Claims by the South African National Roads Agency (Sanral) that it is running out of cash and will battle to pay for the upkeep of roads have been branded a "red herring" by the Opposition to Urban Tolling Alliance (Outa).
Outa says the assertion is a bid to get government moving on signing the Transport and Related Matters Amendment Bill into law. The legislation, which would pave the way for e-tolls in Gauteng, is awaiting president Jacob Zuma's signature.
The controversial project has met with much anger and opposition, and Outa is set to present its next legal challenge to the project in September, at the Constitutional Court, after losing previous bids to halt it.
The cost of implementing the project is some R20 billion, which Sanral had expected to recoup through tolls. Last February, National Treasury reduced Sanral's debt burden by R5.8 billion, which was also set to lead to lower tariffs.
Out of cash
Despite the bailout, Sanral says it is running out of money and is not in a position to raise more debt. Bloomberg quotes spokesman Vusi Mona as saying: "Sanral has almost totally depleted its available cash."
Mona was not available to comment this morning, as he was in a meeting with recently-appointed transport minister Dipuo Peters. He is quoted by the wire service as saying: "We're not able to fund ourselves any further, due to investors not feeling comfortable with our risk profile."
According to data compiled by Bloomberg, Sanral has debt, including interest, of R65 billion and R1.48 billion of bonds, which mature at the end of October.
The Department of Transport's latest strategy shows Sanral is set to receive R7 billion for capital expenditure in the current financial year. Funding for operations has been set at R3.5 billion for the year and the department has increased funding in both categories.
Sanral ended the year to March with cash and cash equivalents of R9.2 billion, but made a R2.5 billion loss for the year. It pointed out that, as of September last year, the delay in implementing e-tolls cost it 40% of its estimated 2012 toll revenue.
Sanral spent an average of R601 million a month on the Gauteng Freeway Improvement Project in the 2012/13 financial year. "Absent tolling, the amount has to be funded by National Treasury."
Moody's has already downgraded Sanral two notches, and the agency had to suspend its marketing activities and limit the sale of its bonds to depress borrowing costs, it said. It noted the future growth of road networks cannot be undertaken unless it can raise third-party funding.
"We've requested further assistance," Mona told Bloomberg, but National Treasury told the wire service it had not been approached for more funding.
Truth or dare?
Outa chairman Wayne Duvenage wonders if Sanral's claim about a cash crunch is not just a bid to push e-tolls. He points out that the roads agency is state-owned and can be bailed out, in the same way that South African Airways is repeatedly rescued.
"We simply cannot see government allowing Sanral to fail. Its function is too important to allow that to happen and we trust this is not a red herring to try and garner society's sympathy and support for e-tolling" says Duvenage in a statement.
Treasury reduced Sanral's debt burden by R5.8 billion last year, and - had government applied a 10c fuel levy for the project - more than R17 billion would have been raised, including the additional allocation, says Duvenage. He notes this would have covered the capital costs of the freeway.
Outa says "Sanral has only itself to blame for this predicament they find themselves in". The alliance notes that, apart from a six-month period when e-tolling was interdicted, between April and September last year, Sanral has been free to launch its plan.
Waiting game
Sanral "proclaimed with vigour" during August last year that it would be ready to roll out within weeks of the interdict against the controversial project being set aside, which the Constitutional Court did last September, says Outa.
"Ten months have now passed since that ruling in their favour and one has to ask why they have not launched as quickly as they said they would," says Duvenage.
However, Mona has said e-tolls cannot kick off until the Transport and Related Matters Amendment Bill becomes law. The Bill, known as the E-toll Bill, is currently with the president's office awaiting his signature, he said.
"Announcement of commencement will be made by the Department of Transport once advised by the Presidency about the Bill being signed into law."
Duvenage says Outa believes the delay is because the system, the biggest of its kind in the world, is too complicated to implement in this environment, and enforcement is a huge problem.
"The authorities have underestimated the backlash from society, which is the result of arrogance, poor public engagement and a lack of transparency by Sanral throughout the e-toll debacle. The multitude of 'after the fact' engagement sessions have been meaningless talk shops, with no change of heart displayed by them."
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