The SA National Roads Agency (Sanral) has bemoaned the uncertainty about E-tolls, telling MPs that the impasse will compromise its ability to finance and maintain road infrastructure in the short term.
The agency, still struggling to generate cash from E-tolls, is one of many state-owned entities that rely heavily on government support. Its woes worsened when SA went into lockdown in March as the government moved to curb the spread of Covid-19. This resulted in a marked reduction in traffic volumes, leading to a drop in toll revenue of about R640m to date.
In 2019, Sanral resolved to suspend pursuing E-toll debt amid low levels of compliance from Gauteng motorists. This was pending consultations with various interest groups and the government. Subsequently the agency has struggled with low revenues and rising debt levels.
It has a backlog of about R150bn for toll-road projects that are without funding, amid confusion within the government about how to address the E-toll issue.
Last week, transport minister Fikile Mbalula said that before Covid-19 hit the government was on track to resolve the E-toll impasse, but plans were derailed by the pandemic. Various groups, including the lobby group Organisation Undoing Tax Abuse and trade union federation Cosatu, oppose E-tolls.
“Now that we are easing the lockdown to level 1 we are prepared to expedite the rollout of infrastructure projects and to also resolve the issue of the E-tolls,” Mbalula said at the time, adding that the cabinet would soon make a final decision.
While Gauteng premier David Makhura has vowed to get E-tolls scrapped, finance minister Tito Mboweni has said that if people want a road transport infrastructure that works the user-pay principle must apply and thus motorists need to pay their tolls.
Briefing parliament’s select committee on transport, public service & administration on Sanral’s strategic objectives and the impact of Covid-19, the agency’s finance chief Inge Mulder said the lack of resolution on E-tolls has resulted in low levels of compliance, negatively affecting the company’s ability to finance the toll portfolio in the short term.
Overall, government grants constitute the largest source of revenue for the agency, followed by toll fees collected from road users. In other words, the agency could have to rely more on government grants and borrowing to stay afloat and deliver on its mandate. But with the state’s finances in dire straits due to the health crisis, the government is looking to wean parastatals from the fiscus and make them commercially viable.
Sanral has had to turn to the bond market to borrow to service its debt.
Mulder said the E-toll decision is imperative for certainty of project delivery. She said Sanral is pursuing a R7bn loan from the New Development Bank and a R7bn loan guarantee from the Multilateral Investment Guarantee Agency, an international financial institution. Mulder said half of the loan guaranteed by the agency could be used for refinancing, with the remainder earmarked for capital projects. There has been no decision yet on the applications, Mulder said.
The auditor-general has expressed doubt about the going concern status of Sanral, citing uncertainty about E-tolls. Though Sanral received an unqualified audit opinion in its 2019/20 annual report, the auditor-general raised a concern about the expected credit losses amounting to just over R10bn, most of which (R9.8bn) relates to the impairment of E-toll collections.
Irregular expenditure of R342m was incurred in the current year, due to non-compliance with prescribed procurement prescripts. Of that amount, R227m (66%) relates to irregular contracts identified.
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