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Sanral unsurprised by downgrade over e-tolls

Staff Writer
By Staff Writer, ITWeb
Johannesburg, 20 Jan 2015
Moody's downgrades Sanral from stable to negative.
Moody's downgrades Sanral from stable to negative.

The South African National Roads Agency (Sanral) is not surprised credit rating agency Moody's has dropped its rating from stable to negative.

The agency says, although it is solvent, non-payment of tolls has had a negative impact on the debt levels in the toll portfolio. The non-toll portfolio, which covers 85% of the national road network, is healthy, says CFO Inge Mulder.

Mulder adds Sanral was not surprised by Moody's downgrade of its rating from stable to negative.

"The ratings agency had warned at the time of the previous two ratings (July and November 2014) that any failure by Sanral to generate e-toll revenue leading to deteriorating cash flows and growing borrowing needs would lead to a downgrade.

"We were ahead of forecasted income at the time when the e-toll advisory panel was announced by the Gauteng province. Since then, income has dipped appreciably and Moody's itself makes a correlation between the increase in the non-payment of e-tolls and the decision by the Gauteng province to establish a panel to assess the socio-economic impact of e-tolls - something that could have sparked speculation among the general public that the e-toll project may be abandoned."

The Opposition to Urban Tolling Alliance has noted compliance with paying bills dropped from just under 50% before the panel convened last year to around 30%.

The panel's report was last week released to the public by Gauteng premier David Makhura, which noted the system places a financial burden on low- and middle-income households, as well as being administratively burdensome.

Makhura last week said government will determine the future of e-tolling before the end of February. This process is being led by deputy president Cyril Ramaphosa, and will explore all the e-toll advisory panel's recommendations and their full implications, including the best funding model for the Gauteng Freeway Improvement Project (GFIP).

Around 50 suggestions on a way forward, to alleviate the burden on the poor and trim administrative hassles, were suggested in the report.

"We now await the outcome of the process led by Ramaphosa on e-tolling to provide policy clarity as well as the funding model for the GFIP. With policy certainty, we can devise a plan to repay our debt which should improve our rating," Mulder said.

Sanral's tolled portfolio accounts for 15% of the total road network it manages.

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