"The preference at the department is that we will use existing commercial reprocessing plants in the world for reprocessing spent fuel," Tseliso Maqubela, the Department of Minerals and Energy's nuclear chief director told Reuters.

"In the medium to long-term we will also look at whether it's economically viable to establish a reprocessing plant in South Africa, but economically it makes sense in the short-term that we use existing facilities."

Maqubela spoke to Reuters after briefing parliament on a proposed national radioactive waste management bill.

State power utility Eskom plans to spend 343 billion rand (US$44.03 billion) over the next five years to boost generation capacity.

The government has owned up to being behind the power crisis after years of neglecting to invest in the sector.

Eskom also operates the continent's only nuclear power station, Koeberg near Cape Town, which has also been in and out of action regularly because of maintenance problems.

The Koeberg facility accounts for approximately 95 percent of South Africa's spent fuel inventory, which had some 1,000 tonnes of high-level radioactive waste.

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France, Britain and Japan were likely countries with whom to partner on the reprocessing project, particularly with companies such as France's Areva and US-based Westinghouse Electric, which is majority owned by Toshiba.

"The contracting would be done by Eskom, not by government so I would be hesitant to give a figure," Maqubela said on the potential value of the contracts.

"Quite clearly something like this would be in the millions of dollars, definitely," he said.

Maqubela said radioactive waste will probably be shipped overseas, where the spent fuel is reprocessed to produce a "mixed oxide fuel" -- a mixture between uranium oxide and plutonium oxide -- for re-use in nuclear reactors.

South Africa, which has Africa's largest uranium reserves, has categorised uranium as a critical mineral. The country has approved a nuclear policy, which among other things, covers the mining of uranium to ensure a security of supply.

The nation also plans to regulate the rate of exports of uranium in the near term to secure supplies to Eskom.

South Africa plans to build 24-30 new technology Pebble Bed Modular Reactors, with construction of the first demonstration model planned for 2010. The plant would be commissioned in 2014, followed by the commercial reactors three years later.

Westinghouse Electric, Eskom and South Africa's Industrial Development Corporation are investing billions of rands to prove the PBMR technology. (Editing by James Jukwey)