Sanral’s FY revenue from GFIP e-tolls scheme improved 25.6%

Revenue received by the SA National Roads Agency (Sanral) from e-tolls on the Gauteng Freeway Improvement Project (GFIP) surprisingly improved by 25.6% to R569 million in the year to end-March 2022, from from R453 million in the prior year.

Sanral attributed the increase to the significant increase in traffic volumes to normal levels, after the national Covid-19 lockdown, as well as the general increase from the 4.12% inflation-related tariff adjustment.

In addition, Sanral included in its revenue an amount of R550 million received from government as a grant, plus a R3.25 billion portion of the non-toll government grant, which was reallocated to address the GFIP shortfall as a result of the low e-toll payment rate (by GFIP users) and to service debt repayments.

Sanral confirmed in its latest financial results statement that a critical challenge continues to be the delay in the resolution of the GFIP e-toll scheme.

“This continues to put a material strain on Sanral’s toll portfolio and may impact the agency’s status as a going concern,” it said.

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Sanral acting CEO Lehlohonolo Memeza added that one of the issues that continues to impact on the agency’s revenue is the unresolved situation regarding e-tolls as it pertains to the GFIP.

“We look forward to government’s forthcoming announcement on GFIP as this will provide greater clarity on the way forward,” she said.

This is a reference to Minister of Transport Fikile Mbalula’s confirmation that an announcement on the future of e-tolls will be made by Minister of Finance Enoch Godongwana in the Medium Term Budget Policy Statement (MTBPS) later this month.

Sanral’s expected credit losses, which mainly relate to e-toll debtors, declined marginally in the year to R9.596 billion from R9.646 billion.

The agency said the reduction in the expected credit losses is as a result of recoveries and bad debts recognised in the current year.

A note to Sanral’s annual financial statements said although the issuing of summonses was stopped by its board, as announced on 27 March 2019, the final decision on the future of e-tolling has not been taken by Cabinet.

Sanral said there has been no significant changes on the overall collection rate of old debt transferred to the Violations Processing Centre (VPC) compared with prior periods. It still remains very low.

“The recoverability rate on historical debt transferred to VPC is less than 1% and it is anticipated that, due to uncertainties on the future of GFIP and existing debt, the VPC debt is considered irrecoverable.

“Therefore the default rate was set at 100%, which is consistent with prior years,” it said.

Sanral added that it continues to provide information to the government on the status of the collections of outstanding toll payments from the GFIP.

It said the task team established by the president concluded its work and submitted its recommendations to the Presidency in 2019 and Sanral awaits the final outcome of this process to be announced.

Uncertain future

Sanral said the uncertainty has resulted in the agency not being able to continue with funding of other capital projects on the existing toll network, which is required to alleviate bottlenecks on major arteries required to grow the economy.

The sovereign downgrades have also resulted in some of the international development finance institutions having to postpone possible loans to the entity, it said.

“Decisions to increase Sanral’s borrowing limit and guarantees, have also been postponed pending the outcome of the decision,” it said.

The Auditor-General’s report said Sanral’s funding strategy for the next 12 months relating to the toll portfolio is dependent on positive developments relating to the increase in the borrowing limit and the public entity raising funding either from government grants or further borrowings.

“These events or conditions, along with other matters … indicate that a material uncertainty exists that may cast significant doubt on the public entity’s ability to continue as a going concern.”

However, Sanral said although there are material uncertainties on the toll portfolio, there are no significant doubts about the going concern of the agency as a whole, after considering the potential mitigation actions and the significant cash reserves.

At 31 March 2022, Sanral had cash and cash equivalents of  R41.250 billion compared with R29.240 billion in the prior year.

It said the significant increase in cash holdings is mainly as a result of underspending on projects on both toll and non-toll roads because of delays in the award and completion of contracts despite a significant increase in project expenditure.

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“Delays are attributed to construction stoppages as a result of community unrest as well as changes required on tender documents due to the new regulations, which has since been resolved.

“The backlog on project spending is expected to be cleared over the next three financial years ending 2025,” it said.

‘The money is in Treasury’s coffers’

Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said on Monday that Sanral is receiving about R47 million a month from e-tolls on the GFIP, which means the compliance rate is now between 15% and 17% and the GFIP continues to be financed through National Treasury grants.

Duvenage said Sanral cannot keep harping on that its revenue collection from the GFIP is low and that is why it is in financial trouble, because it has known [of this situation] since 2014 and has adjusted for it through additional grants from National Treasury.

“Sanral is still sitting with this GFIP noose around their neck for R21 billion borrowed for a road upgrade that should not have cost more than R7 billion and that is hurting them to this day.

“It was a very bad decision and badly managed road upgrade by Sanral and the collusion that took place by the construction companies is hurting them to this day.

“When they made the e-toll decision in 2008, Outa said its a social debt, but if they were desperate a 10 cents-a-litre increase in the fuel levy would have settled the bonds over a 10-year period.

“The fuel levy has been increased by R2.50 since then, so the money is in Treasury’s coffers and we hope later this month, when they announce the final decision to pull the plug on e-tolls, they don’t try and capitalise on this decision by increasing the fuel levy again because they have already got the money,” he said.

Sanral reported that the revenue from conventional toll routes increased by 21.5% to R3.953 billion from R3.254 billion in the prior year, which it also attributed to the increase in traffic volumes to normal levels after the impact of the Covid-19 pandemic.

The agency reported an overall profit, after deducting finance costs, of R348 million for the year compared with R380 million in the prior year.