December 13, 2016 / 4:34 PM / 8 months ago

UPDATE 2-Power utility Eskom to invite bids to expand South Africa's nuclear capacity

* Court rules in favour of Eskom tender process

* Eskom wants to start nuclear procurement soon

* Critics say nuclear programme too costly (Updates with court ruling, background)

By Wendell Roelf

CAPE TOWN, Dec 13 (Reuters) - South African power utility Eskom will this week invite bids to build nuclear reactors in the government's push to increase nuclear capacity, its acting CEO said on Tuesday, despite the concerns of campaign groups and economists.

South Africa, which has the continent's only nuclear power station, has earmarked nuclear expansion as the centrepiece of a plan to increase power generation to ease the country's reliance on an ageing fleet of coal-fired plants and has asked Eskom to procure an additional 9,600 megawatts (MW) of capacity.

Russia's Rosatom is expected to be among the bidders, along with companies from South Korea, France, the United States and China.

However, the programme is being opposed by environmental and clean-energy groups, while economists have said that South Africa cannot afford to build new nuclear plants.

Eskom's Matshela Koko, speaking to reporters in Cape Town on the sidelines of a court case in which environmental and clean-energy campaigners are challenging the government's decision, said the energy regulator's approval of the plan on Dec. 8 meant the company could proceed with the tender.

In reaction to Koko's comments, lawyers for environmentalists later on Tuesday requested the judge in the hearing to halt the tender process. High Court judge Lee Bozalek, however, ruled it could go ahead, adding that a final decision on the plan was a long way off as the tender process would be lengthy.

"The die is not cast, there is still a long road ahead," Bozalek said.

Environmental groups say parliament was not consulted on the programme and that it has been shrouded in secrecy.

"This is a self-evident case when the legalities must be determined first ... It is hard to exaggerate the risks to the country," David Unterhalter, a lawyer representing environmental groups, said during Tuesday's court proceedings.

The main court hearing on the challenge to the government's nuclear plan will not take place until early next year.

Koko took the helm at Eskom at the start of December following the resignation of Brian Molefe, who resigned after being implicated in allegations of influence peddling in a report by an anti-graft watchdog. Molefe has denied any wrongdoing.

A draft blueprint of the government's Integrated Resource Plan, published last month, said it now aimed to increase nuclear power output by just 1,359 megawatts (MW) by 2037, compared with a previous target of adding 9,600 MW of new nuclear power by 2030.

Economists say South Africa cannot afford the nuclear plants, estimated to cost more than 1 trillion rand.

"Risks to Eskom's balance sheet and indirectly to the sovereign are significant - the total cost may be around $50 billion depending on technology choice," Nomura analyst Peter Attard Montalto said in a note on Tuesday.

Opposition parties are also worried the government could make decisions on nuclear procurement without the necessary public scrutiny. (Editing by Stella Mapenzauswa and Susan Fenton)

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