E-tolls have no future in Gauteng. At least, that’s what Gauteng premier David Makhura said in his state of the province address in July, a scant two months after the ANC retained Gauteng by the skin of its teeth in the general elections.
Ahead of the polls, the ANC in the province resolved that e-tolls must be scrapped — a position Makhura himself repeated several times.
But three months on, the controversial tolling system — part of the Gauteng Freeway Improvement Project (GFIP) — is still in place. And an apparent stalemate between the national and provincial governments has left its future uncertain.
Finance minister Tito Mboweni is adamant that the user-pays principle must prevail.
In his medium-term budget policy statement (MTBPS) last Wednesday, Mboweni said the tolling system is here to stay. He made the pronouncement despite the fact that a task team — including himself, Makhura and transport minister Fikile Mbalula — is still apparently discussing the matter.
On Thursday, the cabinet announced that it had referred the issue back to the task team for further discussion of the seven options it had put forward for consideration (see box).
The task team will now have to submit its preferred option to the cabinet, which is expected to make a decision soon afterwards.
It’s a battle that’s been raging for almost six years, and is weighing on the fiscus. Compliance is at a record low of 25%-30%. Mbalula told the media that unpaid fees total about R67bn.
According to the MTBPS, the SA National Roads Agency (Sanral) has since 2015 incurred average losses of R1bn a year. The agency has not generated sufficient cash from its toll portfolio to settle operational costs and debt redemptions, which will be due in the next three years.
The MTBPS shows that the government has extended a total guarantee facility of R38.9bn to Sanral, of which R30.3bn had been used by end-March.
There are seven options on the table for the government:
• Cancellation of the e-toll scheme, with full responsibility for debt servicing falling on the government. (Mbalula says the government does not have the money.)
• A partial shadow toll scheme linking the toll scheme to a government subsidy of less than 100%.
• Selling the existing debt to a private concessionaire, which would have to agree to enforcement by the state.
• The introduction of a public transport fund to prioritise public transport on freeways and support the Gautrain.
• The introduction of a hybrid funding model — a combination of taxes, a fuel levy and licence fees to subsidise toll fees.
• A further dispensation and physical toll plaza installation.
• Implementation of the scheme as it was intended, with motorists paying e-tolls.
Source: Linda Ensor/Business Day
— E-toll alternatives
Over the medium term, Sanral is expected to repay R10.7bn of maturing debt obligations and R10.8bn in interest payments.
So what is to be done? For the Organisation Undoing Tax Abuse (Outa), which started as a lobby group against e-tolling, the solution is simple: scrap the entire system.
Outa CEO Wayne Duvenage says the government needs to make a decision, but if that decision is to continue with e-tolling, "the war with citizens continues".
He believes the mixed message coming from Mboweni and the cabinet last week has created confusion. "It is either a stalemate or they are speaking different [languages]," Duvenage says.
In contrast to Mboweni’s view, Outa says Sanral will not lose money if the system is scrapped — it is only those involved in the collection process who will lose out.
"That is not helping Sanral or the government," says Duvenage. "[Mboweni] says he thinks if you cancel [e-tolls] you are going to lose money, but you are not going to lose a cent because you’re not getting anything."
E-tolls are collected by Electronic Toll Collection (ETC), whose contract with Sanral is due to expire on December 2.
According to Outa, Sanral collected R725m in 2017/2018. Of that, ETC earned R643m.
These administrative fees for e-toll collection are among the highest in the world, says Duvenage. Outa’s research shows that the international average is 7%-10% of the finance cost. In SA’s case, the ETC contract would add an additional 60% to the cost of financing the GFIP bonds if the collection targets were met. Duvenage believes the government needs to find another way to fund the Gauteng road improvements.
Sanral needs R2.6bn a year to finance the original bond. To this end, Outa suggests the agency should renegotiate its Public Investment Corp bonds — get a new interest rate and payment terms.
The allocation of funds from the National Treasury should also be reassessed, and the inclusion of an allocation from the fuel levy should be considered.
Sanral, which suspended the collection of e-toll debt earlier this year, has said it will "implement the decisions taken by cabinet on this matter".
"The user-pays principle is part of government policy and to the extent that government decides to use this principle to fund the GFIP, Sanral continues to apply it," says Vusi Mona, spokesperson for the department of transport, under whose ambit Sanral falls.
On the issue of historic debt, Mona says the government’s decision will inform how debt and compliance are addressed.
It is not clear which way the government will go. If Mboweni is calling the shots, Gauteng residents will be forced to pay. But Makhura’s administration is not giving up just yet — especially with another local government election on the horizon.
Vuyo Mhaga, the premier’s spokesperson, says Makhura’s ultimate objective is to be able to tell Gauteng residents there will no more e-tolls. "We think we have made a strong proposal against [e-tolls], but we will engage with [the task team] and try to find something suitable for everyone," he says.
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