E-tolls are cheap for users: Sanral

[creeper]

@DJ Thanks. Nice calcs

What exactly is the government's argument against Fuel Levies?

I mean, saying "but then the entire country pay for gauteng roads" is invalid? Surely a Fuel Levy is applied at the Petrol STATIONS ? In other words, where you fill up? Why can't Gauteng have the price of petrol/diesel be increased by say 10c? Wasn't this the case before with the coast having different prices?

Their argument is the fact that cars are becoming more efficient and therefore, overall fuel consumption will decrease. This will cause less revenue generated from a fuel levy. It was also argued that if the country pays extra on the fuel levy, other provinces will pay for the etolls.

Both arguments have strong counter arguments.

 

[2026]

BTW, if you want to do very crude calculations like these, then go ahead. Everyone can do these calculations. Nazir Ali shared with us the breakdown of payments, and we can therefore use these figures to determine their highest possible revenue point. You then multiply this by the weighted breakdown of Gauteng motor users and you then compare this with their debt obligations. It doesn't make sense even on that fundamental basis.

I've simply gone into a lot more detail with my calculations and scenarios, taking into account expenditure disclosed by Sanral...

Where did you get the number of road users from? (the 3 million in your posts with graphs)

 

[Gaz{M}]

Hi DJ

Impressive as your calc's are..you have left out the other vehicle categories, like heavy vehicles and trucks. They pay a lot more than ordinary road users and are not subject to the R450 cap on etolls. You also can't say what sort of 'non-compliance' income they have budgeted for, as these users are also not subject to the R450 cap and pay 6 times more than an etag user.

So it is difficult to say that their revenue targets are overly optimistic without the other vehicle data.

 

[MrGray]

They have this stupid "user pays" argument that they keep rolling out, but they don't apply that to anything else, least of all JZ's private house.

Yes! Can you imagine if we applied "user pays" to everything?

In theory, I wouldn't have to pay any personal taxation as I already pay privately for my own healthcare, education and security.

I'll do a deal with government - I'll pay their "user pays" road toll, but only if they apply the same principle to absolutely everything and I never pay twice for it via taxation or pay for something I never use (e.g. Nkandla). Fair enough, isn't it? I'll pay a "user pays" fee if I ever crack an invite to Nkandla, but not a cent towards that or any other expenditure on facilities, infrastructure and equipment I'll never use.

 

[MrGray]

Hi DJ

Impressive as your calc's are..you have left out the other vehicle categories, like heavy vehicles and trucks. They pay a lot more than ordinary road users and are not subject to the R450 cap on etolls. You also can't say what sort of 'non-compliance' income they have budgeted for, as these users are also not subject to the R450 cap and pay 6 times more than an etag user.

So it is difficult to say that their revenue targets are overly optimistic without the other vehicle data.

And the heavy vehicle compliance rate will probably be very high as they are not private, mostly corporate owned.

 

[Bundu]

What exactly is the government's argument against Fuel Levies?

I mean, saying "but then the entire country pay for gauteng roads" is invalid? Surely a Fuel Levy is applied at the Petrol STATIONS (where you fill up your car) . Why can't Gauteng stations have the price of petrol/diesel be increased by say 10c? Wasn't it like this before with the coast having different prices? Actually isn't it still the case?

"user pays" basically means that one should not cross subsidise

AFAIK, for every R4 tax paid by Gauteng residents, Gauteng only receives R1 back from the fiscus, so we are masively subsidising most other provinces - but for some reason, govt. says these provinces should not subsidise even 10c/ltr for Gauteng roads, which is BS in any case, as the other provinces will also need new roads

It's obvious that e-tolling was chosen as a collection method, to enable corruption - if that were not true, then incompetence would be the only other alternative reason for e-tolling

 

[DJ...]

What's the cost per kilometer we paid for the highways btw?

Total cost, we paid R162 million per kilometre...

 

[DJ...]

What exactly is the government's argument against Fuel Levies?

I mean, saying "but then the entire country pay for gauteng roads" is invalid? Surely a Fuel Levy is applied at the Petrol STATIONS (where you fill up your car) . Why can't Gauteng stations have the price of petrol/diesel be increased by say 10c? Wasn't it like this before with the coast having different prices? Actually isn't it still the case?

Their argument is that the user must pay, because the roads are not of national importance. Yet Sbu Ndebele admitted that they were. They sold the project to government on the basis that they are of national importance. And the recently inferred in parliament that they are of national importance. It is lunacy...

 

[DJ...]

Where did you get the number of road users from? (the 3 million in your posts with graphs)

AA data...

Hi DJ

Impressive as your calc's are..you have left out the other vehicle categories, like heavy vehicles and trucks. They pay a lot more than ordinary road users and are not subject to the R450 cap on etolls. You also can't say what sort of 'non-compliance' income they have budgeted for, as these users are also not subject to the R450 cap and pay 6 times more than an etag user.

So it is difficult to say that their revenue targets are overly optimistic without the other vehicle data.

I haven't left anything out at all. Those are the figures that Nazir Ali has stated as fact, as the breakdown of total payments that will be made. Those come from his mouth. I simply used the data that he gave us. What it shows is that either he was lying or being disingenuous when he made those statements, or he is lying about possible increases. And I can certainly create scenarios resulting in variances in compliance with my model, but it would be safe to assume a close to 100% compliance with trucks.

But let's for arguments sake add the trucks in to that category using my model. Every truck registered in the whole of South Africa (because we assume that all trucks will drive in JHB at some point) will need to be paying around R2,200 per month in order to maintain the system without increases beyond CPI each year. Every single truck!

This equates to an increase in input costs for the trucking logistics industry of around R275 million per month, or R3,3bn per annum. Adding R3,3bn per annum to the input costs of the logistics industry is going to have some rather serious inflationary impacts, and will no doubt result in smaller operators being forced to shut their doors. This cost is passed on to clients, who in turn mark up their goods accordingly. Also remember that in economics, any variable input cost increases allow opportunities to factor in principle pricing increases as well. So that R3,3bn is passed on to consumers, and more. Probably in the region of about R4bn worth of spending power gone, with one flick of the e-tolling switch.

So even if we include them, there are disastrous consequences for South Africans. Let's also not forget that not all trucks will be paying that each month as not all trucks will travel in JHB, and most trucking companies have instructed their staff to avoid e-tolls as much as possible. If we accept that around 50% of the trucks in SA will travel in JHB and the vast majority will be local trucks, then JHB logistics operators will have to be paying around R4100 per month, per truck. All of a sudden you have some serious pricing variance between provinces which is not what you want in a functional micro-economy such as theirs.

EDIT: you must also remember that I have severely understated their operational expenditure. I have only used data publicly available. If you look at their current operational expenditure, it is in the region of about R6bn per annum iirc. E-tolling will be their largest project undertaken to date having a massive impact on their revenue, yet I've only stated their operational expenditure at around R1,8bn per annum, which by their current revenue/expenditure ratio is about half of what it should be, even if this process is more streamlined...

 

[Bismuth]

Thanks DJ..., those are indeed interesting scenarios. I see that even with best-case scenarios, the whole etoll system will fall flat on its' face!.

That leads me to the question, did they do any research at all before starting with this etoll idea?. Was there any sort of feasibility/sustainability study done, to see if it is actually practical? I will answer myself here, and say not, because if I had a business plan, that had scenarios as calculated by DJ... here, I would fire myself.

B

 

[2026]

AA data...

I'm not finding that number, but I did find this article from a year ago: http://www.bdlive.co.za/articles/2012/01/11/gauteng-e-toll-vehicle-registration-reaches-200000;jsessionid=46234F655659FA9F35CAC1D60118E4C4.present1.bdfm

which says

"We still have a long way to go but it is picking up, our first goal is to get about 1-million users registered which if you look at the number of daily users on the network is about 900000," Mr van Niekerk said.

Seems that the 3 million is a bit of a generous number.

edit: of course, this is what sanral wanted to be registered. Might not reflect the true number of road users.

 

[DJ...]

So let's have a look at this based on their current financial statements, without understating their expenditure, and including revenue generated from trucks which I excluded from my previous calculations. They currently operate on a 35% operational profit margin. So let's extrapolate that into their costs going forward, while including revenue from trucks, assuming 100% compliance with trucks, and scenarios based on lower compliance levels with private cars:

Here is the 100% compliance rate:

As you can see, assuming no net profit, no tax, no other interest, no depreciation, and 3 million active users per month, the bare minimum year on year increase required is 10%...

Here is 66% compliance:

And once again, assuming no net profit, no tax, no other interest, no depreciation, and 2 million active users per month, the bare minimum year on year increase required is 15,79%...

Now let's look at 33% compliance:

Finally, assuming no net profit, no tax, no other interest, no depreciation, and 1 million active users per month, the bare minimum year on year increase required is 28,7%.

So I think this paints a more accurate reflection of what is going to be required in order for the system to remain operational, although we haven't factored in any depreciation, taxation, or interest outside of the bond issuances. I'm not going to start doing their complete financial forecasts for them now...

 

[DJ...]

I'm not finding that number, but I did find this article from a year ago: http://www.bdlive.co.za/articles/2012/01/11/gauteng-e-toll-vehicle-registration-reaches-200000;jsessionid=46234F655659FA9F35CAC1D60118E4C4.present1.bdfm

which says



Seems that the 3 million is a bit of a generous number.

I am being very generous as not all registered vehicles will travel the toll roads at all, hence why I am creating scenarios. Scenario 3 represents the position if one million users pay, which by Van Niekerk's admission would represent an over-subscription...

 

[Sonic2k]

The thing is that Kapsch has paid the bribes, and now expects a return on investment. I think the pressure on cANCer to get the e-toll up and running is tremendous!

Correct, the Austrians are tightening the thumb-screws now. Can you imagine the e-mails that must be going back and forth?
Kapsch is one disgusting, despicable company.

 

[Gaz{M}]

We all know what will happen - Pravin will write a cheque for the difference.