Nuclear Energy Corporation of South Africa and National Nuclear Regulator Annual Reports: briefings

Meeting report

MINERALS AND ENERGY PORTFOLIO COMMITTEE
4 November 2005
NUCLEAR ENERGY CORPORATION OF SOUTH AFRICA AND NATIONAL NUCLEAR REGULATOR ANNUAL REPORTS: BRIEFINGS

Chairperson: Mr E Mthethwa (ANC)

Documents handed out:
NECSA presentation
NECSA Annual Report [available shortly at www.necsa.co.za]
NNR presentation
NNR Annual Report [available shortly at www.nnr.co.za]
[please email [email protected]]

SUMMARY
The Nuclear Energy Corporation of South Africa and the National Nuclear Regulator presented their Annual Reports to the Committee. Detail was provided on the latest achievements of the respective entities and key programmes explained. Representatives provided detail on major products and services and attempts to transform the industry. Training programmes were in place but skills capacity at the local level had to be urgently addressed. Financial statements were provided including the audit opinion of the Auditor-General. Strategic objectives and major challenges were explained.

Members asked various questions including further detail on the learnership programmes, reasons for a moratorium on employment, the current state of the nuclear energy market, reasons for poor financial performance, plans to facilitate a sustainable industry, safety concerns within the general public over nuclear waste storage and potential terrorism threats, the sites of learnership programmes and a timeframe for the Pebble Bed Modular Reactor programme.

MINUTES
Nuclear Energy Corporation of South Africa (NECSA) presentation
Dr S De Waal (Interim CEO) presented detail on the current situation within NECSA and its latest achievements. The entity intended to have a 40% female staff complement by 2010. Products were sold to 50 countries and a staff retention strategy was in place to retain key skills. Public relations programmes would better inform the public of nuclear issues. Information on current nuclear programmes was provided. Major products and services were discussed including storage and disposal of nuclear waste and security of facilities. Regional co-operation agreements were in place and economic performance indicators were outlined. 70 learnerships were in operation promoting skills development. Contributing factors to current problems were explained. A turnaround plan was in place and government had provided additional funding for the 2005 / 2006 financial year. Further financial support from government would be forthcoming in future financial years.

Discussion
Ms N Mathibela (ANC) asked for a demographic breakdown of the learnership programme.

Prof I Mohamed (ANC) asked why a moratorium on employment was in place and why lasers had been removed from NECSA and placed with the Council for Scientific and Industrial Research (CSIR). He asked whether the lasers would be returned at some point. He asked whether the nuclear energy market was experiencing a turnaround given the strong opposition from certain groups. NECSA’s total liabilities exceeded its assets and an explanation was needed in this regard. Clarity was sought on incidences of non-compliance with the Companies Act. A continued operating loss remained a major concern. He asked whether talk of a turnaround was justified.

Mr L Greyling (ID) asked whether the overall intention of the entity was to become financially independent. The financial status of the organisation had to be explained. Continued state investment in the nuclear industry had to show returns at some point.

Mr S Louw (ANC) concurred that the entity could not continue to make a loss and blame the exchange rate for the weakness. He asked whether other companies were involved in the learnership programme. The filling of 183 vacancies could assist with the turnaround plan.

The Chairperson asked for more detail on the security concerns at Pelindaba.

Dr De Waal responded that no specific breakdown of the learnerships was available but additional information would be sent to Members. Limited funds and an increased budget deficit had resulted in the imposition of a moratorium on employment. The use of nuclear energy remained government policy and necessitated the continued existence of NECSA. Lasers had been supplied to the CSIR due to the discontinuation of a particular NECSA project and would not be returned. NECSA continued to lose staff to other entities and countries.

The need for alternative energy sources due to global warming concerns had resuscitated interest in nuclear energy. Fuel for the proposed Pebble Bed Modular Reactor (PBMR) was being developed by NECSA and could be marketed internationally in future. The provision of R56 million by the state would assist the turnaround plan and new funding in the following financial year would contribute further. The Nuclear Energy Act stipulated certain international responsibilities that NECSA had to execute on behalf of the state. The monitoring of nuclear material on an ongoing basis required state funding as profits could not be generated from such activity. The new Energy Act would encourage further commercialisation within the industry.

The calibration pads at Pelindaba had in the past been used in uranium surveys. Security measures could have been of a higher standard but the public had not been in danger at any stage. Earthlife Africa had made false statements about the level of danger. Very low risks were associated with naturally occurring uranium and the Regulator monitored such material. Certain improvements in security had been recommended and implemented.

Ms N Galeni (CFO) provided detail on the distinction between the corporation and the group. The corporation comprised NECSA and its divisions while the group consisted of various subsidiaries. Losses had occurred within the corporation but had been offset by profits within the group. The losses had been exacerbated by a drop in demand for NECSA’s products in the international market. The Auditor–General had qualified the Annual Financial Statement due to concerns over the status of the corporation and that its liabilities exceeded its assets. Increased liabilities had been caused by provision for the post-retirement medical aid scheme. In addition, a subsidiary had made an investment without the required Ministerial approval. The NECSA compliance office would have to hold more meetings in future. The 70 learnerships were provided by NECSA and were not part of the joint venture company at this stage.

Dr De Waal declared that NECSA could only be closed down by an Act of Parliament. Decontamination and decommissioning of nuclear facilities was an important task that relied on state financial support. R20 million had been provided to retain such skills. A Cabinet memorandum would address the problem of the excessive liabilities. Key management positions had to be filled to address skills shortages.

Mr E Lucas (IFP) stated that Members should receive important information such as the recent Pelindaba crisis from the relevant organisations rather than civil society groups. Disturbing reports in the media had increased public concerns. The financial situation should be addressed and no write-offs should occur.

Prof Mohamed asserted that continuous state funding was needed to maintain waste removal and other important tasks. The identification of new storage sites was not NECSA’s responsibility. He asked whether NECSA’s production of medical isotopes overlapped with those produced by Themba Labs.

Mr M Matlala (ANC) asked which provinces were involved in the learnership programme.

Ms Mathibela reiterated the need for further detail on the learnership profile.

Mr Greyling sought clarity on the future of the industry and whether sustainability could be achieved in the medium term. Continued state investment had to show returns at some point. Security measures had to be enhanced to avoid future "media" crises. He asked whether access to the medical reports of ex-employees had been resolved and why the medical aid liability had resulted in escalating costs.

Dr De Waal stated that specialised staff was required to address safety concerns. Currently, no safety concerns existed at Koeberg and Pelindaba. Spent nuclear fuel was not regarded as waste until a definite decision had been taken to dispose of it. Recycling of spent fuel was an option. He concurred that Members should hear of crises from the relevant entities rather than NGOs and the media.

NECSA was a member of the International Atomic Energy Agency (IAEA) and prescribed safety guidelines had to be followed. State funding was necessary to meet these obligations. Inherited strategic loans from the previous government had been paid off. A new policy for high-level waste would be developed at Cabinet level before the end of the year. The potential shutting down of facilities would not mean that NECSA could cease to exist. Certain liabilities would remain that NECSA would have to deal with such as the storage of spent fuel. No overlap existed with isotope producers such as Themba Labs but a co-operation agreement was in place. NECSA had appointed consultants to investigate illnesses amongst previous employees. Earthlife Africa was assisting people in pursuing claims against NECSA.

Ms Galeni added that 200 ex-employees had lodged complaints against NECSA but it was having difficulty in retrieving the relevant medical records. The post-retirement medical aid scheme would be re-evaluated every year and growth was linked to the Consumer Price Index. Training was provided to all provinces.

The Chairperson added that the disposal of nuclear waste was an important task given the international context of environmental concerns and global warming. The state was required to adhere to international protocols such as the Kyoto Protocol.

National Nuclear Regulator (NNR) presentation
Mr M Magugumela (CEO) explained the objectives of the NNR and provided detail on specific functions. The organisation's structure was highlighted and certain achievements outlined. Statistics on levels of exposure of workers at key installations were elucidated and results of research on public exposure proffered. The Regulator was required to monitor radioactive waste safety systems. Information was provided on international activities and progress in meeting human resource policy directives. Key strategic goals and challenges were outlined including organisational capacity and maintenance of the security mandate. An analysis of the financial situation was provided.

Discussion
Ms Mathibela asked for detail on the extent of a potential threat to South Africa from nuclear terrorism. Clarity was sought on the type of monitoring mechanism used to evaluate the health of employees after retrenchment or resignation.

Mr Greyling stated that the Regulator had done well to dramatically reduce the number of worker exposures to radiation but he asked whether the previously affected were monitored to assess possible future reaction. He asked whether the recent alteration in the PBMR design had affected the safety licence application.

Prof Mohamed asked whether Koeberg had reached the maximum safety limit for spent fuel storage. A terrorist attack on Koeberg would have serious implications for the greater Cape Town region. Contingency plans were required to deal with any eventualities.

Mr J Combrinck (ANC) sought clarity on the safety of metal waste containers and the contribution of nuclear power to the South African economy. Foreign investment was urgently needed to render the PBMR programme a success. He asked what attempts had been made to secure investment.

Mr Lucas asked why employees’ exposure to radiation had decreased in recent times. Constituencies should be informed of steps taken to secure nuclear facilities as much concern remained. A timeframe for the implementation of the PBMR programme had to be established and available expertise within South Africa should be utilised to support nuclear programmes.

Mr Molefe asked for a progress report on the training of monitors by the Regulator. He voiced concern over recent attempts by a Russian delegation to buy spent nuclear fuel from Koeberg. 30% of such fuel was bomb grade material. He asked what effect recent changes in the PBMR model could have on safety issues.

Mr Magugumela replied that metal waste containers were safe and were suitable for all categories of waste. The Regulator had to ensure that all related activity was licensed and promoted adequate training of monitors. Training occurred as part of bilateral commissions. The Regulator would study recent changes to the PBMR design model to ascertain compliance with strict license criteria. A skills shortage existed in South Africa that required urgent attention. Exposure to radiation would be monitored within the mining industry. A safety case was needed to secure the PBMR licence and no specific timeframe was in place. Low and medium level waste contained lower radioactivity and posed less danger in terms of potential terrorism threats. The Regulator would seek to use the available human resources within South Africa to promote the nuclear industry.

The Chairperson asked for a progress report on the utilisation of local skills and the training programme to acquire new skills. Certain challenges around the PBMR project remained that the Committee would monitor.

The meeting was adjourned.