Monday, 11 October 2021 18:13

Sanral calls on government to make a decision on e-tolls.

By Lehlohonolo Lehana.

@GalloImages.

The South African National Roads Agency Limited (Sanral), the state company responsible for the management, maintenance and development of South Africa’s National Road network, says that the Covid-19 lockdown had a significant impact on toll revenue, with a budgeted loss of R570 million between 1 April 2020 and 31 March 2021.

Notably, Sanral said that the Gauteng Freeway Improvement Project (GFIP) showed a revenue downturn of 31.5%.

"This project is the only Sanral toll route that receives a government grant to offset the discounts on tariffs instituted in response to public opposition to tolling on Gauteng freeways," it said.

In 2020/21, this grant amounted to more than R2.7 billion, which includes R2.3 billion that the minister of transport, as Sanral’s sole shareholder, approved as a transfer from non-toll to toll operations to reduce the expected shortfall in collection of revenue, the group said.

Sanral receives an annual grant from the fiscus mainly to fund its non-toll road portfolio. During the year under review, the government grant was R20.4 billion, of which R3.13 billion was allocated to tolls. This grant covers operational and capital expenditure on non-toll roads, which comprise 87% of Sanral’s operations.

“Road users’ ongoing refusal to pay e-toll fees on the GFIP continues to have a negative financial impact on Sanral. Cabinet has yet to decide on the matter, and we await direction in this regard,” Sanral said.

Sanral’s chief executive Skhumbuzo Macozoma called on the government to make a decision on e-tolls at the Consulting Engineers South Africa (Cesa) Infrastructure Indaba last week.

"Bite the bullet and do so. There is not going to be an answer that is not going to affect South Africans in the pocket, including cancellation. Cancellation, in fact, is the most expensive of the options that are on the table. So it’s a complex decision, but it must be made. It’s not assisting that we [Sanral] don’t have a decision," he said.

Transport minister Fikile Mbalula stressed at an event in Gauteng a day later that e-tolls cannot be scrapped.

"The funding model that we have employed as a country for our roads is affected by our attitude towards e-tolls, but we are working on that, and an e-toll solution will be found. We are a caring government but have a country to run and an economy to sustain, and we’ve got hard decisions to make regarding this matter, "said the minister.

Sanral recorded revenue of R12.6 billion, including grants, in the 2020/21 financial year. Overall, across the non-toll and toll portfolios, government grants constitute the largest source of revenue for the group, followed by toll fees collected from road users.

In addition, Sanral received finance income of R1.42 billion and other income of R1.581 billion, bringing total income to R15.6 billion.

"Toll levies and borrowings on commercial markets have been the main sources of finance for the development, upgrading, repair, maintenance, and operation of national toll roads managed directly by Sanral.

"These constitute some 7% of the national road network. However, due to the under-collection of e-tolls on the Gauteng Freeway Improvement Project (GFIP), government grants have become a significant supplementary funding source for the toll portfolio, "it said.

Sanral said in its report that the annual budget allocation is expected to increase to R21.599 billion in 2022 and R21.279 billion in the 2023 financial years.

The toll portfolio income for the year under review decreased to R3.706 billion.

"Management has acknowledged that the toll portfolio has liquidity concerns due to uncertainties on the continuation of the GFIP project. The 201km representing the GFIP road network, represents less than 1% of national road network or operations," it said.

The government, it said, has indicated and shown its preparedness to provide financial support to the e-tolls project while a solution is awaited. Sanral said it has therefore included a budgetary transfer of R3.25 billion (excluding VAT) per annum over the MTEF ending 2022-23 financial year to cover the shortfall on e-tolls.

It continued that even though final approval of this additional transfer from Parliament is still awaited, “based on past experience, management concludes that it is inevitable that it will be granted to ensure that the entity does not default.

"The material uncertainties on the future of GFIP as a going concern on its own are expected to be mitigated through direct government support and feasible sources of financing".

It pointed out that conventional toll plazas do not have liquidity or going concern issues.

As at the end of March 2021, cash flow projections currently show that Sanral’s cash reserves for the toll portfolio remain cash positive until February 2022. These cash flow projections showed an expected deficit of R1.5 billion from March 2022, but it excludes the expected additional grant of R3.250 billion, which has been budgeted for, Sanral said.

The state company said it believes it will have positive cash flows until July 2022.