaken on the Nile River or any of its tributaries without prior approval from Cairo. In fact, various Egyptian leaders have threatened to go to war to protect these so-called “acquired rights.” Upstream riparian states such as Kenya, Tanzania, Uganda, and Ethiopia, have argued that they are not bound by these agreements because they were never parties to them.

The spectre of a “water war” is regularly bandied around the international media, but the possibility of it happening are actually really slim, both for military and political reasons. That is not to say that the issue of the Nile is not taken dead seriously by countries like Egypt, Sudan and Ethiopia. With all of the riparian states still in their economic infancy, this will remain a hot button issue for some time to come.

Source: The limits of the new “Nile Agreement” | Brookings Institution

Ethiopia’s bid to become a renewable energy powerhouse

Ethiopia is set to become Africa’s main producer of renewable energy, betting that its vast hydroelectric, geothermal, solar and wind power generating potential will not only allow it to become energy self-sufficient, but also export substantial amounts of electricity to its power-hungry neighbours.

In many ways, renewable energy is one of Ethiopia’s most important strategic assets and essential for the government’s internal and regional politics. Ethiopia has only very limited traditional energy sources available and now imports most of its fuels via the seaport of Djibouti. This is expensive and creates political dependencies, which the regime despises.

It also limits economic development, with energy prices higher than they need to be. Especially the establishment of a sizeable manufacturing industry (with shoe production showing a lot of promise in this particular case) relies on the availability of cheap and reliable electricity. To that end, the Ethiopian government has grand plans:

Africa’s second most populous country – plagued by frequent blackouts – plans to boost generating capacity from 2,000 MW to 10,000 MW within the next three to five years. – Al Jazeera

Centrepiece of this strategy is the Renaissance Dam, a massive project on the Blue Nile close to the Sudanese border, which will provide a massive 6,000 MW once finished. In terms of electricity generating capacity, the Renaissance Dam will be the largest on the continent and rank among the top 15 worldwide. But this is by far not the end of the story:

Experts put Ethiopia’s hydropower potential at around 45,000 MW and geothermal at 5,000 MW, while its wind power potential is believed to be Africa’s third-largest behind Egypt and Morocco. – Al Jazeera

Recently, the Ethiopian government announced plans to develop a 1,000 MW geothermal plant in the country’s south and it just inaugurated the continent’s largest wind farm, with 84 turbines churning out 120 MW.

At home, these ambitious plans will increase service delivery to Ethiopian communities and create much-needed jobs. This is important for the government, because given its authoritarian style and allegations of ethnic monopolization of high offices and the army by members of the Tigray ethnic group, the government needs to provide results to limit discontent. Also, energy independence will remove possible leverage from other powers who may want to limit Ethiopia’s ambition as a regional and continental power.

Externally, transforming itself from an importer of fossil fuels to the region’s powerhouse could prove to be pivotal for the governments regional ambitions. Already, the promise of access to Ethiopian electricity has helped to forge an East African coalition against Egypt’s claim over the sole right to decide over the partition of the Nile’s water. The Ethiopian government knows that electricity (or the lack thereof) is one of the most potent political leverage in Africa. Providing substantial amounts of electricity to e.g. Kenya or the relatively young nation of South Sudan would make Ethiopia instantly a partner to be respected and potentially feared as well.

Overall, Ethiopia’s renewable energy strategy shows that this type of energy production has firmly entered the domain of power politics traditionally reserved for oil and gas. Governments, donors, NGO’s and the civil society around the world will need to take note.