South Africa has potentially set itself on a collision course with the West by announcing yesterday that it had signed a nuclear partnership agreement with Russia.

The deal with Russia’s state-owned nuclear company may see Rosatom build reactors in Africa’s second-biggest economy, a development that critics of the government’s nuclear energy plan fear would put a massive financial strain on the country and hike power prices.

Rosatom, the Russian State Atomic Energy Corporation and South Africa said in a joint statement that the intergovernmental agreement on strategic partnership and co-operation in nuclear energy and industry was signed on the margins of the 58th session of the general conference of the International Atomic Energy Agency in Vienna, meeting this week.

“South Africa today, as never before, is interested in the massive development of nuclear power, which is an important driver for the national economy [sic] growth,” said Energy Minister Tina Joemat-Pettersson, who signed on behalf of the South African government.

Rosatom and the government said: “The agreement lays the foundation for the large-scale nuclear power plants procurement and development programme” using Russian VVER reactors with installed capacity of about 9 600 megawatts, or as many as eight nuclear reactor units.

Rosatom director-general Sergei Kirienko said in the statement that the collaboration would result in orders worth at least $10 billion (R112bn) to local industrial companies.

But the awarding of the contract to Russia, a fellow member of the Brics (Brazil, Russia, India, China and South Africa) bloc of emerging powers, is poised to raise eyebrows as Russia is currently the target of sanctions over the conflict in eastern Ukraine. Analysts say it is unclear how South Africa will navigate the sanctions minefield.

“It is a scary development,” a market analyst, who declined to be identified, said of the nuclear agreement.

“On the surface it seems like diversification but you are also overexposing yourself to problems in eastern Europe.”

Lance Greyling, the DA’s spokesman on energy, said Joemat-Pettersson must immediately release details on the deal with Rosatom.

“We have serious concerns about this agreement,” he said in a statement. “Last year, an unsigned draft agreement sought to give Russia exclusive rights for the construction of nuclear plants in South Africa by committing the government to securing consent from Russia should South Africa wish to enter into any other agreements with third-country organisations or countries.”

Greyling added that “this deal may also undermine South Africa’s bilateral commitments on nuclear energy with other nations and would indeed act against South Africa’s national interest, limiting our ability to effectively negotiate and procure nuclear capacity from other nations”.

The agreement comes three weeks after President Jacob Zuma visited Russia and met with President Vladimir Putin. The National Treasury said in February last year that a R300bn nuclear programme was in the final stages of study.

Areva, EDF, Toshiba’s Westinghouse Electric, China Guangdong Nuclear Power, Rosatom and Korea Electric Power have expressed interest in building the nuclear plants.

Dawid Serfontein, a senior lecturer at the School of Mechanical and Nuclear Engineering at North West University, said: “If you want to buy nuclear reactors, Russia is one of the best countries to buy from because it is at the forefront of nuclear technology.”

He noted that Russia had also promised to lend South Africa the money to fund its nuclear programme, which would be a great help. “If the decision is taken by South Africa to buy from Russia, there will thus be good reason to believe that the decision was taken on merit,” Serfontein said.

He forecast that the full price tag for the 9 600MW nuclear power capacity would be about R650bn. “Therefore, the R112bn announced yesterday is clearly only a small part of the total cost.”

Serfontein said the amounts should thus be interpreted as follows: if the whole fleet would cost R650bn, then up to R112bn of the parts and services would be bought from South African companies, while the remaining R538bn would be imported from Russia.

Earthlife Africa project co-ordinator Christian Taylor said that in the long term, the cost of nuclear electricity produced under the programme would be too expensive for ordinary people to afford. He added that South Africa was giving itself over to long-term debt with Russia.

“We must be concerned. This would be more expensive than any other alternatives. This would definitely alter the tariff price,” Taylor said.