Johannesburg - In a blow for the nuclear energy industry, South Africa's power utility Eskom said Friday it had decided against building a second costly nuclear power plant, citing the "magnitude of the investment."

French nuclear giant Areva and US firm Westinghouse had been vying to build the twin-reactor plant, which would have given Eskom another 3,000-3,500 megawatts of generating capacity, or around a tenth of its current capacity.

A subsidiary of Areva previously built South Africa's first and only nuclear power station at Koeberg in Cape Town.

Eskom said it had informed Areva and Westinghouse that it had "terminated the commercial procurement process to select the preferred bidder for the construction of the Nuclear-1 project,"

The Nuclear-1 project was to be the first of around five or six nuclear plants that Eskom was toying with as part of a massive program to increase generating capacity by
2025.

South Africa is suffering acute energy shortages. Those resulted in weeks-long rolling blackouts at the beginning of the year.

Most of South Africa's electricity is currently obtained by burning coal. Under pressure to rein in its emissions of climate- changing gases, South Africa's government threw its weight behind nuclear energy.

French President Nicolas Sarkozy visited South Africa in February to boost relations between the two countries. Among his goals was obtaining business for Areva.

But the international financial crisis has taken a toll on Eskom's access to credit. For weeks, the utility had been making noises about the exorbitant cost of nuclear power, paving the way for Friday's announcement. (dpa)