Gauteng and national transport at odds over e-tolling review

The national department of transport has poured cold water on a Gauteng provincial review of the controversial etolling system, saying that a review of national policy can only be conducted at national level.

On Thursday, new Gauteng premier David Makhura announced the details of the review panel, tasked with conducting a “comprehensive assessment of the socio-economic impact of the introduction of the Gauteng Freeway Improvement Project [GFIP] in general and the e-tolls in particular on the economy and the people of Gauteng”.  

But Tiyani Rikhotso, spokesperson for the national department told the Mail & Guardian that any review had to be “carried out by the department responsible at national level”. “There is no province that has any authority whatsoever, to review any national government policy,” Rikhotso said.  

“Our understanding from the office of the premier of Gauteng and their terms of reference is that they are only looking at the socio-economic impacts that e-tolling has had on the residents of Gauteng.”  

Lasting solution sought
Makhura said in a statement released at the launch of the review panel, that it would invite proposals and submissions on proposed solutions to the impacts of e-tolls. He gave no assurances that an easy solution would be forthcoming, however, and urged road users to pay their e-tolls while a lasting solution was being sought. 

“I wish to reiterate that we are not promising easy solutions with the establishment of this panel,” he said. “However we shall not turn a blind eye or a deaf ear to the cries of people who are negatively affected by the cost of travelling across the province.” 

Makhura’s spokesperson Nino Zama said the provincial government could not comment on the statements by the national department. The province wanted to allow the panel time to do its work, after which its recommendations would be made by November she said.  

The Democratic Alliance’s Mmusi Maimane called the Gauteng review a “public relations stunt”. The e-tolls system was governed by national legislation, and as such “the only body that is empowered to legitimately review the system and make pronouncements on its future, is Parliament, through the Portfolio Committee on Transport”, Maimane said in a statement. The DA is pushing for a parliamentary review of e-tolls. 

Sanral began e-tolling in December last year after a two-year delay. Continued public outrage is believed to have been a major factor is the ANC’s lacklustre polling in Gauteng during the May elections. Uncertainty over the review has nevertheless hurt investor confidence in Sanral, which has amassed R20-billion in debt to finance the e-tolling project. 

The announcement of the review last month was blamed for the flop of Sanral’s most recent bond auction. It failed to secure the R500-million it needed from investors to finance its operations – only raising R275-million.

E-tolling opponents have also questioned Sanral’s ability to collect the e-toll revenues and the implications this has for its finances. 

Rikhotso said government was very “conscious [of] doing anything that will worsen the situation further.” Sanral had gone through a number of ratings downgrades, but had been recovering of late, he said. Any review of the GFIP process would have to take into consideration all those factors he noted. “We are quite hopeful this recovery will translate to a rise in the appetite for its bonds.”  

In the run up to Makhura’s announcement earlier this week Sanral spokesperson Vusi Mona said that “investors are sensitive to policy uncertainty and this was a clear message from investors at our recent bond auction”. Sanral was optimistic, however that, “policy certainty will prevail on the matter” he said. 

Moody’s changed Sanral’s rating outlook
The fact that the agency was “well ahead of its forecast in terms of cash received to date, should encourage the investors to see the upside in Sanral bonds,” said Mona. 

In June ratings agency Moody’s changed Sanral’s rating outlook from negative to stable on the back of improved etoll revenue collection by the agency. 

But anti-tolling activists the Opposition Against Urban Tolling Alliance (Outa) have questioned whether Sanral is actually achieving its revenue targets, and consequently why Moody’s improved Sanral’s ratings outlook.  

According to Daniel Mazibuko, associate analyst at Moody’s, it took the decision for a number of factors, “including primarily the evidence of good GFIP e-toll collections in the first six month of operations”.  

He said that since the implementation of e-tolls Sanral had collected R678-million for the first six months ended May 31 2014. In its June assessment, based on unaudited financial statements, Moody’s said the company projected toll revenues to grow to R4,1-billion by 2015, of which R1,8-billion was expected solely from e-tolls. The stated objective to collect R1.8-billion from e-tolls by the end of the 2015 financial year, “remains an ambitious target given the strong public opposition to the GFIP project”, said Mazibuko. But the introduction of the Transport Laws and Related Matters Amendment Bill of 25 September 2013 provided Sanral “with the necessary legislative instruments to enforce e-toll payments”, he said.

Sanral’s collections in doubt
But Outa chairperson Wayne Duvenage argued that given recent parliamentary responses by transport minister, Dipuo Peters the extent of Sanral’s collections was in doubt.   

In reply to parliamentary questions Peters indicated that for January and December, nominal revenues of R331,6-million and R373,6-million were collected respectively. Budgeted cash receipts from GFIP were R2,4-billion annually or at least R200-million per month. But in a separate reply Peters said that as of February 2014 some R543 544 574 in revenues had been transferred to the violations processing centre, suggesting a large number of road users have not yet, or are unwilling to pay. Of this only R50 043 487 had been collected, or just over 9%. 

This suggested, argued Duvenage that actual collection revenue levels in the first three months of implementation were less than 30%.  

Sanral said in a statement at the time that it was not running out of cash and that the agency collected R250.8-million during February. It did however note that revenue represents nominal value of transactions, excluding VAT. These numbers had not been adjusted in terms of international financial reporting standards, it said which required that these amounts be fair valued and impaired if applicable. As such they were subject to change. Nor, according to Sanral had it made provisions for bad debt.  

When asked how revenues and collection rates had changed since February and what revenues looked like once impairments had been considered, Mona stated that Sanral could only confirm and release figures once its audited annual report figures was tabled in Parliament. The Auditor General process was currently underway he said.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.
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