The impasse over the controversial e-toll scheme and doubts about the financial viability of the South Africa National Roads Agency (Sanral) resulted in the agency losing two key project funding opportunities totalling R14 billion.
Sanral CEO Skhumbuzo Macozoma said the agency lost the opportunity to obtain R7 billion each from the New Development Bank (NDB) and the Multilateral Investment Guarantee Agency (Miga) and expressed concern about the uncertainty over the future funding policy of Sanral.
“On the toll side, you are seeing some severely constrained capex programmes due to, of course, the anti-toll sentiment in our country,” he told a Consulting Engineers South Africa (Cesa) Infrastructure Indaba this week.
“The key question that tends to hold us back is a chosen funding policy for infrastructure projects in this country,” he added.
Macozoma stressed that road funding clarity is absolutely critical and a decision must be taken on this issue.
Bonds ‘will mature’
He said Sanral has not been to the bond market since 2016, which “is not good” but has had some successful private placements with investors who trust the agency and know its brand.
But Macozoma said the most important issue confronting Sanral on the toll side is that it has obtained a lot of money from bond markets and “at some point those bonds will mature”.
“We are entering an era where for the next three or four years there is going to be some big bond maturities, which means we need access to finance for us to be able to do that.
“The current uncertainty in terms of funding policy is not assisting and we need to be able to deal with that,” he explained.
Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said National Treasury had between 2016 and 2020 already allocated Sanral R10.8 billion for the Gauteng Freeway Improvement Project (GFIP).
It accounts for about 51% of the freeway bonds for the overpriced upgrade and is on top of another grant of R70 billion – an annual average of R14 billion a year – for the same period for non-tolled roads.
“This has been the solution being practised for the past number of years and should continue to remain, as the entire country benefits from Gauteng’s freeway upgrade,” he said.
Time is being wasted
Macozoma stressed that on the funding side, Sanral has “reaffirmed government as the major funder for Sanral being a Schedule 3A entity and we will not abandon that”.
“Are we going to use private finance to develop road infrastructure or are we not? Because we are wasting time. There are a lot of opportunities that are slipping us by because of this uncertainty.”
But Macozoma noted Sanral will to continue pursuing private finance “even in the face of criticism and rejection of the toll model” and has seen opportunities to generate its own revenue.
He confirmed Sanral is looking to tap into the Infrastructure Fund to be able to access funding to deliver on some of its projects.
Macozoma said 14 Sanral projects were gazetted by Minister of Public Works and Infrastructure Patricia de Lille as the new strategic infrastructure projects (Sips) and Sanral also has projects in the previous Sips, including the N3 and N2 corridors.
Expertise to share
He pointed out that Sanral has also decided to share its expertise “as a targeted objective” with South Africans as well sub-Saharan Africa.
“There is quite a lot of experience we have amassed over the years that we have now put together into advisory capabilities that we are sharing with other roads authorities across our continent and beyond,” he said.
Macozoma said the future of Sanral is important because it manages a 22 253km national road network, with a collective asset value of about R413 billion.
“It’s an asset that you don’t want to let go of in the country and collectively it is said to be the single biggest asset that we own in our country,” he noted.
Macozoma questioned if Sanral will remain a 25 000km road network authority, as it projects in its Horizon 2030 strategy, or if it is “going to expand to 50 000km or 70 000km as other corners of our country are proposing because we seem to be the most geared to be able to deliver”.
He said the future of provincial and local municipal roads authorities needs to be determined. Regulatory bureaucracy also needed to be unlocked as it affects how Sanral executes its work – such as environmental, mining and National Treasury guarantee approvals – to “free” Sanral to be able to deliver on the mandate it has been given.
Macozoma added that Sanral has initiated processes to review its mandate because it believes there are certain limiting provisions in the Sanral Act.
“We’ve looked at the model that we use to support other road authorities to ensure that we are more effective in doing that and not creating a ‘Big Brother’ mentality that is going to lead to the further weakening of other roads authorities,” he said.
New funding mechanisms?
Duvenage said it will be interesting to see what Sanral’s new funding models or mechanisms are other than tolling.
He said Outa has a sense that Sanral does not want to cancel the e-toll scheme because it wants to use the National Transaction Clearing House (NTCH) to start allowing people to pay into an account to access parking.
Sanral issued a new tender in August 2019 for the operations and maintenance of an open road tolling system in Gauteng, a NTCH and a violations processing centre.
That tender was subsequently cancelled and reissued in 2020.
The NTCH is currently almost exclusively used for clearing e-toll collections for various toll operators and toll plazas.
But Sanral previously confirmed it is in the process of repackaging and expanding the function of its NTCH to provide a host of other mobility services, such as vehicle licence renewal payments, cashless parking, fuel payments and to use Sanral’s customer service centres for driving licence renewals.
Duvenage questioned how Sanral, whose mandate is to build and maintain roads on behalf of the state, can get involved in parking and work in Africa.
He said more transparency is needed when Sanral starts playing in these new areas.
“Sanral is not the Southern Africa or the Africa National Roads Agency. It is the South African National Roads Agency and it is a state-owned entity responsible to the South African citizens.
“It shouldn’t be going into Africa and, if it is going to, it needs to be a separate state-owned entity that the state must set up and motivate because this is not where Sanral, which we finance, should necessarily be going.”