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Sanral in dire straits without e-tolls

Aug 01 2012 11:41

Cape Town - The SA National Roads Agency Limited (Sanral) faces heavy financial pressure post October 2013 should the roads agency still not earn e-toll revenue, Moody's said in a BusinessLive report.

This was notwithstanding Sanral's current cash reserves of R7.1bn, which should absorb operating costs and debt service in the short term, Moody's said in the report.

Moody's has estimated that Sanral would lose R270m a month for each month toll fees are not collected.

Moody's downgraded Sanral by two notches, after doubts about whether it could meet its debt commitments.

The downgrade means Sanral could see a spike in borrowing costs.

"We believe that Sanral's high gearing and uncertainties over e-tolling issues could make it difficult for the company in (the) medium term to debt-finance the operating deficits resulting from its loss of e-toll revenue," a Moody's analyst is quoted as saying.

Deputy President Kgalema Motlanthe, who chairs an inter-ministerial committee handling the Sanral crisis, has warned that failure to meet the road agency's debt repayments while the legal battle over e-tolling in Gauteng continues would have dire consequences for Sanral and the country.

The Treasury has extended a R5.8bn budget allocation to Sanral to help it meet its commitments.

On April 28, the high court in Pretoria handed down an order preventing Sanral from levying or collecting e-tolls for the Gauteng Freeway Improvement Project  pending the outcome of a judicial review.

The Opposition to Urban Tolling Alliance applied to have e-tolling halted.

A government spokespersonhas said despite the opposition, the state remains committed to e-tolling and would appeal the interim order by the the high court in Pretoria halting its implementation.

 - Fin24



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