Serious questions about R23.7 billion e-toll bailout

The Organisation Undoing Tax Abuse (Outa) recently raised questions about the South African National Roads Agency’s (Sanral’s) and the Gauteng Freeway Improvement Project’s (GFIP’s) debt.

Outa said the GFIP upgrade was R20 billion and that Sanral borrowed R20 billion to fund this.

Consequently the e-toll system was implemented to repay this loan and ultimately fund the GFIP.

“Since 2011/12, the national government has authorised government grants totalling R30.053 billion to Sanral for the GFIP,” Outa said.

“However, the GFIP debt remains inexplicably high, as National Treasury said this was R43.031 billion in March 2022.”

During this year’s mid-term budget policy statement (MTBPS) finance minister Enoch Godongwana said a special appropriation bill would allocate an additional R23.7 billion to cover government-guaranteed debt used to finance the GFIP.

Outa’s statement encouraged Daily Investor to delve into Sanral’s finances to gain clarity on its debt and grants.

Sanral receives annual government grants, it mainly funds its non-toll portfolio which is its road infrastructure and its operational costs.

However, a substantial portion of this grant is also allocated to fund the GFIP. In 2022 Sanral received a government grant of R21.62 billion of which R4.44 billion was allocated to the GFIP.

Since 2016, Sanral’s annual government grant received increased by an average rate of 9.4%, higher than the average inflation rate of 4.7%.

Since 2016 Sanral has received a total of R124.4 billion in government grants of which R19.61 was allocated to the GFIP.

The problem is that the e-toll system was implemented to carry the costs of the GFIP, however, each year Sanral continues to finance the GFIP using government grants, putting additional pressure on the taxpayer.

Sanral has total liabilities of R156 billion according to its latest financial statements.

R49.6 billion relates to interest-bearing debt from capital markets and other loans. This can be viewed as Sanral’s total debt and appears to be mostly related to the GFIP.

A much larger portion of Sanral’s total liabilities, R89.71 billion, relates to deferred income.

These are related to government grants and payments from concession contracts to Sanral that were not used in the period received but are held for future utilisation.

Sanral states in its report that any unspent grants are included in its cash and cash equivalents balance, which according to its financials seems to be the R89.71 billion.

However, the balance is only R41.2 billion, and it is unclear why there is such a large deviation from the deferred income.

It raises the question of why the government needs to bail out Sanral with an addtional R23.7 billion when it still has R41.2 billion available in cash.

However, if the reporting is accurate, Sanral would be able to settle R41.2 billion of its R49.6 billion total debt in cash.

It is only a small portion of the R89.71 billion Sanral has in unutilised government grants, which could settle its total debt almost twice over.

This article was first published by Daily Investor and is republished with permission.

Now read: Goodbye E-tolls

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Serious questions about R23.7 billion e-toll bailout