The South African National Roads Agency (Sanral) says it will need more than R15bn a year for the next 10 years if it cannot rely on toll revenue.
Late last year Gauteng premier Panyaza Lesufi announced the provincial government was preparing to scrap the strongly-resisted e-toll system on Gauteng freeways — introduced a decade ago — after finance minister Enoch Godongwana announced a R23.7bn allocation to Sanral in his medium-term budget policy statement.
However, Sanral’s annual performance plan tabled in parliament last week said it was far from out of the woods financially. The scrapping of e-tolls was due to be implemented in December but this did not happen due to delays in finalising a legal agreement and a lack of funding from the Gauteng government.
Sanral warned that a lack of clarity around e-tolls could create a R150bn funding gap for the next decade, and litigation from construction companies it procures road infrastructure services from will continue to undermine it financially for years to come.
The document called for the appropriate use of the user-pays tool of tolling when road infrastructure needs to be upgraded.
In its annual performance plan, Sanral chair Themba Mhambi said its ability to make its economically mandatory contribution has recently been enhanced by the government’s resolution of the Gauteng Freeway Improvement Project (GFIP) and e-tolls challenge.
“The applaudable solution of this matter by our political principals in the Gauteng province, at the National Treasury, in the department of transport and the Presidency has brought about much-needed certainty to a long-standing and material going concern issue pertaining to Sanral,” said Mhambi.
Sanral will require a minimum of R15.75bn per year over the next 10 years should the option of toll funding no longer be available
— Sanral
The annual performance plan said the GFIP experience necessitated the urgent development of a road funding policy led by the department of transport to “clarify the way forward with regards to the GFIP and ensuring policy certainty”.
The annual performance plan said projected medium-term expenditure framework allocations would help Sanral address its basic budget requirement to sustain its road network. However, it would not address the interventions needed to address backlogs or expand the road network.
“To address the basic requirements, strengthening backlog as well as expansion requirement of its current network, Sanral will require a minimum of R15.75bn per year over the next 10 years should the option of toll funding no longer be available,” the annual performance plan said.
Neither the National Treasury or the department of transport responded to requests for comment.
Sanral reiterated that the proposed transfer to it of 15,000km of roads from provinces needed to be reviewed if its budget was not proportionately increased.
“The agency does not have the financial and human capital capacity to take over the management of such a large network of roads. This new approach is of critical importance because previous road transfers were often done without the necessary budget transfers from the relevant road authorities,” the plan said.
The annual performance plan said Sanral’s operations in the engineering and construction sector amid economic downturns and regulatory reforms had led to legal challenges over procurement and these were expected to increase.
“There is also an occurrence or theme where contractors withdraw from the site and argue community unrest. They would then lodge an urgent application barring Sanral from claiming the guarantees from insurers. Such cases will be challenged, and legal processes initiated,” the document said.
Litigation is based on procurement, contract management, penalties, the nature of site disruptions and several other factors, it said.
Despite these financial challenges, transport minister Sindisiwe Chikunga expects Sanral to play a central role in road infrastructure development. She said in the report that Sanral was a crucial part of the government’s plan to leverage infrastructure to implement the economic reconstruction and recovery plan.
Wayne Duvenage, CEO of Organisation Undoing Tax Abuse, told Business Times that Sanral's financial troubles signified the government cannot implement its decision because it hasn't thought it through before making announcements to the public.
“Ineptitude is also part of the issue here. Around 90% of Gauteng’s funds come from Treasury anyway. What’s the big problem here? This scheme should have been turned off a few years ago, and yet it continues to bill the few motorists — less than 5% by now — who continue to pay,” said Duvenage.
Duvenage said Sanral has three funding streams to pay for the road network it manages — boomed plazas, toll roads, and toll roads managed by concessionaires.
“The money from these roads goes to the concessionaire who builds and maintains, while National Treasury allocations, which equate to between R12bn and R15bn a year, mean Sanral is already receiving what its says it needs.
“I think government is not fulfilling its role to the construction industry. They need to make it clear that the state does not support the construction mafia antics. Then they should set up a crack dedicated team of police and investigators around the country to deal with this extortion.
“Finally, then set up a hotline for construction companies to report incidents of extortion. I realise it’s a tad more complex, but a dedicated effort to tackle this scourge is long overdue,” he said.
The e-toll system came into law a decade ago despite vocal opposition from Gauteng motorists, businesses and non-government organisations.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.