N4 toll corridor on the right Trac
It's taken six years, but the Mozambican part of the N4 toll route finally has higher tariffs and the country is starting to pay its part of the debt.
The N4 toll route, known as the EN4 in Mozambique and a vital part of the Maputo Logistics Corridor, stretches 570km from the outer edges of Pretoria East, through one of the busiest border crossings in Southern Africa and ending in the urban roads of Mozambique's capital, Maputo.
The 30-year concession agreement, initiated in 1998, is a deal between the governments of South Africa and Mozambique. They have underwritten each other's debt, but across the Lebombo Border Post the road is undoubtedly of inferior quality.
The R135-million the Mozambique government owes Trans African Concessions (Trac) means the concessionaire's hands have been tied in terms of the upgrade desperately needed for the portion of the 14-year-old road in Mozambique. The upgrade was scheduled for last year but did not happen.
Traffic on the Mozambique portion of the road has increased immensely and unexpectedly over the past few years, owing to strong economic growth in the country. More traffic is expected following the significant discoveries of coal and gas.
The Maputo Toll Plaza in Mozambique is the busiest of all 10 on the route. It has had a 30% growth in traffic over the past year and an average of 50000 vehicles pass through its booms each day.
"The number of heavy vehicles has gone up dramatically on the route to Maputo Harbour," said Carla Davis, traffic engineer at Trac. From the border into Mozambique the number of trucks passing through accounts for 41% of traffic.
The tariffs are supposed to be adjusted annually, but a series of events causing public outrage in Maputo had the government fearful of further exacerbating the already violent strikes over the cost of living.
Riots over rising costs, in particular a 30% increase in the bread price and a rise in water and electricity prices, made headlines in 2010 when hundreds were injured and several killed in the unrest. And last week many Maputo residents locked themselves inside their homes because protests flared up over bus fares, which went up from R1.48 to R2.65.
"The government doesn't like confrontation in any shape or form," said Arthur Coy, the chief executive of Trac. "It is frightened of public reaction."
The adjusted tariffs were supposed to be passed by a council of ministers each year, but the council has simply rejected the increases since 2006.
The South African National Roads Agency Limited, the implementing officer of the concession agreement, has received increasing pressure from Trac in the form of legal letters on an almost monthly basis. The agency has applied the same pressure, if not more, on the Mozambique government – to no avail until recently.
The government raised the toll tariffs for the first time in March. Tolls were increased by 11% – from R27.87 to R30.80 – at Moamba Toll Plaza and by 14% – from R5.13 to R5.87 – at the one in Maputo. It also paid Trac a lump sum of R10-million following the tariff increase and committed to paying an additional R5.7-million each month until the debt is repaid. Trac is hopeful the payments will continue because it needs to pay off about R3-billion in interest-bearing loans.
"We haven't nearly caught up to where we are supposed to be," said Anita Heyl, Trac's corporate affairs manager.
All the tariffs along the route are meant to be adjusted annually according to the South African Consumer Price Index. Trac's loans are being repaid to South African banks at local interest rates. It would have worked out in favour of Mozambique over the years of non-payment, considering its inflation outstripped South Africa's for many years. In December 2010 it had inflation as high as 17.4% whereas South Africa's was 3.6%.
Finas Mazime, the Mozambique manager at Trac, said that despite the stagnant toll fees the concession company spent a lot of money on the roads.
Lawlessness on the Mozambique side has also exacerbated the issue, because trucks face few repercussions for exceeding the load-weight limit and putting strain on the tarmac, which requires constant maintenance. The toll route goes through urban areas, which have presented additional costs such as cleaning areas where hawkers sell their goods.