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Transport Committee slams Sanral chair for not 'respecting' it

Nov 07 2017 17:18
Lameez Omarjee

Cape Town – Members of the Portfolio Committee on Transport lambasted South African National Roads Agency (Sanral) board chairperson Roshan Morar when he failed to attend the briefing of the state-owned enterprise’s (SOE) annual report.

The report was presented to the committee by Sanral CEO Skhumbuzo Macozoma on Tuesday. But first he had to explain why Morar wasn't there. 

Committee member Mtikeni Sibande expressed his displeasure over the matter when he said: “We are respecting you, but you don’t respect us at all. There are a lot of reasons we decided to come here, to give you a proper hearing. But continuously the chairperson of the board does not respect us.

“You are accounting officers, you account to us, it is a responsibility. You are not doing us a favour. Next time we will chase you away.” 

In response Macozoma assured the committee that the message would be passed on to the chairperson at the next board meeting on Wednesday.

“I fully understand we are a state-owned company which is fully accountable to Parliament.”

He explained that Morar’s wife had been hospitalised, which is the reason why he could not attend.

Committee member Manuel De Freitas raised a query on the late tabling of the report which had breached the September 30 deadline.

He also raised concerns over the status of the SOE, which appeared to be on a downward spiral. “Sanral seems to be more and more in trouble,” said De Freitas.

Macozoma said that Sanral was trying to turn around this perception. 

He explained that the report was delayed because there was a process to finalise the interpretation of its guarantee.

“It was beyond our control [that] we could not submit a report at the end of September and requested to table it by the end of October.”

During the course of the year, there was a misinterpretation of the R31.9bn guarantee from National Treasury. Investors on the JSE interpreted this to mean that the R31.9bn would be exhausted as a nominal amount, plus the interest on it.

Treasury had to reword the guarantee to show that the guarantee was limited to the nominal amount of R31.9bn, Macozoma explained. This rewording was necessary to give investors confidence that Sanral would be able to settle its outstanding amount. 

This process took a long time and could not finish before the September 30 deadline, he added. 

Results

The entity’s financial report shows that revenue grew to R13.955bn, from R11.474bn. Operating expenses grew to R17.362bn from R10.954bn. The loss for the year was R4.962bn, up from a loss of R1.2bn reported in 2015/16.

This loss was related to e-tolls and poor collection rates, said Macozoma.

“This is the biggest risk facing Sanral. This risk is threatening our sustainability. The board has made it clear to the minister we must find a solution. The country can’t afford the problem to continue without a clear resolution,” he said.

“Apart from threatening the sustainability going forward, it will threaten our ability to go to the bond market to secure funding for us to be able to manage and maintain the rest of the toll roads.”

Macozoma said that Transport Minister Joe Maswanganyi  has been consulting and plans to table a discussion with Cabinet on the matter.

“[This] is a very difficult matter, but on our side, I want to be clear that the decision to continue to consult on e-tolls does not rest with us. This matter was taken to the minister.” Maswanganyi is reviewing the options to determine the way forward for e-tolls, said Macozoma.

Not all targets related to the e-toll project were implemented due to the “anti-tolls” sentiment in the public, said Macozoma. These targets had to be pushed beyond the medium term, which means that fewer jobs were created. 

He added that the Gauteng Freeway Improvement Project had to be resolved as it would ensure Sanral's future Going Concern and possibly enable it to achieve a clean audit. This year Sanral received an unqualified opinion, as it has in the past.

Macozoma said that he does not think Sanral is the worst entity. If the e-toll problem is resolved then Sanral would not be lumped together with the other problematic SOEs, he said. 

A lot of debt is related to e-tolls, as there have been an impairment of R3.6bn so far. “The impairment of debt in e-tolls is a serious concern for us,” he said.

Macozoma added that the Auditor General was satisfied with its valuation and the logic of its methodology applied. Irregular and fruitless and wasteful expenditure reduced from R1.16bn to R425m, over the period. 

During the year spending on Sanral toll roads amounted to R4.5bn, compared to R11.6bn spent on non-toll roads. As for roads funded by private finance amounted to R1.9bn. Macozoma said that this illustrates that Sanral was mainly funded through public funding. “Since my arrival we have sought to correct perception that we want to toll at all costs … I want to reaffirm that we are an SOE, a Schedule 3 SOE, which means Treasury is our main source of funding.”

Macozoma also said that there is value to private finance and Sanral will continue to find opportunities to get private investment to develop roads. 


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