MTBPS 2022: National Treasury will allocate R23.7 billion to Sanral on condition it meets certain requirements regarding the Gauteng Freeway Improvement Project (GFIP), commonly known as e-tolls.
This, says the 2022 Medium-Term Budget Policy Statement (MTBPS), is in an effort to address the balance sheet weaknesses in some public entities that are central to economic recovery.
“Sanral receives funds to pay off government-guaranteed debt, conditional on a solution to phase one of the Gauteng Freeway Improvement Project,” the MTBPS states.
According to the National Treasury document, Sanral remains in limbo given policy uncertainty over government’s position on the user-pays principle.
“As a result, Sanral cannot collect sufficient cash from its toll portfolio to settle maturing government-guaranteed debt. This balance sheet weakness is affecting Sanral’s ability to maintain the broader road network and as such also presents a medium-term risk to economic growth.”
Finance minister Enoch Godongwana didn’t mince his words when responding to a question about the budget allocation for Sanral, speaking to media ahead of his mid-term budget speech.
According to Godongwana, there’s been dilly-dallying on the issue of the GFIP for the past seven years. This, he states, has impacted negatively on Sanral’s balance sheet.
A decision was made to take Sanral’s debt, which is to the value of R47 billion, to sovereign, where it will be split 70/30 between national government and Gauteng Provincial Government, respectively, states the finance minister.
“The uncertainty surrounding the Gauteng Freeway Improvement Project continues to have a major negative implication for road construction in the country.
“We need to move on from the debates of previous years and find solutions to this challenge. To resolve the funding impasse, the Gauteng provincial government has agreed to contribute 30% to settling Sanral’s debt and interest obligations, while national government covers 70%.
“Gauteng will also cover the costs of maintaining the 201km and associated interchanges of the roads, and any additional investment in roads will be funded through either the existing electronic toll infrastructure or new toll plazas, or any other revenue source within their area of responsibility.
“Government proposes to make an initial allocation of R23.7 billion from the national fiscus, which will be disbursed on strict conditions.”
Remaining defiant
Despite public resistance, Sanral moved ahead with plans to introduce e-tolling on the Gauteng freeway system on 3 December 2013.
Sanral previously contracted the Electronic Toll Collection Company to collect e-toll payments on its behalf. However, the task was not without its fair share of challenges, egged on by ongoing resistance from motorists.
In July, a report by Moneyweb revealed there was “an average of 17.7% e-toll payment compliance rate on GFIP in the first six months of 2022”.
There has also been push back from the Gauteng region of the Department of Roads and Transport, with the provincial government saying it wants to see the implementation of e-tolls in Gauteng halted.
In 2018, trade union Cosatu and the Gauteng ANC embarked on protest action against the e-tolling system.
Godongwana points out the decision on how to finance 30% of Sanral’s debt remains squarely that of the provincial government, indicating that national government can’t prescribe to them. “Should they decide on tolls…it will be their decision.”
Mitigating economic risks
In total, the 2022 MTBPS proposes providing in-year funding allocations of more than R30 billion to Denel, Sanral and Transnet.
With roads agency Sanral set to be allocated R23.7 billion, a total of R5.8 billion will be allocated to Transnet – half of which is shifted funds to repair infrastructure damaged by the recent floods, and half to repair and maintain freight rail locomotives.
Denel has been allocated R204.7 million to reduce contingent liabilities arising from its weak financial position and R3.4 billion – if set conditions are met – to complete its turnaround plan.
According to the MTBPS, government is allocating the in-year funds to mitigate economic and fiscal risks associated with the three state entities.
“Proposed conditional in-year allocations to Denel, Sanral and Transnet will reduce contingent liabilities and enable these entities to continue supporting economic growth and national security.
“Government is considering various policy approaches to safeguard fiscal sustainability.”
Godongwana concludes that non-compliance to the set conditions means no funding for the public entities.
Share