E-toll debts not written off, says Sanral
The South African National Roads Agency Limited (Sanral) has rubbished reports that it has cancelled e-toll debts older than three years and written off R3.6 billion in the 2017 financial year relating to this debt.
A report by Moneyweb this morning suggested the roads agency had "thrown in the towel over e-toll debts older than three years" although Sanral will "continue in its attempts to recover unpaid e-tolls by pursuing defaulters in the courts".
Responding to ITWeb over the new development, Vusi Mona, Sanral's spokesperson, said reports that Sanral has written off e-toll debt are incorrect.
He explains that Sanral made a provision in its assessment of collectability in its Integrated Annual Report as required by International Accounting Standard 39.
"This standard outlines the requirements for the recognition and measurement of financial assets, financial liabilities, and some contracts to buy or sell non-financial items."
He adds that the roads agency acknowledged the low collection rate on the Gauteng Freeway Improvement Project (GFIP) and its board has requested the shareholder (the Minister of Transport) to address the impact of the poor collection rate with Cabinet to ensure the sustainability of Sanral.
"For the purpose of measuring revenue arising from e-toll activities, which is measured at the fair value of the consideration received or receivable, Sanral reviewed its historic data in order to determine the probability of receipt of payment and expected future economic benefits.
"In estimating the probability of future economic benefits that will flow to the entity, management bases its estimates on past experience. In making this judgement, Sanral made a distinction between users based on their payment patterns. The revenue recognised takes cognisance of payment patterns."
As a result, he points out, revenue is not initially recognised from transactions where future inflow of economic benefits is assessed as improbable on the date of the transaction.
"Therefore, Sanral has not written off e-toll debt," Mona stresses.
E-tolling on the Gauteng freeway system started on 3 December 2013, after much controversy. However, it has been met with ongoing resistance from motorists.
According to Mona, there are approximately 2.5 million vehicles using the e-toll network in Gauteng on a monthly basis. Of these, he says, 1.45 million are currently registered, of which 1.3 million have accounts in good standing.
Meanwhile, the Organisation Undoing Tax Abuse (Outa), in a statement issued this afternoon said Sanral's financial statements provide a clear signal that the state-owned entity acknowledges that it is finding collecting the Gauteng e-toll debt extremely difficult.
It also means that Sanral is likely to require increased funding from an already over-stretched National Treasury, as the investment houses are very absent at Sanral's bond auctions.
According to Outa, the most telling sign of Sanral's financial woes is the increased loss for the 2016/17 year, at just under R5 billion, substantively up from the loss of R1.2 billion posted last year and with the bulk of the loss (about R4.6 billion) arising from the toll operations.
"However, it is the treatment of the outstanding e-toll debt when compared to last year, that illustrates that Sanral is starting to face e-toll reality," says Rudie Heyneke, Outa's transport portfolio manager.
It civic body says Sanral records impairment losses of R3.6 billion for e-toll debts that were effectively written off, compared to R92 million in 2015/16.
"Last year, virtually no outstanding debt was written off, as Sanral had pinned its hopes on the 60% discount dispensation gaining traction during the following financial period. This year, the massive R3.6 billion e-toll impairment loss is a significant acknowledgement that the e-toll debt is uncollectable," says Heyneke.
That R3.6 billion is the equivalent of 50% of all toll revenue (the trade receivables) for the first 15 months of Gauteng e-toll operations and is substantially more than the prescribed debt (the debt older than three years).
Sanral's report says it can't legally write off toll debts but that the amounts assessed as irrecoverable include debt older than three years, losses due to the reduction of the standard tariffs in 2015, accounts under R500 and debt owed by businesses in liquidation or under business rescue, says Outa.
"The impairment of the outstanding debt, combined with operating losses, is a strong indicator that Sanral's leadership, together with the Minister of Transport, must make an in-depth revision of their e-toll policy," says Heyneke.
Of serious concern is that Sanral's chairperson speaks of having "only" R425 million of irregular expenditure as an achievement, due to the reduction of this figure from the prior year's R1.2 billion.
"While the trend of curbing irregular expenditure may be moving in the right direction, the value is still unacceptably high," says Heyneke.