The Gauteng E-tolling Thread

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We currently have a system where the price is adjusted on a monthly basis to cover the actual cost of the fuel purchased etc...

Could they not have done the same with the fuel levy i.e. set it at a calculated [just an example] R2 a liter for the tollroads and see how it goes from month to month. If the income is a bit lower then increase the levy for the following month etc... basically like the fuel price is working now.

In that way they could have created some stability on the income side. Just a thought...
 
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Vehicles have to use the highways irrespective. This is evident based on current usage even after implementation. They can forecast those numbers very easily. Forecasting development in fuel systems over the course of 30 years is not possible, and adding this component into a DCM deal adds considerable risk.

I'm not supporting their decision. I'm simply telling you the reality of the fixed income market, which is one I've worked in for years...

And you are still going to argue that the e-toll system's revenue will be more constant than the fuel levies?

Vehicles don't have to use the highways as can be seen by a massive surge in traffic on alternative routes. I haven't driven on a e-toll route since December and I use to use them weekly before then.
 
What about variables like fuel prices increasing and thus people minimizing trips and less cars due to public transport systems or economic depression and and and?

Those "risks" have precedent that can be used to calculate risk. Development in the fuel market over decades cannot be forecast...
 
Those "risks" have precedent that can be used to calculate risk. Development in the fuel market over decades cannot be forecast...

And when hovercars become mainstream in 2025, and freeways become redundant? Ooops.
 
And you are still going to argue that the e-toll system's revenue will be more constant than the fuel levies?

Vehicles don't have to use the highways as can be seen by a massive surge in traffic on alternative routes. I haven't driven on a e-toll route since December and I use to use them weekly before then.

Their version of implementation has been atrocious, and imo they were not honest with investors with regards to possible backlash when they went on their initial fundraising roadshows, hence the additional guarantees in the deals. All I'm pointing out is that you cannot factor in a variable of risk to such a degree in a debt prospectus and expect to solicit funding, without it being rated so poorly that you'd effectively force your bond into high yield status. You cannot fund infrastructure with a high yield bond issuance.

The fixed income market is all about cash flow. You already have a time component risk to your bond when you fund it over decades, which in turn produces interest rate risk (just as an example - there are many more). When you add a new variable with no precedent and no ability to forecast it, your deal becomes so risky that you'll struggle to secure funding. You can guarantee the debt, but then the guarantor needs to accept the risk.

Moreover, considering the current state of the bond issuances, the reality is that changing cash flow sources will in all likelihood trigger a default. That's the situation they've put us in...
 
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And when hovercars become mainstream in 2025, and freeways become redundant? Ooops.

Looking at current development in that market, it doesn't look likely at all. Any fixed income investor will consider this, and factor in such a risk when getting involved in a transport-related deal. The likelihood of significant fuel efficiency development in this space is high. The likelihood of a hovercar is incredibly low. Just have a look here - http://www.pewenvironment.org/uploa...ry of Fuel Economy Clean Energy Factsheet.pdf

What you see as a fixed income investor is serious risk exposure to fuel efficiencies should you invest in a deal where the cash flows are tied to fuel efficiency. Alternative energy sources are also becoming readily available, and there's no way for any originator of the debt to guarantee that they will have legislative control over alternative energies. So now you add considerable legislative and regulatory risk to your deal as well.

I'm simply pointing out how the market evaluates risk with respect to cash flows. The cash flow risk has to be mitigated as far as possible before an investor accepts the risk of subscribing to a bond. They balance this with the coupon rate, which means the greater the risk, the greater the coupon. It also results in high spread yields when traded which creates more risk.

You simply cannot efficiently fund a deal over decades with an unknown variable to cash flow that has such a potential to impact on the cash flow. If you want government to do this, then the reality here is that you'd better be prepared to pay even more on the funding side of things. It would end up costing us far more in the long-run due to the coupon required to meet risk appetite. We also don't have the craziest appetite for risk in SA. Our high yield market isn't that big and is thinly traded. You're asking for serious trouble trying to fund infrastructure development from this market...
 
Dude, I was being conservative with my estimate. Haven't you SEEN BTTF2???
 
Dude, I was being conservative with my estimate. Haven't you SEEN BTTF2???

:D

Look, if you want government to secure funding with a fuel levy cash flow component, then the reality is that the entire deal will cost far more than what it should with MBUF. MBUF is cheaper in the long-run and more efficient, if the country is ready for it economically (and we're not, considering the limited payment-base), and if it is implemented correctly.

It will also result in punitive charges for efficient vehicles to offset the cash flow difference created, so the benefit of efficiency is lost. Alternatively you punitively cost the leftover oil/fuel component, which in our country is also asking for trouble as we have an emerging middle class and economic goals intended to uplift the poor. You'll simply shift economic onus onto that group - you can't realistically do this if you want to support growth.

What we needed was a R50bn investment into public transport. Now that would have been spectacular. Income could have been used to invest in resurfacing roads, and the investment required for current resurfacing could have been funded with a shorter-term bond issuance that could have been funded from the fuel levy. That would have been ideal.

Instead, palms were greased and we landed up in the proverbial schit-hole once again. It really infuriates me...
 
@DJ - if they government had (1) being honest and said "we eFFed up the fuel-levy and spent it on a ton of other sh*t - sorry, we need to charge you more to maintain the roads, but everyone pays" or (2) had utilised the fuel-levy properly, there would have never been a reason for creating debt in the form of building the "gantry-monster".

The only reason e-tolling came into existence was due to being shortsighted (and obviously handing out tenders). So it is not really a valid argument that "e-tolling is better as it allows to calculate risk". There are many financial models out there which rely on fluctuating variables to establish risk and predict it.
 
Had they implemented the increased fuel levy 2 years ago, they could have already raised the billions needed by now. And we would all not be in this mess DJ. To say its risk this and that with the fuel levy is one thing. To say that its the truth why gantries were put up is another. We all know why they went up and it has ZERO to do with risk
 
Had they implemented the increased fuel levy 2 years ago, they could have already raised the billions needed by now. And we would all not be in this mess DJ. To say its risk this and that with the fuel levy is one thing. To say that its the truth why gantries were put up is another. We all know why they went up and it has ZERO to do with risk

Ah but that would have been an unpopular move country wide - can't annoy the voters now can we? Rather just **** with the middle class in Gauteng only.
 
E-tolls: two months in review [itweb]

Two months on from the implementation of what has been one of the most contentious issues between government and Gauteng citizens, in particular, over the past two years, and the backlash to e-tolls continues unabated.
Since Gauteng's e-roads – 45 gantries across the province's highways – went live on 3 December, the SA National Roads Agency (Sanral) has come under fire for a number of issues. While many of these emerged post-implementation, a chunk originated from public defiance ahead of e-tolling in Gauteng, which civil society groups fought tooth and nail to prevent.

In the last month alone, Sanral has been hit with criticism over its lax online security that left users vulnerable to online predators, an inefficient billing system resulting in erroneous invoices – perceived by many as threatening – being sent out, and has suffered three serious disruptions to its central operations centre (COC) due to anthrax and bomb threats.

Taxi tempers
This morning, the National Taxi Alliance (NTA) held a protest across major Johannesburg highway routes "against government's failure to issue operating licences to its members" resulting in some taxi operators having to pay for e-tolls – despite the public transport vehicles being deemed e-toll exempt.

Sanral says there are a number of taxi operators that have not yet received their operating licences from the Department of Transport (DOT), and so "the system does not recognise their vehicles as exempt and they are being billed".

Sanral spokesperson Vusi Mona says the roads agency is taking interim measures to assist taxi operators that are being billed, while they await their licences. "We have asked the taxi associations to give us lists of their members' vehicles, with all the necessary documentation, so that they can be loaded on to the system and can be identified as exempt vehicles."

Taxi operators that have been billed already, he says, will receive a credit note and will not be held liable for the outstanding amounts.


Sanral has been accused of letting taxis off the hook out of fear, but the state-owned agency says the accusations are unfounded and untrue.

A few months ago, Outa contested the fact that taxis – which it said do not constitute public transport – received "free passage". The alliance said the decision was introduced shortly prior to the planned initial launch date in early 2011, as the taxi industry had threatened to blockade the freeways and boycott the system should taxis be forced to pay e-toll fees.

Mona responded by saying no one is excluded from using public transport – including taxi services. "Then you have people who own their own vehicles, who can afford to pay for the maintenance of improved roads."

Rest can be read here http://www.itweb.co.za/index.php?option=com_content&view=article&id=70555

My question, what if those taxi's who are being assisted now, never get their taxi license? Will they then be paying back any credit received and will they also be held liable for any fees incurred until such time?

I guess not.
 
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@DJ - if they government had (1) being honest and said "we eFFed up the fuel-levy and spent it on a ton of other sh*t - sorry, we need to charge you more to maintain the roads, but everyone pays" or (2) had utilised the fuel-levy properly, there would have never been a reason for creating debt in the form of building the "gantry-monster".

The only reason e-tolling came into existence was due to being shortsighted (and obviously handing out tenders). So it is not really a valid argument that "e-tolling is better as it allows to calculate risk". There are many financial models out there which rely on fluctuating variables to establish risk and predict it.

1 - I accept that the fuel-levy could have been used, but the entire structure of the deal was created to avoid it. It was dishonest and the intention was always to charge road users directly, as it forms part of government's unspoken "reallocation of wealth" programme.

2 - they misspent everything. Agreed. had they budgeted for this for just two years they'd have been able to fund it internally. BUT, IRR comes into play again. Having cash on hand doesn't mean that investment in any project is the best use of those funds. One can still have cash on hand and find that funding a deal through cheap debt is a better option. You should know this. But they refuse to disclose this information to the public. IMO the legal fighters should be submitting PAIA requests for the due diligence documents to determine the rationale for funding.

3 - the argument is certainly valid now. Changing cash flow sources (which will change the cash flow models in the prospectus deals) might have devastating consequences in terms of the events of default clauses in the existing deals. These will be covered in the bond covenants...

4 - It was also relevant then. Infrastructure development has traditionally been funded through the fixed income market as cash on hand with government is better spent from an economic perspective at least on social projects with better IRR, as an example. One cannot simply discount the option of funding with this method, but it comes down to due diligence, and I don't believe their due diligence was as diligent as they'd like people to believe...

5 - I'm not saying that government made the right choice here. I'm simply correcting statements about the fuel levy being the most efficient means of funding. MBUF has its place and is a great model if implemented correctly. It wasn't in this case, and we do not have a broad enough payment base to justify it...
 
Had they implemented the increased fuel levy 2 years ago, they could have already raised the billions needed by now. And we would all not be in this mess DJ. To say its risk this and that with the fuel levy is one thing. To say that its the truth why gantries were put up is another. We all know why they went up and it has ZERO to do with risk

Please guys, you need to understand the context of my posts here. I'm not saying that the government made the right decision. I'm saying that government opted to fund the deal through the fixed income market (for whatever reasons they chose) and fuel levies in this respect are a massive risk factor to cash flow. That is all. I'm not defending government's decision. I'm correcting assumptions being made about the fuel levy's application NOW!

@DJ
didn't the govt stand surety for the loan?

Yes, for portions of the loans. So they accept the risk. If we add a fuel efficiency and alternative energy component to the deal, the risk is greatly increased...
 
Please guys, you need to understand the context of my posts here. I'm not saying that the government made the right decision. I'm saying that government opted to fund the deal through the fixed income market (for whatever reasons they chose) and fuel levies in this respect are a massive risk factor to cash flow. That is all. I'm not defending government's decision. I'm correcting assumptions being made about the fuel levy's application NOW!

So they messed up when they made that decision already, and now we have to live with the consequences... well I've got news for them, but they know that already.
 
So the taxi associations can simply register any vehicle they like without investigation on Sanral's part. Man this is ridiculous...

(Phoning up friends to find out if my car can accidentally appear on the list :whistle: )
 
I still don't buy the "unsustainability" of fuel levies. If I understand DJ correctly, the issue is the risk of fuel not being a mainstream source of transport energy in the next few decades, which is an unacceptable risk given the way the GFIP is financed. Firstly, I would strongly question the magnitude of this risk. It would take many decades for traditional fuels to work their way out of the system and there is no sign of this happening anyway. Mainstream manufacturers have been marketing electrical and hydrogen based vehicles for over a decade now and it is becoming obvious that they're not even making a dent in the car market and probably won't for many many years, if at all. Secondly, why is there the assumption that you cannot levy alternative energies similarly? Thirdly, how have we managed to build and maintain our road infrastructure for the last century perfectly well without resorting to extortionate tolls?
 
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