Scrapping e-tolls in Gauteng
When newly-appointed Gauteng Premier David Makhura announced in his State of the Province address last week that a task team will assess the impact of e-tolls, some people got really excited.
Finally government and the ANC have come to their senses and are prepared to acknowledge they made a mistake, scrap the hated system, and fund the loan repayments from the fuel levy, commentators argued.
Others are convinced that government has realised that it will be virtually impossible to prosecute motorists who are not paying their e-tolls and that that is the reason behind Makhura’s statement.
But the fact is that the South African National Roads Agency Limited (Sanral) is not under Makhura’s jurisdiction. It is an agency of the National Department of Transport, executing national government policy.
The provincial government therefore has no jurisdiction and does not have the power to scrap e-tolls.
It may put forward a certain position within government about the matter and this will carry weight within the framework of inter-governmental co-operation, says Professor Dirk Kotze, political analyst at Unisa.
He points out that e-tolls is considered the main reason for the ANC’s drop in support in Gauteng during the recent elections. Makhura probably tried to show that the new provincial administration is taking the message voters sent seriously, he says.
Theo Venter, political analyst at the North West University concurs, saying that Makhura was verbalising the wishes of the people of Gauteng. He says Makhura is a strong figure in the ANC, especially in the Northern provinces, “but he is not a Zuma man.”
Venter believes e-tolls may become a subject of dispute within the ANC and it may only come to a head at the party’s mid-term conference in a year’s time.
Clarification
Tiyani Rikhotso, spokesperson of the National Department of Transport, emphasised that Makhura would be focusing on the impact of e-tolls only. He said the current e-toll system will remain and the only debate is about whether it is still the correct mechanism for further phases of the Gauteng Freeway Improvement Project (GFIP).
“The management of e-tolls is currently problematic,” says Kotze, adding that government is not necessarily looking at the scrapping of the system. “It may boil down to ways to improve it,” Kotze says.
Credit rating agency Moody’s last week affirmed Sanral’s rating and changed its outlook from negative to stable. It expects Sanral to realise R1.8 billion revenue from e-tolls in FY2015. That boils down to an average of R150 million per month, which is 60% of the targeted R250 million.
Sanral CFO Inge Mulder acknowledges that the expected revenue is below target. She says the agency has adjusted its projections after realising it will take longer to achieve its original targets.
The trend is however in the right direction and is expected to improve further once prosecutions start, she says.
Prosecutions on the horizon
Sanral has given notice to all relevant parties and those motorists who don’t pay their e-tolls, can expect to be brought to book in the near future, she says.
Whether Sanral will be able to pull that off, remains to be seen. Law expert, Professor Marinus Wiechers is extremely hesitant. He doubts whether the State will be able to prove all the elements the criminal justice system requires for a conviction. Pieter Conradie, attorney from Cliffe Dekker Hofmeyr who acted on behalf of the Opposition to Urban Toll Alliance (Outa), says the volumes will be impossible to deal with and there won’t be enough magistrates to hear the e-toll cases.
However, Sanral will be in a difficult financial position should things turn in favour of e-toll opposers.
Wiechers and Conradie agree that should the prosecutions fail and e-tolls be scrapped, Sanral will face huge claims from its service provider, Electronic Toll Collection (ETC). This may include real costs and loss of income for the full duration of the contract.
ETC has an eight-year contract with Sanral to operate the e-toll system. It is not a concessionaire, but merely a service provider that bills Sanral for actions taken on its behalf, for example sending a letter or attending to a query.
The risk of compliance lies with Sanral. ETC contracted with Sanral on the basis that Sanral will do certain things, for example, have the legal framework in place. Even if the e-toll system stays in place, but Sanral fails to go ahead with certain aspects, like the prosecutions, ETC may have a claim against the agency, says Mulder.
Wiechers says ETC may also be entitled to claim if it can prove that Sanral made misrepresentations or was negligent in its projections of, for example, compliance levels or the ability to prosecute.
He says such a claim will have to rely on complex actuarial calculations and will best be dealt with through arbitration, rather than litigation that can drag on for years.
Disappointed investors
One group that was not excited by Makhura’s statement is the Sanral investors.
Sanral hoped to raise R500 million in its monthly bond auction on Wednesday, but only managed R275 million as investors lost their appetite due to Makura’s indication that e-tolling needs to be re-evaluated.
Many compliant road users may also ask why they should continue paying e-tolls if the system may be scrapped shortly.
Is it possible that Makhura’s public position on e-tolls may refuel the resistance and the demise of e-tolls may become a self-fulfilling prophecy?
Source: Moneyweb
More on e-tolls
Sanral breaks silence over e-toll review
ANC vote losses behind e-tolls review: report
Government may scrap e-tolls: report
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