Sanral raises R1.5bn funding

Johannesburg, 06 Aug 2009

The South African National Roads Agency Ltd (Sanral) has raised an additional R1.5 billion for its major road improvements.

The agency says it's on its way to raising the first R22 billion in debt finance to fund its upgrade project, ensuring e-tolling will be a reality in 2010.

The agency issued its first state-guaranteed bonds with maturities in 2020 and 2034. Including the R9.95 billion raised in the previous financial year without guarantee, Sanral has raised R11.45 billion to expand and upgrade toll roads.

The most recent funding is being raised through the Domestic Medium-Term Note programme, which will allow it to issue notes covered by a government guarantee, on an ongoing basis.

In May, government also gave Sanral a guarantee of R12.33 billion for the current financial year and guarantees for future funding with set limits for each financial year. The funding was secured following a decision by National Treasury to permit future issues by the agency to carry a state guarantee.

Sanral, which raises funds for its capital projects, previously stated it would need to raise R22 billion for the first phase of its improvement projects. The second phase is expected to cost R25 billion, while the cost of the third phase has been set at R20 million. Over R20 million of the funding is expected to go towards the Gauteng Freeway Improvement Project (GFIP).

The GFIP is an initiative which aims to provide an interconnected network of inner and outer ring roads as a solution to the traffic congestion experienced in Gauteng. The 185km of new toll infrastructure will see the N1 to Pretoria, Johannesburg ring roads and the R21 to Pretoria, become electronic tolling zones. Roads will be operated on the user-pays principle after October 2010.

Sanral is still appraising various options for billing the toll fees to motorists. These could include linking tags to bank accounts, systems to recharge tags at retail outlets, or Internet-based products.

The agency recently concluded a loan agreement with the European Investment Bank, which would be used to fund the freeway improvement project. It also expects to receive over R50 million from bids on its HWAY bond this year.