E-tolls here to stay, for now

The controversial e-toll system on the Gauteng Highway Improvement Project (GFIP) failed to get a mention in the 2022 Budget Review and appears here to stay, for now.

This is despite Transport Minister Fikile Mbalula explicitly stating that an announcement would be made on the future of e-tolls in the 2022 Budget by Finance Minister Enoch Godongwana.

The lack of any pronouncement on e-tolls is possibly related to the fact that the general fuel levy remained unchanged in the budget while there was also no increase in the Road Accident Fund (RAF) levy in the fuel price.

The RAF compensates road users for losses or damages caused by motor vehicle accidents through revenue it receives from the RAF levy.

Fuel prices have hit record highs in recent months, leading to calls for the finance minister not to increase these levies in the Budget.

There were previously calls by various organisations, including the Automobile Association (AA) and the Organisation Undoing Tax Abuse (Outa) for the bonds the SA National Roads Agency (Sanral) issued to finance the GFIP to be funded through an increase in the fuel levy.

Finance Minister Enoch Godongwana said on Wednesday the inland petrol price breached R20 per litre in 2021, with the higher price putting pressure on the cost of transport, food and other goods and services.

Godongwana said no increases would be made to the general fuel levy on petrol and diesel for 2022/2023, which will provide tax relief of R3.5 billion to South Africans.

He said there will also be no increase in the Road Accident Fund levy.

Godongwana said he had agreed with Minister of Energy and Mineral Resources Gwede Mantashe that a review of all aspects of the fuel price is needed.

“Our teams have already begun to engage on this critical work,” he said.

Godongwana said Sanral will receive an additional R9.9 billion for maintaining the non-toll road network.

The Budget Review said although the fuel levy remains unchanged in 2022/23, revenue is expected to increase at an average annual rate of 1.3% from R44.7 billion in 2021/22 to R46.5 billion in 2024/25 due to expected growth in fuel sales volumes.

“Over the medium term, the RAF aims to scale up the use of annuity rather than lump-sum payments to settle loss-of-income claims.

“This will result in a moderation in the payment of claims to match the fund’s pay-as‐you‐go principle.

“Accordingly, benefits paid out are expected to remain stable at an average growth rate of 0.02% from R49.2 billion in 2021/22 to R49.3 billion in 2024/25, over the next three years.

“The accumulated deficit grows by an annual average rate of 6.4% from R404 billion in 2021/22 to R486.8 billion in 2024/25,” it said.

Mbalula said during a question and answer session during a briefing on the state of transport entities in Johannesburg on November 26 2021: “When we went to Cabinet, a decision was taken. When it was supposed to be implemented to scrap the e-tolls, Treasury said: ‘No wait. You can’t’.

“We will be ready by February to make an announcement on this matter and how we are going to handle the e-toll thing in South Africa.

“The Minister of Finance will be in a position to make the announcement in the Budget speech in February,” he said.

Mbalula previously also indicated that Godongwana would make an announcement in the Medium Term Budget Policy Statement (MTBPS) late last year but nothing was mentioned about e-tolls then either.

Dr Mampho Modise, the deputy director general responsible for public finance at National Treasury, told Moneyweb when the MTBPS was delivered last year that National Treasury was still calculating the risks to the possible options for the future of e-tolls.

Sanral confirmed late last year that the current e-toll payment compliance rate on GFIP had declined further and was now at 18% – its lowest ever level.

The agency at the time also confirmed that it had once again extended the operations contract awarded to Electronic Toll Collections (ETC) for the Open Road Tolling (ORT) system on the GFIP and Transaction Clearing House (TCH) for a further two months before its expiry on December 2 2021 to allow for the finalisation of the appointment of a new contractor.