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Sanral’s new road to confidence

Jan 15 2017 09:42
Justin Brown

The new Sanral boss is looking to fix the road agency’s battered reputation as it fights an e-tolls boycott in Gauteng and opposition elsewhere, while at the same time hunting for fresh funding sources.

Skhumbuzo Macozoma, the new Sanral CEO who started the job in December, said this week during an interview: “We need to win back the support and trust of the South African public.”

The whole Gauteng e-tolls debacle has knocked Sanral’s credibility, and made it highly unpopular, and this has resulted in vehement opposition to new tolling projects elsewhere in the country, especially for the N1 and N3 upgrade in the Western Cape and Wild Coast toll road on the N2.

Macozoma identified five freeway projects in Gauteng that are on the cards. “These are expensive projects,” he said.

Sanral is also working on a KwaZulu-Natal project that will re-route the N3 national road through the De Beer’s Pass, which is located between Ladysmith and Harrismith to shorten the distance between Durban and Johannesburg.

The De Beer’s Pass project has come under fire owing to concerns that it will hurt the Harrismith economy.

The existing Gauteng Freeway Improvement Project (GFIP) covers about 200km.

Another two phases of the Gauteng e-tolls project are also in the wings, which will expand the GFIP to over 400km.

Funding

Turning to the funding of the GFIP, Macozoma said that Sanral “looked to our political principles... The decision is not within the ambit of Sanral.”

“In the Western Cape, there has been a call for us to investigate how we could tap the fuel tax – whether national or provincial – to fund road infrastructure in that area.”

Tolling revenue is Sanral’s second most important source of funding after allocations from National Treasury and without it some of Sanral’s projects are going to be left high and dry.

Sanral maintains 21 000km of road and 3 100km of those are tolled roads.

Sanral has issued 6 500 summonses related to outstanding Gauteng e-tolls debt that run into billions.

“We have agreed with the Organisation Undoing Tax Abuse (Outa) that it would be in the interests of everyone to have a test case ... It’s in Sanral’s interest for that test case to be held as urgently as possible,” Macozoma said.

Since 2012, Outa has been leading the fight against e-tolls, which it has termed irrational, inefficient and unlawful.

“Before we get a verdict on that, it is going to be difficult for any of us to do anything different. So, Outa will continue to encourage people not to pay and we will continue to recover our money so that we are financially sustainable.

"It would not be responsible for a government entity to write off all of this debt. In fact, it is not possible. Even the minister of finance said it is our obligation to recover the money,” he said.

“In the past five years or so, government has made quite a number of concessions. If Sanral gets liquidated, it doesn’t benefit anyone,” Macozoma said.

Owing to its funding crunch, Sanral is casting about for extra revenue options.

“We are looking at other opportunities to mobilise funding. There is a lot of property that we can exploit. We can provide our services to other parts of this continent and generate some revenue for ourselves.

“We can look at structuring projects differently so we can access funding from institutions at a global level,” Macozoma said.

New toll roads policy

Given the question mark over toll roads, Sanral had requested that Transport Minister Dipuo Peters develop a new toll roads policy that would enable South Africans to participate in developing the policy, Macozoma said.

“Once that is done, then we will have a proper policy context to drive the toll roads programme.”

Macozoma wants to engage a number of Sanral stakeholders.

“We want to engage all of the provinces ... so that we can facilitate a process of joint planning. We want to engage some of our critics. We are already meeting with Outa [this] week as an introductory meeting for us to see if we can work together.

“I certainly wouldn’t want a relationship that is adversarial and destructive in nature.

“We are part of an ANC government and it would not be practical for Sanral to be at loggerheads with Cosatu.”

The key thing that Sanral would like to avoid was being accused of consulting in bad faith, he said.

“When we design and develop these toll schemes, we don’t want them to be seen as a threat to local economic development.”

Investor roadshow

Since taking over as Sanral CEO, Macozoma has held a three-day event with 10 key local investors of its bonds.

In August last year, Futuregrowth Asset Management suspended funding to six state-owned entities, including Sanral.

Futuregrowth has resumed lending to the Industrial Development Corporation, the Development Bank of SA and the Land Bank, but it has maintained its “capital strike” at Eskom, Transnet and Sanral.

“We have had regular engagement with Futuregrowth. We are optimistic that we will be able to address the concerns that they may have. We should be on the right footing for Futuregrowth to be willing to fund us again.”

Macozoma said that a team had been set up at Sanral to make sure that the company was fully exploiting the provisions of the Sanral Act.

The DA has proposed a draft bill that would compel Sanral to obtain the majority approval of provincial legislatures before it can declare a toll road‚ and to identify an alternative route for motorists to use.

Macozoma said that the proposals that the DA were making had been previously suggested by the SA Local Government Association.

Sanral wouldn’t have a problem with some of the provisions, but there were certain elements that the company would object to.

The final approver

“National roads are a national function and the minister of transport is the decision-maker and final approver.

“We would not want a situation where the minister’s powers were eroded and there is a big dependency on provincial legislatures.”

Local communities and lobby groups have concerns about the environmental impact of the Wild Coast toll road on the N2 that Sanral is planning.

“For any of the construction projects that Sanral undertakes, there is an obligation on us to do an environmental impact assessment. We have complied with all the provisions of the act ... I don’t see any problem from where I sit.”

Transformation

Sanral has had numerous initiatives over the years to achieve transformation so as to open up opportunities for emerging contractors to partake in the company’s projects, Macozoma said.

“We have also initiated processes to bring in emerging consultants to play in this game. We will be developing a fresh transformation policy for the company, which will be supported by very specific subsector strategies.”

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