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Govt: Sanral default not an option

May 17 2012 11:41 Sapa

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Cape Town - A default by the SA National Roads Agency Ltd (Sanral) on its R20bn debt incurred in improving Gauteng's highway network "is not an option", government spokesperson Jimmy Manyi said on Thursday.

"Government will pull (out) everything it can to ensure Sanral meets its obligations," Manyi said in Cape Town during the cabinet's fortnightly briefing.

"Government will ensure the financial stability of Sanral is preserved. The issue of Sanral defaulting is not an option."

Sanral was downgraded two notches by ratings agency Moody's Investors Service last week after doubts about whether it could meet its commitment to pay its debt.

The downgrade means that Sanral could see a spike in its cost of borrowing.

Moody's said in a statement that the rating action followed the North Gauteng High Court's decision on April 28 to block the implementation of electronic tolling on the Gauteng Freeway Improvement Project (GFIP), pending a final court resolution on the matter.

The government said on April 26 that it would postpone the project, which had been opposed by trade unions and opposition political parties.

The government had agreed on a significant reduction in e-toll rates, following which Treasury extended a R5.8bn budget allocation to Sanral to help it meet it's commitments.

It is estimated that Sanral has lost about R2.7bn due to the postponement.

Moody's said Sanral's e-toll revenues were essential to it servicing its R20bn debt, which is 50% guaranteed by the government.

Manyi said that government was not "bailing out" Sanral.

"The word 'bailout' has all sorts of connotations," he said.

"There is no question about whether Sanral will default on its payment. Government will not allow that to happen."

The cabinet has formed a high level committee to look into the e-tolling committee. The committee is headed by Deputy President Kgalema Motlanthe, who is due to brief the media on the issue next Thursday.

Sanral chief executive Nazir Alli resigned from the company last week.

His resignation was welcomed by The Opposition to Urban Tolling Alliance and the Congress of SA Trade Unions.

Despite the opposition, Manyi said the government remains committed to e-tolling and would appeal the high court in Pretoria's interim order halting the implementation of the system.

"Cabinet has taken a decision to appeal the interim order to stop the e-tolling," Manyi said.

He said the government only received a written copy of Judge Bill Prinsloo's April 28 judgment late on Wednesday.

"As we are sitting here, our lawyers are studying the judgment and will advise the executive in due course."

He added: "Cabinet reiterated its commitment to the user pays principle and its decision on e-tolling as an efficient mechanism of collection."

Manyi said cabinet also made plain it would not allow the embattled Sanral to default on the debt it incurred to complete the GFIP.

"As a country we need to demonstrate unequivocal commitment to meet all our contractual obligations, including repaying the debt incurred in the construction of GFIP.

"Defaulting on our debt is simply not an option."

 
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