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By John Helmer in Moscow

RUSSIAN government officials have revealed that relations with SA are in crisis, after cancellation by Pretoria of the two largest commercial agreements ever negotiated between the countries.

The crisis directly affects SA government plans for nuclear energy to increase Eskom’s power supply, and for SA military and civilian satellite communications.

The breakdown in relations triggered an urgent mission to Moscow two weeks ago by Foreign Affairs Minister Nkosazana Dlamini-Zuma. But her failure to repair the damage has led to recriminations in Pretoria, and an order to South African ambassador Bheki Langa and other South African officials to cover up what has happened.

A multibillion-rand contract to build nuclear reactors for Eskom — one of the largest government contracts contemplated by SA — was to have been open for bidding by the Russian reactor builder, Atomstroyexport (ASE), according to agreements reached during President Vladimir Putin’s visit to SA in 2006, and reiterated by officials of the two governments in the middle of last year .

Eskom said the licensing process for the five nuclear power stations, which would produce up to 20000MW of electricity, would start this year.

Mineral and e nergy a ffairs d epartment officials, including chief director of nuclear affairs Tseliso Maqubela, confirmed to their Russian counterparts several times during 2006 and last year that they intended to invite ASE to visit SA; brief Eskom on their reactor capabilities and the latest Russian technology; and receive details of the reactor sites and specifications Eskom was considering for Northern, Western and Eastern Cape.

ASE recently built a state of the art reactor in Tianwan in China . It is also constructing the Kundakulam nuclear power plant in India and the Bushehr reactor in Iran. Eskom operates SA’s only nuclear plant Koeberg, built by Areva of France . Russia supplies the nuclear fuel for Koeberg.

SA also operates an experimental pebble bed modular reactor, using technology supplied by the US firm Westinghouse .

Last year at informal talks, Russia promised to provide nuclear enrichment technology to Eskom if ASE was selected to build the new reactors.

The minerals and energy affairs department told Russian officials last year that they wanted to include ASE and other Russian agencies involved in uranium mining and processing in “bilateral co-operation with those states that have similar nuclear programmes or which have nuclear programmes from which SA requires technology transfer”.

A spokesperson for the Russian nuclear fuel exporter, Tenex, said: “currently we have an active contract for the reactor in Koeberg. We supply enriched uranium from which they have made the reactor fuel by themselves, as this reactor is not a Russian construction and we can’t make fuel for it.”

O ther companies bidding for the R720bn nuclear power station contract, French company Areva and Westinghouse and its Asian affiliate, Westinghouse-Toshiba, have reportedly told Eskom that they would not provide access to their nuclear fuel enrichment technology.

Last November, Areva claimed it had received signs from the South African government that it was the preferred bidder. According to an intelligence report, Eskom sent a request for proposals to Areva and Westinghouse. The report claimed that French P resident Nicolas Sarkozy “was following developments closely” and was expected to discuss Areva’s bid with President Thabo Mbeki this week.

Eskom confirmed that it sent requests for construction bids to Areva and Westinghouse. Its spokesman, Tony Stott, said the Russians were excluded from the bidding between 2005 and the end of 2006 , when Eskom undertook a pre-feasibility study of conventional nuclear power generating technologies to evaluate their potential for deployment .

At the time, nine different technology options from six countries — including Russia — were short-listed and evaluated against specific criteria. These included the type of technology; the technical specifications of the technology; experience with exporting the technology; experience with technology transfer; the flexibility of nuclear fuel design and supply; and the compatibility of engineering, design codes and standards with those familiar to the South African nuclear industry and regulatory authorities.

“Only two technologies, the AP1000 of Westinghouse and the EPR of Areva, fully met the criteria and hence the request for proposals was issued to these two companies,” Stott said.

But Russian officials said that the invitations to visit SA and prepare for a bid came after 2006. Since then, there had been no word from Eskom or the South African government explaining why the agreement to include the Russians in the reactor bidding had been scrapped.

ASE’s said that it was waiting on communication from Pretoria. “According to international practice,” a company spokesperson said, “before initiation of tender, this should be announced. A fter that, companies can purchase technical documentation. If and when this is done by the SA side, we will participate in the tender.”

Last week, Dlamini-Zuma claimed in a communiqué that in her talks with the Russian government in Moscow on February 12-13, “the two sides welcomed the establishment of the joint coordinating committee for co-operation in the peaceful use of nuclear energy with a view to ensuring a proper and structured implementation of the agreement signed during the visit of Russian President Vladimir Putin to SA in September 2006″.

An ASE source said Maqubela issued the invitation to ASE to participate in the Eskom reactor process in June last year , when he and Dlamini-Zuma were at a session of the inter-governmental trade and economic commission (ITEC) in Sochi on the Black Sea.

Last week, the foreign affairs department acting deputy director-general for the Americas and Europe, ambassador Gert Grobler, said the issue of ASE’s bid to build the reactors “is being currently discussed on a government to government level”.

He said Dlamini-Zuma’s latest Moscow talks were “amicable and constructive; so much so that this process … has picked up so much momentum that we deemed it necessary to have the next round of ITEC as early as May this year”.

Vadim Zaitsev of Rosafroexpertiza, a leading Moscow think tank on Africa, said the talks two weeks ago focused on the nuclear issue — “atomic energy, the ban of ASE from the tender, together with Tenex supply contracts and other things ”. Russian sources said no agreement was reached with the South Africans on this issue.

Another major source of friction between the South African and Russian governments is the breakdown of agreements for the Russian space agency Roskosmos to launch South African satellites — the civilian Sumbandila satellite and a South African military communications and reconnaissance satellite.

Anatoly Perminov, head of the federal space agency Roskosmos, said South African officials cancelled the agreement.

Perminov told the Itar-Tass agency on January 25: “Unfortunately, the Russian d efence m inistry refused to launch this satellite, as the South African d efence m inistry for its turn refused to use our satellite.

“The two countries’ defence ministries decided to go their own way, and we did not interfere in these affairs. Today there is no opportunity for the launch.”

Dlamini-Zuma’s communiqué on February 13 said that “the two sides considered enhanced SA /Russia co-operation in the sphere of space research and the finalisation of a m emorandum of u nderstanding between SA and Russia in this regard ”.

Sources investigating the cancellation of the Russian reactor and satellite agreements said this followed secret lobbying by the US, France and other western governments to have Mbeki put a stop to Russian involvement.

Zaitsev said he had been told the dispute over the satellites started when “the conditions which were signed with the South Africans were changed. SA didn’t accept the new conditions and cancelled the contract.”

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