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Cablegate: Westinghouse Pushes Its Quest for New Nuclear

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RR RUEHWEB

DE RUEHSA #3078/01 2431552
ZNR UUUUU ZZH
R 311552Z AUG 07
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 1496
INFO RUEHBJ/AMEMBASSY BEIJING 0652
RUEHLO/AMEMBASSY LONDON 1282
RUEHMO/AMEMBASSY MOSCOW 0660
RUEHFR/AMEMBASSY PARIS 1150
RUEHUL/AMEMBASSY SEOUL 0220
RUEHKO/AMEMBASSY TOKYO 0499
RUEHTN/AMCONSUL CAPE TOWN 4778
RUCPDC/DEPT OF COMMERCE WASHDC
RUEHUNV/USMISSION UNVIE VIENNA 0211
RHEBAAA/DEPT OF ENERGY WASHINGTON DC

UNCLAS PRETORIA 003078

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR AF/S, EEB/ESC, ISN
DOE FOR SPERL, PERSON, BIENAWSKI, AND PARKER

E.O. 12958: N/A
TAGS: ENRG BEXP TRGY PREL IAEA SF
SUBJECT: WESTINGHOUSE PUSHES ITS QUEST FOR NEW NUCLEAR
BUILD IN SOUTH AFRICA

REF: A. PRETORIA 3061

B. PRETORIA 3012
C. PRETORIA 2494
D. PRETORIA 317

1. (SBU) SUMMARY: Westinghouse believes it is
well-positioned to win South Africa's contract for the
construction of conventional nuclear reactors based on its
advantages in price, safety, modular plant design, and
commitment to technology transfer and localization; i.e.,
insuring benefits accrue to South African suppliers and
engineering service companies. Nevertheless, competition
with French Areva is likely to be vigorous. End Summary.

2. (SBU) Westinghouse of the U.S. (owned by Toshiba of
Japan) is expected to compete with Areva of France for
construction of conventional nuclear reactors to supplement
South Africa's sole existing reactor facility in Koeberg near
Cape Town (Reftels). The SAG and state electricity company
ESKOM are expected to choose a winning supplier by March 2008
to provide approximately 3 GW of nuclear power in a contract
worth up to $6 billion. The USG has approved Westinghouse's
application for advocacy based on the provision of thousands
of jobs in the US. The SAG has announced its intent to build
up to 20 GW of nuclear power reactors over the long-term,
thus making the initial contract all the more important.

3. (SBU) In a meeting on August 23, Westinghouse local
General Manager Rita Bowser explained to Minerals and Energy
Officer and Specialist the company's plan for pursuing the
contract. Bowser described the SAG's newly announced draft
nuclear energy policy as almost tailor-made to support
Westinghouse's bid (Reftel B). She cited the clear
separation of SAG supply of new nuclear power plants
(assigned to ESKOM) from the possible pursuit of nuclear
enrichment (assigned to NECSA) and the specification of
Pressurized Water Reactor (PWR) for the reactor(s). Bowser
identified the following advantages for Westinghouse:

-Advantage on price.
-Excellence and track record on nuclear plant safety.
-Modular plant design (three Westinghouse 1.1 GW plants could
meet the SAG requirement, versus two Areva 1.7 GW plants).
-Commitment to technology transfer and localization to South
Africa.

Bowser welcomed Post's advice that Westinghouse stress
localization as a bidding factor or requirement in its
comment on the SAG's draft nuclear energy policy.
Westinghouse has already demonstrated its commitment to
localization by organizing supplier workshops and sending SAG
officials for training in the U.S. Westinghouse's general
philosophy is to build two plants, assist with the building
of the next two plants, and support the host government's
building the subsequent two plants with its own capacity.
This philosophy would fit well to build the first two to
three 1.1 GW plants, followed by an additional 13-15 plants
over the long-term.

4. (SBU) In a series of recent conversations with Economic
Counselor and Minerals/Energy Officer, Westinghouse has
outlined its strategies for positioning itself to win the
nuclear new build contract:

-- Complete the acquisition of local nuclear services
supplier IST. Although the acquisition is still under review
by the Competition Authority, Westinghouse is optimistic that
the acquisition can close in early October.

-- Work with its local public relations firm to arrange a
public campaign to support its efforts. Raising the
contract's profile will also insure greater transparency
during the award process.

-- Work with the U.S. Embassy to support its efforts.
Embassy will consider hosting an event marking Westinghouse's
acquisition and quest, as well as participating in the new
office ground-breaking. Embassy will also participate in a

joint call on the Embassy of Japan next week to coordinate
U.S. and Japanese government support.

-- Raise its public profile and its American flag by joining
AMCHAM and becoming a member of the AMCHAM board. AMCHAM has
asked and Westinghouse has already agreed to join the board
and will participate in the next AMCHAM board meeting on
September 19.

-- Continue to show its interest in providing fuel and
services to the existing plants. Westinghouse was awarded a
nuclear fuel supply contract to ESKOM in August according to
DME Chief Director: Nuclear Tselio Maqubela.

-- Consider working with CSSA on encouraging the American
Society of Mechanical Engineers (ASME) to work with South
African counterparts to arrange an industry conference as a
way of show-casing U.S. technical support and prowess.

5. (SBU) According to Westinghouse, French Areva exhibits
some advantages in being the supplier for the existing
nuclear power facility at Koeberg and providing a critical
turbine on short notice last year. On the other hand, the
facility has experienced problems and shut-downs,
exacerbating electricity shortages in the Cape region. Each
problem at Koeberg is an additional boost for Westinghouse as
the alternative supplier. Areva also has the reputation of
being solely focused on creating jobs back home, and not
being as focused on technology transfer and localization.

6. (SBU) Economic Counselor and Minerals and Energy Officer
used an August 28 meeting with DME Chief Director: Nuclear
Tselio Maqubela to make a strong pitch on behalf of

SIPDIS
Westinghouse, outlining the competitive advantages mentioned
in paragraph three. Maqubela recused himself from commenting
on Westinghouse's strong points, noting that he is spending
half his time consulting for ESKOM. Moreover, noting that
there would be competition between Westinghouse and Areva, he
said he was now unable to meet one-on-one with any company or
associated government officials. Maqubela said he would also
have to limit his meetings with the USG as the competition
heats up.

7. (SBU) COMMENT: Post will continue to work closely with
Westinghouse to develop an action plan for advocating its
bid. The fact that key SAG officials are already sensitive
to not meeting alone or too frequently with U.S. officials
indicates that Westinghouse's quest is being treated as a
serious bid.
Teitelbaum

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