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Sanral’s CFO on the money

E-tolls exceed financial expectations, system’s ‘performing well’.

From a financial point of view the Gauteng e-toll system is performing marginally above expectations says Inge Mulder, the lady who carries the South African National Roads Agency (Sanral) purse.

Sanral does not need a bail-out and the system is not close to collapse, Mulder says.

A total of three million transactions are being processed every day. It was tested at six million and can handle a lot more than that, she says.

The number of daily transactions is on par with the total number of daily inter-bank card transactions in South Africa.

Asked about revenue, Mulder says Sanral needs to generate R250 million per month through e-tolls.

Revenue is however very volatile. One has to keep in mind that from an accounting point of view revenue is money earned, not money received. In practice it means that revenue is recorded at the discounted rate for registered e-tag users when they pass underneath a gantry and at a standard rate for unregistered users. If they don’t pay within seven days, the rate increases dramatically and therefore also the revenue. If they pay within 30 days, a 60% discount applies which will again lower revenue. “It changes every day,” Mulder says.

The system was really designed to be pre-paid and the seven days is a grace period, she says.

How does she then know what is going on in Sanral’s finances?

The crux is in the reconciliation, she says. And she has to explain this to all stakeholders and oversight bodies, including the Auditor General who has to understand the system to be able to audit it, the Sanral board, investors and analysts.

“This is what we really thrashed out over the last three years. We worked out 96 different scenarios. The budget is based on a very conservative view on the violations percentage.” Currently the picture is “about 1% above expectation”, but there will be more clarity by the end of this month, Mulder says.

Sanral also determined at what violation percentage the system won’t be viable anymore and at what point the cost of collection is too high to pursue a specific account. She wouldn’t disclose these percentages.

“The whole purpose is to collect payments before it is being handed over for criminal prosecution,” she says. While the Sanral Act provides for a civil fine equal to R2 160 per transgression (that is per gantry) if convicted to be paid to Sanral, it may take a long time to collect such moneys and Sanral does not rely on this source of revenue. It will be a bonus, says Mulder.

“The system is solid”, she says. “The extent of the glitches is small. Only 0.3% of the 56 000 queries received from December 3 necessitated us writing a work ticket to adjust something on the system.”

She says many of the queries, like an e-toll account sent to a dead person, do not originate from a malfunction on the system, but from incorrect data. As information comes forward, corrections are being made and data is being purified.

Electronic Toll Collection (ETC), the contractor that manages the e-toll system, will hand in its first certificate at the end of January. So far its performance is within the contractually specified tolerances on all indicators, Mulder says.

Sanral plans to go on a roadshow to investors in March and start with bond auctions to raise money for its toll portfolio again in April. These auctions were halted earlier when investors lost confidence because of the delay in implementing e-tolls.

Mulder says Sanral’s debt currently stands at R41 billion. The organisation had to borrow R5 billion in short-term loans last year to tide it over until it could revert to long-term bonds. “Investors were enthusiastic. They understand that government supports Sanral and won’t allow it to default,” Mulder says. She therefore expects that the bond auction in April to be successful.

The short-term loans will in due course be converted to long-term debt which is more suitable to Sanral’s long-term assets.

She says e-toll tariffs will not increase with other toll tariffs in March, but will only be subject to the annual increase from next year.

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