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Tolls delay may hit Sanral rating

Johannesburg - Moody's Investors Service has placed the AAA long-term rating of the South African National Roads Agency Limited (Sanral) on review for possible downgrade.

"Today's announcement follows the decision by Sanral's board of directors to delay the tolling operations of the company's largest project - the Gauteng Freeway Improvement Project (GFIP), which will likely exert pressure on the company's cash flows and casts doubt on the government's transport policy strategy," said Kenneth Morare, Moody's lead analyst for Sanral.

Sanral is a public company, wholly owned by the government with the minister of transport the shareholder representative.

"Moody's notes that Sanral incurred R20bn in debt (of which approximately 50% is guaranteed by the South African government) to finance the GFIP project, which was to have been repaid from the now-suspended toll revenues," it said.

Moody's said that the debt issue was the single largest contributor to the rapid increase in Sanral's overall debt, now R32.6bn from R6.2bn in 2007.

Delays in the implementation of tolling operations - originally scheduled to start in June 2011 - prompted Sanral to issue additional debt to cover the financing shortfall, adding pressure on its already-high financial leverage, said Moody's.

 
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