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Question of the Day: If you were buying a TV today, which brand would you choose?
The Gauteng E-tolling Thread
- Thread starter LazyLion
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I cannot do that calculation for obvious reasons. I'd effectively have to originate the deal from scratch and negotiate with creditors and then create a new, hypothetical prospectus to be rated by myself and then hypothetically subscribed to using various models.
What I will say is, over 30 years I cannot forecast development in fuel and energy markets. Precedent shows that the current development is likely to have significant effects on economy and performance figures. Further evidence exists that alternate fuels entirely are being looked at, and many are at an advanced stage. With so much focus on green energy now (unprecedented), significant strides in this sector are very likely. Considering the vast nature and opportunity of this market, government cannot guarantee legislative control over this, nor can they forecast a correlation, nor can they even begin to promise legislative changes to something that doesn't even yet exist. To use this argument that government can simply begin to tax whatever new developments there are doesn't work in the fixed income market. Additionally, they cannot create a model where they correlate with economy rates, because they'd have to create some sort of benchmark for that (which would be a costly affair) as well as hampering economic growth by moving the payment burden to the lower classes when this takes place.
Ergo as an investor accepting 30 year exposure to cash flows that are tied to this technological advancement (in a negative way), my levels of risk need to be compensated. In this case I'd be taking a massive risk with no way for you to show me any integrity in your cash flow model, so I'd demand quite a few additional percentage points on the existing coupon rates.
On that basis, it would cost far, far more than the collection fees. Significantly more in fact. Just a single percent increase in their coupon rates across the board will already exceed the cost of collection, and you're not going to get the market to accept such additional risk for an additional one percent. Their exposure to the market, should something happen, will leave them in a really tricky situation. The fixed income market works on the basis of eliminating risk, not on adopting it. Risk is for the equities market, generally speaking...
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Kuhlkatz
Member
14% VAT collected on top of the compounded interest on the 20bn while pissing away 20-30% of what you actually collect just for the sake of collecting it is a nice free income for mahala for the government over time.
You are already charged VAT on fuel, so there is no 'extra' bonus generated on an additional bit charged on the fuel levy, hence e-tolling is the obvious choice for screwing us over.
You are already charged VAT on fuel, so there is no 'extra' bonus generated on an additional bit charged on the fuel levy, hence e-tolling is the obvious choice for screwing us over.
no VAT on fuel AFAIK
Kuhlkatz
Member
Also true.. I should have rather just stated that via the fuel levy there is no additional bonus, just the addtional levy.
I must just point something out about the fixed income market. The purchasers of a bond effectively purchases the cash flows of said bond. If the cash flows don't tie out properly, then there is massive legal liability for both the underwriter and the issuer. So one couldn't even secure an underwriter for the bond, let alone expect the market to subscribe to a bond, unless you can show massive confidence levels in your cash flow models (i.e. cash flow integrity). So expecting to raise finance over an extended period of time using the fuel levy method is nigh on impossible these days. You can try, but it will be an expensive exercise in futility. Referring to the raising of coupon rates is actually a bit of a moot point, because that assumes a level of engagement that you wouldn't even be able to achieve.
You can fund over a shorter term though, which is what should have happened. There would have been no need for e-tolling on this basis, but it would have required a fair whack to the fuel levy...
You can fund over a shorter term though, which is what should have happened. There would have been no need for e-tolling on this basis, but it would have required a fair whack to the fuel levy...
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BTW, the only way I can imagine this actually working out (transition to fuel levy) would be if the bonds had been issued as extendable reset notes, but this was not the case.
The alternative is for government to default on the debt and negotiate default payment terms with its creditors.
It is a minefield, and one we will pay heavily for...
The alternative is for government to default on the debt and negotiate default payment terms with its creditors.
It is a minefield, and one we will pay heavily for...
I disagree with their figures on a few points (I actually think the figure is less):
1 - it was a cash flow issue. Government didn't have the cash on hand to make payments. They'd have had to have a lot of the cash on hand from the beginning.
2 - if we take this into account and split it over 6 years of construction (edit: it's 7 years if we factor in the additional year, which you will see later on), we can spread the payments over that term to figure out an average required increase.
3 - construction prices were inflated. But let's leave them out of the construction costs and leave the figure at R17,9bn.
Using these figures, and using a figure of 25bn litres of petrol and diesel consumed (an average between 2007 and 2013), I calculate that we required a single increase to the fuel levy of 10c per litre, and we'd have paid for the entire project by the time construction had been completed, and the 10c levy could have been removed.
The economy at the time could sustain a 10c increase. Just work it out for yourself. 10c multipled by 25bn multipled by 7.
OUTA included the interest component of the debt in their calculations IMO (their calculations equate to a R30bn repayment), which wouldn't have been necessary. We could have actually funded this entirely from the fuel levy without going to the bond market at all, had they increased the fuel levy one year before construction began and negotiated a decent remuneration model with the construction companies. We'd have saved ourselves R12bn in doing so, and in turn, saved 10c from every litre.
And let's not forget that this excludes the inflated cost that government should have managed. If we assume the prices were inflated by just 20%, the once-off required fuel levy decreases to just 8c per litre, is in place for 7 years, and is then removed.
We can factor in some admin costs there if need be, but it is negligible...
EDIT:
The total impact to road users would have been around R1627 over 7 years, per vehicle, had this method been adopted. That is it! R230 per annum. That's R19,37 per month, for 7 years, and then the charge would have been eliminated.
If only Gauteng road users were charged, then the cost would have been a total impact of around R4700 over the course of 7 years, which is R672 per annum, or just R56 per month had someone with brains been in charge, or had palms not been greased...
That is it! That is all that this should have cost...
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I've adjusted the figures. Check it out...
I might. I'm considering it, but I also don't see the point in it now. It might encourage some action, but could have, should have, and would have doesn't really inspire action imo.
If I do another video I will consider including these calcs...
thanks for your efforts DJ!
I do however believe it has value that people can see "what could have been" - it should demonstrate either the incompetence or the corrupt intent of the 'masters' - how else does one prevent this in future?
I do however believe it has value that people can see "what could have been" - it should demonstrate either the incompetence or the corrupt intent of the 'masters' - how else does one prevent this in future?
The total impact to road users would have been around R1627 over 7 years, per vehicle, had this method been adopted. That is it! R230 per annum. That's R19,37 per month, for 7 years, and then the charge would have been eliminated.
If only Gauteng road users were charged, then the cost would have been a total impact of around R4700 over the course of 7 years, which is R672 per annum, or just R56 per month had someone with brains been in charge, or had palms not been greased...
That is it! That is all that this should have cost...
Check out what the actual impact to road users would have been had they simply adopted my method from the outset.
At most R56 per month for 7 years, or as little as R19,37 per month had the fuel levy applied nationwide. For just 7 years...
I just saw that and am fuming - just makes me more resolute to give them ENDLESS ****e before they ever get one single cent from me!
You have to agree, those figures are "video-worthy"!
When I reduce it down to the actual cost to South Africans, it infuriates me too. I've started a thread to highlight these calcs.
Maybe I'll do a quick video sometime this week...
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