Prosecution closer for e-toll defaulters

Prosecution is one step closer for e-toll defaulters after the South African National Roads Agency (Sanral) and the National Prosecuting Authority (NPA) have come to an agreement about the NPA’s requirements to present cases in court.

Sanral CFO Inge Mulder told Moneyweb that the agency got clarity from the NPA about the “evidential matter” it has to provide to enable prosecution. NPA spokesperson Nathi Mncube could not confirm this.

Mncube said on Friday that the South African National Roads Agency (Sanral) has not yet referred any cases of failure to pay e-tolls alone to the NPA.

However, Dr Stoyan Hristov Stoychev, a researcher at the Council for Scientific and Industrial Research, has appeared in court on charges of fraud, driving a vehicle with false registration number plates and failing to pay e-tolls. He has been released on bail and will appear in the Pretoria Magistrate Court again on December 4, Mncube said.

Another person was arrested for driving with a defaced number plate and will appear in the same court, but Mncube had no further details on this case.

Mulder says Sanral will provide the NPA with a bundle of documents needed in every case to prove that a specific vehicle passed under the relevant gantries at a specific time and date, attracting toll fees and that the fees have not been paid.

There is a legal presumption that unless proven otherwise, the owner of a vehicle would be the one driving it.

Mulder is confident that enough progress has been made to effect enforcement.

The NPA will proceed with the two cases of number plate tampering with the intent to avoid paying e-tolls. She says each time the accused passed under a gantry with the suspect number plates, it constituted a separate charge, amounting to more than 1 000 charges over the relevant period.

“This has to happen more now. It is not as if one has to charge 500 000 people. You just have to see that something is happening. Nobody wants a criminal record,” she says.

Weighed down

Mulder says the Gauteng e-toll system is weighing down Sanral’s finances.

In the year ended March 31, with only four months of e-tolls included, Sanral showed a loss of R2.7 billion in its toll potfolio, after R3.5 billion of finance charges.

This was attributed largely to delays in the implementation of the e-toll system which resulted in an increase in finance charges and loss in revenue, Mulder said.

The Gauteng freeways (where e-tolls apply) represent less than 10% of the total toll portfolio in total kilometres, but are responsible for about half of Sanral’s current R47 billion debt. About half the total toll revenue will also be from e-tolls.

About half of Sanral’s toll portfolio is managed by concessionaires in terms of public-private partnerships, which means that the private partner provides the financing for the project. The debt related to such projects therefore does not sit on Sanral’s balance sheet, but on that of the private partner.

Mulder says any toll project takes between 16 to 22 years to break even. Due to the delays on Sanral’s e-toll project and reduction in initial tariffs, the period has been extended by about four years.

In fact, the Gauteng project will now take 22 years – and the total portfolio due to the weight of the e-toll project – 19 years before it will be out of the red. This is assuming no further projects are embarked on and traffic volumes and interest rate assumptions do not change.

Sanral is bound by law to increase toll tariffs annually by CPI only, and can therefore not increase tariffs further to recover lost opportunities due to e-toll delays.

The toll portfolio showed a R827 million profit before finance costs in the past year and Mulder says serious questions should be asked if that line turns negative.

Working out revenue

To understand Sanral’s accounting on the e-toll system it is important to know how revenue was recognised.

In its annual report Sanral states that it charged a total of R2.27 billion in e-toll revenue for the reporting period. R1.12 billion was however not recognised.

Basically revenue would be all income invoiced, but in terms of accounting standards Sanral has to take a view on the probability of successfully collecting the revenue and only recognise the amount that will probably be collected successfully, Mulder says.

In this regard Sanral looked at historic payment patterns. Most of its e-toll clients are repeat road users and therefore some patterns have developed even in the four months of operations.

In the case of registered and tagged users, it recognised only the discounted tariffs.

In the case of non-registered users, it recognised only standard tariffs (roughly double the discounted traiffs) and did not take into account other potential revenue from persons who pay later, when the extremely punitive alternative tariffs apply (about three times the standard tariff).

Mulder explains that the postponement of the post-grace period discount for e-toll users granted by the Minister of Transport and gazetted in May gave customers the option to register before June 30 and still qualify for the standard rate for transactions between December 3 2013 when tolling started and February 28 2014.

At year-end Sanral did not know how many customers would make use of that offer and therefore refrained from recognising any revenue beyond the standard tariff.

By the time the Auditor-General reviewed Sanral’s financial statements, there was more clarity on the number of customers who took up the minister’s offer and he was able to determine that a further R1.1 billion of addittional revenue may be due from the alternative tariffs, that would apply to those road users.

In the new financial year revenue from alternative tariffs will be recognised for the whole period where applicable. That may increase Sanral’s revenue considerably.

Sanral recorded R1.1 billion in trade receivables or debtors.

It was very difficult to take a view on the amount that will probably be successfully collected, Mulder says. There is no system locally or internationally that can be compared with the South African system and give guidance on expected payment trends.

In the end Sanral had to develop its own methodology that was eventually accepted by the Auditor-General.

The collection of debtors is however dependent on effective collection and eventually enforcement, especially in the current environment of resistance to the e-toll system.

Postal delays

Mulder says the Post Office strike affects collections, especially with regard to unregistered users. She says in legal terms the liability is established when a user passes under the gantry and Sanral is not obliged to deliver the invoice to the user. It is available and users can obtain it through the call centre or customer service desks.

The impact of the strike on collections has not been material, because unregistered customers generally don’t pay because they don’t want to, whether they receive their invoices or not, Mulder says.

Source: Moneyweb

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Prosecution closer for e-toll defaulters