The nuclear judgment clarified, a telling blow to Government
This judgment, which is regarded as a significant victory for civil society, began in October 2015 when the Southern African Faith Communities’ Environment Institute (SAFCEI) and Earthlife Africa (ELA) raised a legal challenge against the Department of Energy’s conduct and plans to introduce a new nuclear build program into the energy mix of South Africa.
But what does the judgment mean and how can the average South African interpret the findings therein? The Organisation Undoing Tax Abuse (OUTA) has taken time to read and assess the judgment and has summarised the salient points and findings below:
The Applicants (Earthlife Africa JHB and SAFCEI) sought a declaratory order as to the lawfulness of decisions taken by the Minister of Energy, in terms of Section 34(1) of the Electricity Regulation Act 4 of 2006 in 2013 (“the First Determination”) and 2016 (“the Second Determination”) respectively – effectively putting a halt to the implementation of nuclear power. Furthermore, the Applicants approached the court to have a series of peculiar IGA’s set aside – which was subsequently granted.
Section 34(1) gives the minister authority to, amongst other things, determine from which types of energy sources electricity may be produced, the quantity thereof and authority to determine who may sell and purchase such electricity. Should the minister exercise this function, they must do so in consultation with the National Energy Regulator of South Africa (NERSA). When the minister acted in terms of this provision and concurrently consulted with NERSA as prescribed, she took an administrative action as described in the Promotion of Administrative Justice Act 3 of 2000.
This decision ought to be made in line with the country’s governing energy policies, – inter alia, the Integrated Resource Plan (IRP) and the Integrated Energy Plan (IEP) claiming that nuclear energy is a viable option, (which OUTA submits, is flawed in its entirety). Furthermore, the First Determination provided the authorisation for the initiation of the procurement for nuclear energy.
The procedures relating the RFI (Request for Information) and RFP (Request for Proposals) aim to give effect to section 34(1), in that they provide the platform for procurement which “must be fair, equitable, transparent, competitive and cost effective”. The court in this instance declared both the First (2013) and Second Determinations (2016) unlawful and unconstitutional – implying all action taken in pursuit thereof (Eskom’s procurement of new generation capacity), is also set aside.
The court’s predominant reason for setting aside the Determinations is that NERSA’s concurrence with the Minister’s decision was based on an error of law and it had failed to prove this concurrence was made without any undue influence. In other words, NERSA’s concurrence was not based on it applying its mind and making an independent decision based on the facts before it, but rather concurred based on the notion that it would have acted in bad faith, had they not concurred, which the court deemed to be a material error of law and sufficient grounds for judicial review in terms of PAJA.
In turn, this means ALL current nuclear-related dealings – RFI’s and RFP’s, pertaining to new generation capacity are set aside, and that prospective tender contracts awarded based on the previous section 34(1) determination, would be void and unenforceable.
Should the government wish to pursue its nuclear ambitions, the consequences of this case dictate that the following would have to happen:
New Inter-Government agreements (IGA) between South Africa and the supplying countries – properly tabled and debated in parliament and not merely noted as was previously the case;
Renewed valid IEP / IRP process, based on accurate relevant and well-informed information, combined with meaningful public participation;
Adjustment of the outcome of the IEP / IRP process, also considering the impact of National Energy Efficiency Strategy (NEES);
Revisiting of the Environmental Impact Assessments (EIA) and public participations by person affected by the designated nuclear sites;
Approval of the nuclear procurement process by treasury.
Furthermore, it is important to note that this judgment has a significant impact on Eskom’s recent application to Treasury for exemption from the Public Finance Management Act (PFMA) Act 1 of 1999, in regard to its plans to fast track the new nuclear build program.
In essence, this judgment has kicked government’s current plans to rush the nuclear deal into touch, including Eskom’s recently announced plans to seek RFP’s from potential nuclear suppliers in the coming months.
The judgment is extremely compelling and encouraging for society, in that it points to the need for Government to act rationally and adhere to the Electricity Regulation Act’s administrative process. This requires amongst other things, a credible IRP for the nation’s electricity requirements, in order to make such determinations for new energy build programs.
“It is clear to OUTA that failing the good work of the legal challenge brought against the Department of Energy by civil action organisations such as SAFCEI and ELA, the authorities would have got away with introducing the most expensive and elaborate capital expenditure project, one which would have crippled this country going forward,” says Ted Blom, OUTA’s Energy Portfolio Director. “It is for this reason OUTA assisted SAFCEI with resources to ensure the public awareness process on this matter was heightened.”
OUTA is fully aware Government may seek to appeal this ruling and as such, will continue to collaborate with SAFCEI and others, as well as build on its past work within its energy portfolio, to hold Government accountable and ensure all actions have the best interests of the people of South Africa at the core of their decisions.
“We are tired of Government’s approach that runs roughshod over the need for meaningful public engagement and due process,” says Wayne Duvenage, OUTA’s Chairperson. “The pro-nuclear lobbyists and Government officials arrogantly ignore their need to be accountable and to provide detailed explanations to the public on why we need new nuclear plants, or what the true costs of these will be.”