By Tom Head for The South African
Gauteng motorists, we’ve got some bad news: e-tolls have been given the kiss of life by the government, who have promised to cover Sanral’s debts.
When the people talk, politicians should listen. However, it would seem there have been some spectacular crossed wires in Gauteng. The much-maligned and financially crippled e-tolls system will now live to fight another day, after Transport Minister Blade Nzimande confirmed Sanral would receive a R5.7 billion bailout.
The roads agency have been plunged into fiscal despair by the ill-conceived tolls, which have failed to bring in the revenue previously forecast. It has left Sanral with debts soaring above R10 billion, but thanks to the deep pockets of the ANC, their money woes have effectively been halved.
Why Sanral have been bailed out
Nzimande explained the decision via a statement on Monday afternoon. He says the bailout is to help ensure that the department can meet “payment terms” with its investors. The move was labelled as a “strategic intervention” to help prop-up the Gauteng Freeway Improvement Project (GFIP).
“As a result of Sanral’s toll network experiencing financial difficulties, and to ensure that Sanral complies to its payment terms to investors, as well as to maintain the toll network across the country, funds were transferred from the non-toll network to the toll network. However, the department is working to resolve the issue of the GFIP speedily.”
E-tolls: Where is the money coming from?
The money has been taken from the Medium-term budget appropriation. It’s important to note that this money was not taken from the Treasury. Instead, money that was set aside for mid-term spending back in October 2018 will now go towards the e-tolls system, which continues to fail upwards.
Despite several promises from local government – including Gauteng Premier David Makhura, who vowed to rid the system from the province – it seems that national structures of the ANC have had the final word.
Source: MyBroadband, Netwerk24
According to a report by Netwerk24, the first e-toll test case will be heard in the North Gauteng High Court in Pretoria.
The report states that the test case will involve the transport company Thandanani Packers & Hauliers, which owes R400 000 in e-toll bills.
The company has stated that it cannot afford e-tolls, and if they were forced to pay this money the business will need to close.
Outa said the case will focus on the overall legality of the e-tolls system and will be used for the main dispute of the overall “legality challenges” to the e-tolls system itself.
The legal team for the supporters of Outa wanted Sanral to suspend enforcement of all other e-toll legal claims against motorists, but Sanral’s team would not agree to this.
“Sanral’s lawyers said a general stay could not be agreed whilst road users were being encouraged not to pay e-tolls,” Outa said.
Sanral added that it would continue to issue a significant number of summonses and proceed with e-toll claims.
South African National Roads Agency Limited (Sanral) says that the growth in traffic demand in Johannesburg is resulting in the peak periods being extended by as much as 15 minutes each year.
Communications lead at Sanral, Vusi Mona, told Engineering News that Gauteng’s freeway toll network is nearly at capacity.
He said that the morning peak period is between 06h00 and 09h00, with the afternoon stretch at between 15h00 and 18h00, adding that there is little traffic reduction in between those peak periods.
“During the peak periods, many of the freeway sections carrying the peak direction demands are running at capacity – actually over the design capacity,” he said.
He cited the busiest section of the Gauteng open-road tolling (GORT) as being between the Buccleuch and Allandale interchanges, in Midrand, with peak volume reaching up to 11,000 vehicles each hour in each direction.
According to Engineering News, this section of road has seen volumes increase by nearly 100% since 2006, while upgrades to the Gauteng freeway network only allows for a 4.7% increase in yearly traffic since 2010.
Mona said he expects that peak periods will increase due to urbanisation. It has been reported that the population of Johannesburg grows by about 10,000 people per month – or 120,000 annually.
The stretch between the Buccleuch and Allandale interchanges could swell to 285,000 vehicles per day as early as 2020, with the highest volumes measured currently, at 283,000 vehicles.
“Essentially the average travel time could increase by ten minutes between now and 2020, but will increase exponentially from then onwards,” Mona told Engineering News.
The South African Roads Agency (Sanral) has begun serving members of the public with letters of demand for outstanding debt on e-tolls.
However, the Organisation Undoing Tax Abuse (Outa) says “letters of final demand” should not be confused with a summons, as it is a low commitment step that does not officially initiate legal proceedings.
Last month, Sanral said e-toll defaulters may start receiving civil summonses from sheriffs in different jurisdictions in Gauteng.
Electronic Toll Collection, the company responsible for collecting e-toll payments, has also warned motorists not complying with the system should expect “intensified collection activity”.
Outa points out Sanral’s past behaviour and processes have laid the ground for a very strong defence in the form of a collateral challenge against the roads agency, if and when a summons arises for non-payment of e-tolls.
“For instance, we have examples of motorists who have previously been compliant and eventually gave up due to the scheme’s failure to account for and manage their queries and billing errors raised on their invoices,” says Wayne Duvenage, Outa chairman.
“Others have never received invoices in accordance with the scheme’s rules, while in other cases, incorrect bills were not removed from their accounts due to a cumbersome and ineffective dispute resolution mechanism.”
Outa points out that “for motorists that have entered into an agreement with Sanral to pay e-tolls under duress, and who remain ‘indebted’ to Sanral, the case could very well revolve around the validity of the agreement.
“We are aware of many motorists who signed up for the scheme out of fear of being prosecuted, not knowing that significant and valid questions surround the lawfulness of the scheme’s introduction, or that Sanral had not ensured their equipment was certified in accordance with the Legal Metrology Act, or that the Department of Transport would change their minds and not pursue their incessant threats of criminal charges against e-toll defaulters, seven months after the scheme was launched.”
According to Outa, the public discontent with the e-toll scheme and Sanral’s threatening approach towards their justified defiance becomes more widespread every day.
“It is unfortunate that despite the continued low compliance levels, government persists in trying to force its failed scheme onto an unwilling public, whose resistance has remained strong throughout the debacle. The showdown between the state and the people on the e-toll matter will continue to intensify until Sanral and their bosses eventually realise the public will not bow down to their pressure.”
The South African National Roads Agency (Sanral) is making an all-out effort to collect as much outstanding e-toll debt as possible ahead of its meeting in May with Moody’s Investors Services.
Sanral, which is responsible for the maintenance and construction of national roads, will be assessed by Moody’s over the next few months along with SA as a country, a number of other state-owned companies and government structures.
The ratings agency’s investigation kicked off earlier this month with a meeting with Finance Minister Pravin Gordhan and Treasury officials.
The agency put Sanral’s rating on review for a downgrade earlier this month, along with SA’s own rating. Moody’s had downgraded Sanral’s outlook from stable to negative in January last year, confirming this finding again in July. Key to its assessment was a concern about Sanral’s ability to collect outstanding e-toll debt. Failure to do so would cut the road agency’s cash flows and raise its debt, which was already at R47-billion at the end of March last year.
In November, outstanding e-toll debt amounted to R5,9-billion and this has probably climbed since then.
Sanral spokesman Vusi Mona says on Monday credit ratings agencies and investors were concerned about a culture of non-payment of e-toll fees.
Sanral had to demonstrate its commitment to collect outstanding debt. Moody’s had clearly stated that Sanral’s rating could be downgraded because of its “inability to effectively enforce e-toll payments, leading to deteriorating cash flows and increased borrowing needs”.
“Although everyone – including those opposed to the system and nonpayers – has expressed concern about the impact of a downgrade of the sovereign and individual credit ratings, they fail to see the direct role their actions have on ratings,” Mona explains.
To tackle this, the agency announced last week that it would begin issuing civil summonses against persistent defaulters and on Monday issued a statement warning of the expiry of the 60% discount period at the end of next month.
Mona says that current payments of e-toll fees by Gauteng motorists of R80-million to R90-million a month were below projections, although still higher than the R60-million in the August to September period.
The discount on historic e-toll debt would expire at the end of next month.
The once-off discount applies to all unpaid e-tolls levied on the inner-Gauteng highways from the implementation of the e-toll system between December 2013 and 31 August 2015.
Mona warned that the discount would not be extended and urged motorists to pay sooner rather than later as there might be a rush at the end of next month, which could see some of those willing to pay lose out on the offer.
He says that the response to the discount offer had so far been encouraging, but it would be possible to gauge its success only at the end as many motorists were waiting until the last minute to take up the offer. He says some payments would come in after the deadline because of the payment arrangements some motorists were entering into in order to clear their records.
Mona says fewer than 20% of defaulting road users contacted for collection flatly refused to pay.
Some people and businesses have indicated that they are delaying payment for as long as possible for them to “earn” interest on the money.
By Lisa Ensor for www.bdlive.co.za