The nuclear contract that rocked the Dutch

In the closing weeks of 2016, State-owned power utility Eskom announced that it would be moving ahead with the decision to invite bids to build six nuclear reactors, which are projected to add 9 600 MW of capacity to the national grid in the coming decades.

While Eskom’s insistence on pursuing a nuclear direction for its future energy mix generated much public debate last year, especially from environmental and tendering perspectives, it would do us well to remember that the awarding of the Koeberg contract in the fateful year of 1976 was mired in a substantially greater controversy. In fact, the announcement of the successful tender on May 31, 1976, sent shockwaves through the Western world and even threatened to destabilise one government.

The contract to construct South Africa’s first 1 800 MW nuclear power station was put out to tender in 1975. The turnkey contract, at the original estimated cost of R875-million, included the design, manufacture and delivery of two pressurised water reactors, the construction and setting to work of the entire station and the implementation of all auxillary and ancillary works.

However, given that all the apparent intellectual know-how and capability to manufacture nuclear power reactors was concentrated in the US and Europe, inevitably, the contracts had to be put out to international tender.

By May of the following year, three international consortia had presented their bids to the South African utility. The first and most experienced of the consortia consisted of US-based General Electric (GE), which would manufacture the reactor, as well as Brown Boveri, of Switzerland, and Rijn-Schelde-Verolme (RSV), of Holland, both of which would handle the engineering works. The second was an entirely French consortium consisting of Framatome, which would build the reactors, Alstom, which would manufacture the turbogenerators, and Spie Batignolles, which would handle the engineering works. The last contender was a West German-South African collaboration involving Kraftwerk Union and Murray & Roberts.

While the tendering process was claimed to be open and objective, until a week prior to the awarding of the contract, the US-Swiss-Dutch consortium was the clear favourites to win. Therefore, it came as a major shock, from commercial and political perspectives, when, on the evening of May 28, a Saturday, Eskom publicly announced that it had awarded the contract to the French consortium.

Eskom’s official explanation for the move was that it had passed over the frontrunners on the basis that the Dutch government had procrastinated too long in granting both credit guarantees and export permission to RSV to participate in the international venture. More importantly, it was argued that, because France had a “realistic foreign policy” towards South Africa, the utility had been able to negotiate the long-term fuel requirements for Koeberg’s nuclear reactors. (Interestingly, France was one of the few countries that abstained from a voluntary arms embargo against South Africa, first introduced by the United Nations Security Council in 1963.)

Given the rationale cited by Eskom for its decision, the GE-Brown Boveri-RSV consortium blamed the Dutch government for the failure of its bid.

The following day, Jan Stikker, head of the RSV consortium and son of a former Dutch Foreign Secretary, publicly described the loss of the contract as a national calamity, arguing that it had cost the country 5 000 work years. “I accuse the government of misjudgment, spite and misbehaviour. That some of them are even happy that the contract has been lost is the proof of their ineptitude,” Stikker raged to the Dutch press.

That frustration was not limited to the commercial sector. A severe political backlash erupted in the days following the announcement, which rocked what was essentially a very fragile five-party coalition government. At the forefront of the political row was Hans Wiegel, leader of the Liberal Party, who accused the Dutch government of “gross ineptitude” and argued that its procrastination had seriously damaged Holland’s reputation as a major trading nation. Such was his anger over the Eskom contract that Wiegel told the Dutch press: “For the good of our nation, I will do everything in my power to force [the government’s] resignation or have them sacked immediately.”

Given that Holland’s Cabinet was already deeply divided over issues of economic growth, wage policies and abortion law reform, losing the Koeberg contract really did shake government to its very core.

However, although the Dutch Cabinet did meet in a special session two days later to discuss Eskom’s announcement, no major political repercussions followed and the coalition government stayed intact until the general election the following year.

Perhaps what helped the political scandal blow over was the fact that, just two weeks after Eskom had awarded the Koeberg contract, South Africa erupted into unprecedented turmoil following the Soweto Uprising of 16 June. No doubt, at least some Hollanders would have then believed they had had a lucky escape not winning the contract.

Inevitably, given South Africa’s pariah status at the time, a political and social backlash was also experienced in France.

However, despite vehement protests by the Organisation of African Unity, which argued that South Africa was waging war against the rest of black Africa, French opposition parties and the Church in France, not to mention the violent unrest that followed in the wake of the Soweto Uprising, the French-based companies and government refused to renege on their commitment to provide the equipment and engineering services for South Africa’s first nuclear plant facility.