E-tolls: The nettle government refuses to grasp

Government has once again failed to make any pronouncement on the future of the controversial e-tolls scheme on the Gauteng Freeway Improvement Project (GFIP).

This is despite transport minister Fikile Mbalula stating last month: “We expect that the minister of finance, when he delivers the medium-term budget policy statement in November 2021, will pronounce on the e-tolls. By that time, we believe cabinet would have finalised the matter,” he said.

However, the 2021 MTBPS document only referred to policy uncertainty on government’s position on the user-pays principle.

It said roads agency Sanral had incurred annual average losses of R2.5-billion since 2014/2015 and has been unable to successfully issue a bond since 2017, largely due to uncertainty about government’s position on the user-pays principle.

The MTBPS said government has extended a total guarantee facility of R37.9-billion to the agency, of which R28.4-billion had been used by 31 March 2021.

“While policy uncertainty remains, Sanral is still responsible for maintaining its toll portfolio and continues to service the debt used to fund construction. To date, R5.5-billion has been collected in toll revenue against an initial projection of R20.2-billion.

“Without a policy decision that reinstates government support for the user-pays principle, Sanral will remain a significant burden on the public finances,” it said.

‘Hasn’t been easy’

Mampho Modise, the deputy director-general responsible for public finance at national treasury, said on Thursday that they are still calculating the risks to the possible options for the future of e-tolls. “As you can imagine it hasn’t been easy to come up with a fair way of dealing with the e-tolls.

“The issues there are very complicated and we as technocrats have submitted the different options that we think the politicians must consider but the discussions are still taking place (and hopefully the minister can give us an update when he has the press conference).

“Once the minister is satisfied with the progress made, then he will certainly make an announcement. I’m not sure when he is going to do that. (We can ask him when we have the press briefing at 10am)  but we are in the final stages of finalising the proposals of how we continue or how we move forward in terms of the e-tolls,” she said.

The Organisation Undoing Tax Abuse (Outa) has estimated that only about 15% of motorists using the GFIP are now paying their e-toll accounts.

The reference is the various options being considered to resolve the e-toll impasse follows President Cyril Ramaphosa in 2019 appointing Mbalula to head a task team to report on the options available for the future of e-tolls by August 2019.

During his budget vote speech in May this year, Mbalula said he had presented nine possible solutions to the e-tolls impasse to the government and confirmed the first of these options is “to scrap the e-tolls”.

Sanral CEO Skhumbuzo Macozoma in September this year called on the government to “bite the bullet” and take a decision on e-tolls and Gauteng MEC for Public and Roads Infrastructure Jacob Mamabolo reiterated in an interview that the official position of the Gauteng provincial government on e-tolls on the GFIP remains that they must be scrapped.

Sanral CEO Skhumbuzo Macozoma in September this year called on the government to “bite the bullet” and take a decision on e-tolls

Sanral’s annual report released last month revealed that revenue from the GFIP decreased by 31.5% to R207-million in the year to end-March 2021, from R452-million in the prior year.

Sanral said 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.

“In 2020/2021, this grant amounted to 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,” it said.

Sanral added that government has indicated and shown its preparedness to provide financial support to the GFIP e-tolls project while a solution is awaited.

‘Inevitable’

It said the agency has therefore included a budgetary transfer of R3.25-billion, excluding VAT, per annum over the medium-term expenditure framework (MTEF) ending in the 2022/2023 financial year to cover the shortfall on e-tolls.

“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 said.

It said gross toll debtors amounted to R9.8-billion, which was reduced by an accumulated expected lifetime loss allowance of R9.6-billion.

Sanral said although the debt is not written off, the impairment reflects the expected losses and is assessed annually at the end of each reporting period.

It added that the inability to resolve the GFIP e-tolls issue continues to place significant pressure on Sanral’s balance sheet, compromising the ability to source funding and exacerbating uncertainty regarding the future of road funding.

• This article was originally published by Moneyweb and is republished by TechCentral with permission