Costs of the Gauteng Freeway Improvement Project (GFIP) and e-tolling will not exceed that of the Gautrain, says the SA National Roads Agency (Sanral).
Media reports this week alleged the open road tolling system in Gauteng will exceed the Gautrain's R30 billion in costs by R5 billion.
In response to a parliamentary question last week, transport minister Sibusiso Ndebele broke down the costs of road construction for each specified phase of the GFIP and the construction cost of the e-toll collection system.
The cost of the GFIP phases, including contract price adjustment (CPA) and VAT, is R17.8 billion, according to the figures in the parliamentary response.
However, publications have reported the figure as R19.8 billion and thus declared an increase of R2 billion on the figure of R17.5 billion that was previously given by government.
Fruity analogy
Alex van Niekerk, GFIP senior project manager at Sanral, told ITWeb that the estimated cost of the toll operations until 2020 is R12.5 billion.
According to Ndebele's figures in the parliamentary response, the e-toll system construction costs amount to R2.6 billion. This figure added to the road construction cost of R19.8 billion and the toll operating cost, gives a round figure of R35 billion.
Even if the figure of R19.8 billion was correct, the GFIP and e-toll system costs still do not exceed that of the Gautrain, notes Van Niekerk.
“That's not comparing apples with apples. They need to take the capital cost plus the operational cost plus the VAT plus the financing cost of the Gautrain, as well as inflation, to be able to compare the two.”
Tariff increase
Media reports also highlighted the increase in the e-toll construction costs from the previously mentioned R1.4 billion by government to the R2.6 billion disclosed by Ndebele.
However, Van Niekerk says these calculations cannot be simplified. “It's extremely complicated contractual matters that need to be understood. I'm just worried that it's a VAT matter.”
He explains that the contractor accommodated for inflation on the 10-year contract period.
“It's the impact of construction inflation. It's the standard practice worldwide. If you apply the current inflation rate, the figure drops by a couple of billion so it's an estimated figure.”
He adds that if the costs were in fact escalating, the e-toll tariffs would have been increased but that is not being done.
Ndebele explained that the determination of toll tariffs is based on a number of factors, including the project's capital costs and associated debt servicing; routine road maintenance costs for the tolled road sections; future periodic maintenance action requirements, such as pavement rehabilitation and overlays; toll operational costs and other costs associated with incident management; and the provision of intelligent transport systems.
There are 19 construction projects that were awarded for the upgrading of the freeways, according to Ndebele.
“These are, what is generally known as a rate and measurement contract. The tendered amounts for the construction of the works, showing the scheduled works, provision for price adjustment in accordance with the standard industry formula, known as the CPA and VAT are shown in the table.”
The minister also noted that the toll construction costs include the incident management systems, central operations centre, transaction clearing house, and violation processing centre.
“Furthermore, it is noted that the costs of the ORT [open road tolling] system and COC are not only applicable to the GFIP, but are potentially applicable to the national road network since it fulfils a national function.”
Strong reaction
The Congress of South African Trade Unions (Cosatu) responded to media reports about escalating costs of the e-toll system, saying it is shocked and angry.
It adds that government has no misgivings in spending billions on elite projects, such as the Gautrain and the open road tolling system, and yet drags its feet when it comes to responding to the basic needs of the working class, such as quality housing and an end to the bucket system.
“The escalating implementation costs of the tolling system are a vindication of our view that the tolls are a modern form of the privatisation of public roads.
“These tolls will impose a huge additional burden on road users, while generating huge profits for those who have installed it.”
Cosatu has issued a notice under Section 77 of the Labour Relations Act and negotiations on this are continuing. It has also requested a meeting with the Ndebele to discuss its demand for a safe, affordable, integrated and efficient public transport system.
“If there is no change in policy from government and the negotiations deadlock, we shall be planning marches, demonstrations, pickets and stay-aways, and taking strike action if the tolls are not scrapped.
“The billions that are wasted on these tolls could be utilised to build an integrated, safe, reliable and affordable public transport system for everyone, particularly the poor.”
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