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Chamber questions R38bn Sanral toll contract hike

Apr 01 2015 11:12
Carin Smith

Cape Town - How did a R10bn contract to build two Western Cape toll roads turn into a R48bn revenue stream for a consortium of civil engineering companies?

Peter Hugo, chairperson of the Cape Chamber of Commerce and Industry's transport portfolio committee, said this was just one of the questions that should be asked about toll road contracts entered into by the South African National Roads Agency (Sanral).

When the contract was awarded to the Protea Parkway Consortium (PPC) in 2011, the cost of the project was estimated at R10bn.

The Supreme Court of Appeal (SCA) in Bloemfontein on Monday ruled in favour of the City of Cape Town by setting aside an order made by the Western Cape High Court on August 28 2014 concerning Sanral's secrecy application.

Mayoral committee member for transport Brett Herron said on Monday the City could now, for the first time since it launched its review application on March 28 2012, fully disclose how Sanral’s awarding of the tender for the N1 and N2 Toll Highway Project to PPC will affect residents of the Western Cape and visitors to this region.

According to the Cape Town City Council, the “secret” documents revealed the R48bn income for the contractors was calculated in 2010 rand terms and excluded VAT, so it would be an even bigger sum in current terms.

READ: Cape Town reveals Sanral toll secrets

“In fact, this week’s disclosures are so disturbing that we now need to take a deeper look at all Sanral contracts going right back to 1994,” said Hugo.

"How many other Sanral contracts included provision for Sanral to pay compensation to the contractors when the toll fee income fell short of expectations?"

The chamber is aware that the Chapman’s Peak toll road contract, for instance, requires the Western Cape province to pay compensation if toll fees do not provide enough revenue for the operators.

"Until now, however, we thought this was an aberration. Now it seems it may be a widely used device to free contractors of commercial risks,” said Hugo.

Another important issue was whether the contracts contained provisions for annual increases in toll fees.

"The chamber had pointed out before that the justification for toll roads was the high construction costs, but when a project was completed, the cost was fixed historically and it should just be a matter of paying off the loans," said Hugo.

"Those instalments should not increase unless the interest rate went up and they should come down when interest rates came down. It should work just like a home loan. When you open one can and find worms in it, you should open all the others to make sure that the whole batch is not contaminated.”

The Opposition To Urban Tolling Alliance (Outa) said it welcomed the ruling by the SCA, which has now lifted the veil of secrecy on certain court papers Sanral has sought to keep hidden from the public concerning the N1 and N2 Cape Winelands private tolling concession scheme.

According to Outa, the ruling "echoes the concerns expressed by other judgments against Sanral over the past decade, which have also expressed alarm at the opaque and evasive public engagement processes conducted by Sanral".

Sanral said it will first discuss the SCA ruling regarding the Cape Winelands toll roads with its legal representatives before making any public pronouncements.

ALSO READ: Sanral talking to lawyers about toll ruling



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