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Sanral: E-toll billions should only be 17% of total revenue

Jun 12 2017 18:16
Matthew le Cordeur

Cape Town – The R2.2bn that road agency Sanral has paid to an Austrian-owned firm to collect e-toll fee should only be 17% of the total revenue collected during the period under question.

Sanral’s response follows a statement by action group OUTA, which calculated that the total income received from December 2013 to March 2017 was R2.9bn, meaning that 74% of that was being paid to the foreign company during the same period.

This follows the revelation by Transport Minister Joe Maswanganyi in a parliamentary response earlier this month that Austrian-owned e-toll collection company ETC received R2.2bn for full toll operations since the inception of e-tolls on 3 December 2013.

However, Sanral spokesperson Vusi Mona told Fin24 on Monday that OUTA is focusing on the cash collected and that “skews their calculation”.

“The non-payment of toll cannot be used as the basis on which to determine the cost of collection, as the current ongoing litigation will determine the ability to realise the revenue."

Sanral and OUTA are opposing each other in a test case regarding the legality of e-tolls and thus Sanral's right to collect of fees.

“In terms of the previously reported revenue, the toll operation costs are still aligned with the 17% anticipated cost of collection,” Mona said. “Unfortunately, toll collection is impeded as a result of OUTA and others’ relentless campaign encouraging non-payment of e-toll, which is unlawful," he claimed.
 
“The toll operations company does not get a percentage of the toll revenue collected, but is compensated in terms of a tendered schedule of rates for services delivered. The exact amount paid by SANRAL per month differs depending on services provided.”

Mona also said that ETC is a South African company. However, Fin24 reported this firm has been fully owned by the Austrian conglomerate Kapsch since August last year.

This came about after the divestment of the only black economic empowerment (BEE) partner in TMT Services & Supplies, with which Kapsch Trafficom made up the e-tolls collections company Electronic Toll Collections (ETC).



Sanral spokesperson Vusi Mona’s full statement:

Outa is focusing on the cash collected and that skews their calculation. The non-payment of toll cannot be used as the basis on which to determine the cost of collection, as the current ongoing litigation will determine the ability to realise the revenue.
 
In terms of the previously reported revenue, the toll operation costs are still aligned with the 17% anticipated cost of collection. Unfortunately, toll collection is impeded as a result of Outa and others’ relentless campaign encouraging non-payment of e-toll, which is unlawful.
 
The toll operations company does not get a percentage of the toll revenue collected but is compensated in terms of a tendered schedule of rates for services delivered. The exact amount paid by SANRAL per month differs depending on services provided.
 
ETC is a South African company. The monthly payment made is dependent on the services delivered and the direct costs for print and post of invoices, municipal rates and taxes, system and infrastructure maintenance costs and other toll operations costs. Statements made that revenue has or will leave the country have been addressed many times in the past. There is a vast difference between revenue (turnover) and profit. The amount paid to ETC is compensation for services delivered in accordance with tendered tariffs. All operational costs are paid within South Africa; costs such as employee costs, administration costs, communication costs, banking fees, facilities (including maintenance and asset refresh), rates and taxes. All these are paid in the country to local service providers. Only if a profit is made, is there a possibility that it may leave the country, subject to Reserve Bank requirements and Tax Regulations. This is the case with any foreign company doing business in SA.  
 
As to statements that "virtually no money is going toward the e-toll bonds and that SANRAL bond auctions are not attracting any investors” the facts are that at our last bond auction, on 14 September 2016, we received total bids of more than R1. 7 billion whilst we were looking to raise R500 million. This means we were more than three times oversubscribed. This has meant that we did not have to go to market. We have postponed some of this year’s bond auctions due to changes in cabinet and sovereign credit downgrades. Our next bond auction is confirmed for 21 June 2017.
 
However, it is concerning that OUTA appears to relish in the current situation that SANRAL finds itself in at the moment.  Despite all their efforts in the past, the courts have found that the project was implemented legally. OUTA’s current campaign is based on encouraging road users to break the law. This is unlawful and SANRAL is confident that the current matters before the courts will find this to be the case. Road users follow OUTA’s advice, at their peril.  Furthermore, the National Road infrastructure provided and maintained by SANRAL carries the bulk of freight traffic in the country and is servicing the people of South Africa.  If SANRAL fails, the users of the network will be in a much worse position, as will the economy of South Africa.
 
In addition, the expansion and improvement of the inner-highways in Gauteng has reduced the congestion and cut drive-times considerably. There are more benefits: for individuals – lower fuel and time costs as well as accident rates and, over time, savings in tyre, suspension and steering repair costs. The same holds for businesses – more turnarounds per day resulting in higher turnover and productivity as well as more appointments per day. These changes, an increase in mobility, ease of use for commuters and business, a decrease in the frustration felt by motorists by cutting down their travel time and helping to ensure their safety as a result of a quality road network are the main drivers behind projects like the Gauteng Freeway Improvement Project. For the last four years commuters in Gauteng have reaped the benefits of this project and while we may continue to disagree on many things surrounding the Project, the one thing I think we can all agree on is that it has already helped to improve the lives of Gauteng citizens, and that, we must not forget, was the entire point of this exercise.
 
Most of the upgraded freeways will reach their capacity within the next 3 to 5 years, due to exponential growth experienced.  It is anticipated that traffic conditions will then be similar or worse than before the implementation of the GFIP in 2008.  This is also reflected in the SANRAL traffic modelling for the GFIP, that was done in 2008.  SANRAL plans its projects well in advance, based on extensive traffic modelling, travel demand patterns, and also informed by city planning and urban development. The Gauteng Freeway Improvement Project was a three-phase project to be developed using a sustainable revenue stream through the user pay principle to fast-track the much-needed initial existing freeway upgrades that was required to stimulate economic growth, as well as future phases that included the construction of new freeways.  With insufficient funding available to SANRAL, phases two and three are unlikely to be implemented. Most of SANRAL’s national road network in Gauteng was upgraded to its maximum capacity.


OUTA’s full statement:

Following Minister Joe Maswanganyi’s recent update and explanation of the e-toll situation in Parliament last week, OUTA has deduced that of the R2,9 billion e-toll income received from motorists since inception (December 2013) to March 2017, the Austrian-owned e-toll collection company ETC was paid R2,2 billion (i.e., 74%).   

This is a clear indication of how irrational the scheme has become and what makes matters worse is the compliance levels continue to decline year on year. At an average of R55 million per month paid to ETC, and with the current e-toll income levels at around R63 million per month, virtually no money is going toward the e-toll bonds. This is clearly a problem for SANRAL and explains why their bond auctions are not attracting any investors, pushing this state-owned entity to the brink of financial failure.  

“Our assessment of SANRAL’s latest reporting, indicates they are not accounting for e-toll revenues billed at the punitive tariffs, but instead are reflecting their invoicing and outstanding revenues at the discounted e-tag rates,” says Wayne Duvenage, OUTA Chairperson.  

Reflecting all e-toll invoices at the discounted rate suggests SANRAL wants to present outstanding debt lower, despite the fact that they are reflecting the outstanding debt to unregistered road users at the higher punitive tariff. At the discounted value, SANRAL will still be owed around R9,2 billion as of the end of March 2017. OUTA believes that SANRAL will not be able to collect a meaningful portion of this debt, regardless of litigation outcomes going forward.

The e-toll litigation process is in full swing, with OUTA having filed its papers in response to SANRAL’s declarations against its members. These cases will be ventilated in both the high court and magistrate courts in the latter part of the year. In all instances, there is a constitutional element to each case, along with the technical elements that will be argued. We believe the courts will not want to be clogged up with numerous cases and that a few cases will first be tested in court to establish the way forward for the e-toll debacle. 

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department of transport  |  outa  |  sanral  |  tolls  |  e-tolls
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