The article originally appeared in New Frame on 11 March 2021. It can be viewed here.
In 1998, a Department of Energy White Paper stated that a radioactive waste disposal policy would be developed “in the near future”. Three years later the same department told Parliament that despite the “urgent” need to develop a policy, it was still working on it. It was another four years before the Department of Mineral Resources and Energy published the Radioactive Waste Management Policy and Strategy for the Republic of South Africa in 2005.
This strategy was guided by several important principles. First, it confirmed that the polluter must pay. That is, whichever entity creates radioactive waste, for example Eskom because of Koeberg, must bear the financial burden of handling, storing and ultimately disposing of it. It also stated that all decisions involving radioactive waste would be made in an open and transparent manner, recognising that radioactive waste could “impose undue burdens on future generations” if not managed properly.
To realise these objectives, the strategy stated that within five years a National Radioactive Waste Management Agency would be established to undertake the entire “management of radioactive waste disposal on a national basis”, including, among other things, the management of Vaalputs and the creation of a central interim storage facility (CISF). To fund this agency, the strategy stated that, also within five years, a radioactive waste management fund would be created to implement the polluter-pays principle enshrined in the strategy. This fund, which would be made up of contributions from polluters and would be independently managed by the National Treasury, would provide all the resources required for the effective functioning of the National Radioactive Waste Management Agency. This was a policy clearly directed at ensuring the financial burden of managing nuclear waste did not fall on the public purse.
Two years later, in 2007, Rob Adam, the then chief executive of the Nuclear Energy Corporation of South Africa (NECSA), the institution then responsible for nuclear waste, told Parliament the National Radioactive Waste Management Agency would be “fully functional” by 2010. He also stated that a CISF for high-level waste – the most dangerous form of waste radioactive for thousands of years – would be operating by 2010. In early 2009, Parliament passed the National Radioactive Waste Disposal Institute Act (2008), which provided for the establishment of the now renamed National Radioactive Waste Disposal Institute (NRWDI). Despite the obvious urgency and seriousness of the situation as regards high-level waste, the creation and putting into action of the NRWDI has become yet another abject lesson in how not to manage a state-owned enterprise.
Where did the money go?
The first warning signs came in 2012 when the portfolio committee for the Department of Mineral Resources and Energy asked the department if the institute had been established. The department replied that despite being “extremely important” it had not been established because of a lack of funds, but it assured the committees that the institute would be operational by 2013. In its annual report for 2012/13 the Department of Mineral Resources and Energy stated that the institute had not been established as there were no funds made available for it.
This situation changed in 2013/14 when the NRWDI received R19.8 million from the Department of Mineral Resources and Energy. The institute was formally launched in March 2014 after the then energy minister Dikobe Ben Martins attended its first board meeting. At the end of that financial year, however, the NRWDI had still not been established. Even though the energy minister is accountable for this failure, the department washed its hands of it, stating that it was “the responsibility of the NRWDI”.
In July 2014, the then deputy minister for energy, Thembisile Majola, stated the NRWDI board was “currently working with the department to ensure the operationalisation of the institute”. In October, however, the portfolio committee for energy noted that the institute was still not operating and must start doing so “as soon as possible”.
In February 2015, the new energy minister, Tina Joemat-Pettersson, announced an investigation was to take place into allegations of serious mismanagement by the board at the NRWDI, which was, she claimed, hindering the mandate of the institution. The investigation was due to report to the minister by the end of March 2015. No findings of this investigation, if it ever took place, where published at the time, or subsequently. In October 2015, the Department of Mineral Resources and Energy noted in its annual report that the NRWDI was still not operational.
Reporting to the portfolio committee for energy, in October 2016, the department confirmed that the institute was not operational as only a board existed. At the same meeting, Margaret Seoka, senior manager from the Auditor-General’s (AG) office, indicated that the NRWDI had not submitted any strategic plans, budgets plans or annual financial statements for 2014/15 or 2015/16. Seoka noted that the institute “struggled with compliance”. What the institute did not do, however, was struggle to spend its budget. By December 2016, it had depleted all of the R19.8 million that it had received in 2013/14, despite not being functional and for all intents and purposes, doing almost nothing up to the end of 2016. So where did the money go?
The answer to this question was revealed in the institute’s first annual report, for the 2016/17 financial year. This report contains three financial and performance audits from the AG for the years 2014/15, 2015/16 and 2016/17.
These reports show that at least R8.7 million worth of irregular expenditure took place during these three years – R830 000 in 2014/15, R4.5 million in 2015/16 and R3.4 million in 2016/17. Irregular expenditure refers to expenditure that takes place in contravention of relevant legislation, such as the Public Finance Management Act. This irregular expenditure included, but was not limited to, R3.4 million spent on consultants in 2015/16, R2.2 million on overseas travel between 2015 and 2017, and R826 000 spent in 2016 on a seven-month rental of a large office space in Midrand for the NRWDI, despite the institute only having 24 staff members, mostly recruited in the second half of 2016.
While not being listed by the AG as irregular, it is also worth noting that the institute’s board received R1.8 million in emoluments (benefits such as expenses, salary compensation, fees, etc) in 2014/15, R1.7 million in 2015/16 and R842 000 in 2016/17. This compares to the emoluments the NRWDI board has received in the past two years of R324 000 in 2017/18 and R202 000 in 2018/19.
In a scathing account of the years in question, the AG noted “effective leadership based on a culture of honesty, ethical business practices and good governance, protecting and enhancing the best interests of the entity was not provided”. The Department of Mineral Resources and Energy stated that “disciplinary steps”, possibly criminal, would be taken after another investigation. No information has been made public about any investigation or any action taken.
What appears to have happened is that the board responsible for this manifest mismanagement was simply allowed to resign. The institute’s annual report for 2016/17 notes that the previous board chair and acting chief executive and two board members left in December 2016, while five new board members were appointed in February 2017. In November 2017, the new board chairperson told the portfolio committee for energy that when the new board took over in early 2017 the institute “was not a going concern”. He also revealed that by that time, the institute had run out of the money and an additional R10 million had to be granted by the department so the institute “could honour its financial obligations” (shorthand for “pay its bills”).
Since the appointment of the new board, things have improved at the NRWDI. It now has a staff complement of 31 and has received two clean audits in a row. The funding situation has also improved, with the institute receiving R30 million in 2017/18, R47 million in 2018/19, R49 million in 2019/20 and R51 million this year. Nonetheless, serious concerns remain.
Institute spends to no effect
Over the next three years, R99.4 million of its allocation will come from funds meant for the Integrated National Electrification Programme. This means funds have been diverted from one of the Department of Mineral Resources and Energy’s few successful programmes. In addition, concerns remain about what the NRWDI is actually doing with its funds. In May 2017, the department informed the portfolio committee on energy that the institute required additional funds to “become operational”. In June 2019, the manager of the spent-fuel storage project at Eskom admitted that the NRWDI was “not fully functional at present”.
A reading of the institute’s annual reports and strategic plans since 2016 confirms this. Neither of its primary objectives since its aborted establishment in 2014 – to take over the management of Vaalputs and establish a CISF – have yet been achieved. The institute’s latest 2020–2025 plan indicates that it wanted to complete the transfer of Vaalputs by 2020, and the construction of a CISF by 2025. The National Nuclear Regulator is currently considering the NRWDI’s licence application for Vaalputs, while no meaningful progress has been made on the CISF. The plan states that “the NRWDI currently faces challenges with regards to the establishment of waste disposal and related infrastructure for the long-term management, including disposal of radioactive waste”. It acknowledges a shortage of “suitably qualified and experienced persons” and “a lack of project funding” for a CISF. What this is essentially saying, is that the institute cannot meet its stated mandate.
Predictably, the 2025 target for the completion of the CISF has already been abandoned. The current energy and mineral resources minister, Gwede Mantashe, announced in July last year that the CISF was now expected to be functional by 2030. This seems highly unlikely given that the NRWDI lacks both the resources and staff to deliver a storage facility.
That the NRWDI lacks the necessary funding to undertake a multimillion rand project is because the government has failed to make the polluter pay as promised in the 2005 policy document. Despite it stating that a radioactive waste management fund would be created by 2010, no such fund exists. Without this fund, the institute cannot hope to function properly.
After a country inspection of South Africa by the International Atomic Energy Agency’s (IAEA) Department of Safety and Security in 2016, the IAEA noted with concern that a funding stream for the NRWDI had not been established. It strongly recommended that “the Government should implement the national Radioactive Waste Management Fund”. Despite this, another four years passed before the department finally announced in September last year that a Draft Radioactive Waste Management Fund Bill had finally been submitted to Cabinet for consideration. How long this will take before it is approved and becomes law is unknown, but given that it still needs to go through numerous stages, including public consultation, it will likely be years rather than months.
The institute cannot fulfil its mandate without the polluter paying. Its budget allocations over the next two years, R54 million in 2021/22 and R57 million in 2022/23, are totally inadequate in the absence of fees from polluters like Eskom and NECSA. This funding crisis for the NRDWI reveals a lack of political will to enforce the polluter-pays principle. The government’s unwillingness to entrench this principle in South Africa was demonstrated last year with the introduction of the carbon tax. In May 2020, the report of the World Bank’s High-Level Commission on Carbon Prices stated that a carbon tax of at least $40 (about R600) per ton of carbon dioxide was needed by 2020 to meet even the most modest targets of the Paris Climate Agreement. Despite this, the government set the South African rate at R120 per ton which, after the various tax breaks and exemptions being offered, drops to as little as R6 per ton.