The South African National Roads Agency Limited (Sanral) has secured an additional R12.33 billion in government funding for its national roads improvement project.
This means the agency has secured more than R22 billion, following its recent announcement that it had raised R9.95 billion.
Government has given 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 roads agency said it secured the funding following a decision by National Treasury to permit future issues by the agency to carry a state guarantee.
Sanral CEO Nazir Alli says: “We wish to thank those who have participated during the past year and look forward to their participation in the future. I would also like to inform all that we will continue our monthly auctions, on the first Wednesday of each month, starting July 2009."
The agency will auction off several of its bonds to raise funds. At previous auctions, Sanral issued its bonds and received overall bids, which exceeded the allocated prices. It expects to receive over R50 million from bids on its so called HWAY bond later this year.
Sanral, which raises funds for its capital projects, previously stated it would need to raise R25 billion in debt finance for its improvement projects. 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 solutions.
In the previous financial year, Sanral had an approval for unguaranteed borrowings of R9.95 billion. The agency announced a portion of the approved borrowings have reached their limit by the issue of bonds through the current R9.95 billion Domestic Medium-Term Note (DMTN) programme. The programme began in July last year and reached its limit in May 2009.
Alli stated that most of its future capital would be also be raised through the DMTN programme, which will allow it to issue notes on an ongoing basis.
"We will be embarking on a new DMTN programme to raise the necessary funds through the issuing of bonds that will be covered by a government guarantee,” he said.
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