28 January 2016

Business Day (South Africa): Necsa now embroiled in nuclear waste row

Necsa now embroiled in nuclear waste row

by Carol Paton, 28 January 2016, 05:46

THE Nuclear Energy Corporation of SA (Necsa) is in a protracted battle with the auditor-general over who is responsible for the cost of decommissioning and decontaminating used nuclear material.

Necsa is arguing that it cannot be expected to take on the full burden.

Calculating the cost of decommissioning and funding it is a critical issue in the management of nuclear energy and one over which there is much contention internationally between operators, regulators and governments.

It will be a major issue for SA’s forthcoming nuclear build programme.

Decommissioning and decontamination costs are expected to be Necsa’s major expense in the future and should be reflected as a contingent liability on its balance sheet. These relate in large part to SA’s old weapons programme during apartheid days, but also to the current activities at Necsa.

The matter is one of several holding up the finalisation of Necsa’s annual financial statements for 2015, which are now four months overdue.

On Wednesday, the auditor-general’s office confirmed that it had received a letter from Necsa, saying it intended to dispute its audit opinion for the 2014-15 financial year. The office concluded its audit and issued a report to Necsa in November, but because the report had not yet been tabled in Parliament yet, it would not comment on its contents.

Necsa has two court cases against it — one to sanction CE Phumzile Tshelane and another to declare him and two remaining directors delinquent.

In court papers filed by former director Medi Mokuena, it is claimed that the auditor-general warned Necsa that it faced an adverse audit opinion for “limitation of scope” arising from the failure to provide necessary documents and information required for the audit.

The dispute over decommissioning and decontamination began several years ago.

The Department of Energy’s policy requires Necsa to have a decommissioning plan that is updated every five years, and on which a progress report is provided to the auditor-general every year.

In its report on the financial statements for 2013-14, the auditor-general cited Necsa’s failure accurately to estimate the liability of decommissioning and decontaminating of the apartheid-era nuclear programme as an emphasis of matter.

At the time, the auditor-general criticised the poor quality of Necsa’s report on the liability, saying it was noncompliant and incomplete. Several documents were missing and a critical step, that of involving an independent expert to verify the methodology, was not conducted.

A final report was not submitted to the board nor to the Cabinet as it should have been.

But Necsa head of corporate services Xolisa Mabongo said in an interview on Tuesday that the dispute with the auditor-general was not over the quality of reporting, but the sharing of responsibility for the liability.

He said engagements were continuing. “The issue here is simple. This is a liability that should be shared between Necsa and the government. We need to agree what is the responsibility of Necsa and what is the responsibility of the government. There is no agreement on that at the moment,” he said.

Determining the liability would be a huge undertaking, he said. “At the Pelindaba site, there are about 100 buildings. We are also talking of a period of about 50 years (in the past) and another 10 or 20 years into the future,” he said. Mr Mabongo also said that the auditor-general had previously agreed with the energy department that Necsa would have 36 months to determine a methodology around the liability, which would share responsibility. But last year, during engagements around the audit, “the AG (auditor-general) had suddenly changed its position”.

“We don’t know why the AG changed its position. In terms of Section 50 of the Nuclear Energy Act, the responsibility for the republic’s institutional nuclear obligations vests in the government. Necsa is only the implementing agent to discharge SA’s institutional nuclear obligations as delegated to the company,” he said.

While the current dispute related to previous activities by Necsa and the ongoing programmes at Pelindaba, it has a bearing on how this issue will be dealt with in the future. “This is not directly related to new activities, but certainly as part of the new build, we will need a perspective on that.”

International nuclear energy consultant and author of the World Nuclear Industry Status Report Mycle Schneider says that determining the size of the liability for decommissioning and decontamination is always contentious. “Calculating the potential costs of decommissioning differs from country to country.”In France, for instance, the range of estimates has been very large. Regulators have tended to take the lower estimates," he says.

A lower liability estimate protects the balance sheet of the operator while a higher one could place it in jeopardy with funders.