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E-toll collections deteriorating even further

Sanral requests treasury to lift debt ceiling.

Roads Agency Sanral has requested national treasury to increase the level of debt it is allowed to carry as e-toll collections continue on a downward trend. 

At the end of February Sanral managed to collect only 62% of its forecast e-toll revenue for the financial year, resulting in an e-toll shortfall of R588 million.

Even if the request to treasury is granted, immediate pressure on Sanral finances may remain as bond auctions don’t deliver the desired results. On Wednesday Sanral’s latest bonds auction saw only one participating bidder, down from eleven a year ago.

Sanral hoped to raise R600 million, but received bids for only R320 million and at a premium rate of 99 basis points – 8 basis points wider than the current mark-to-market rate. As a result Sanral only allocated R270 million of HWAY35 bonds, Sanral CFO Inge Mulder told Moneyweb. No bids were received for the HWAY34 bonds on offer.

Sanral has been struggling since late last year to raise the required funds at its monthly bond auctions.

Mulder says while the agency is not facing a cash flow crisis at the moment, debt levels are high and cash and collections are deteriorating.

E-toll collections reached an all-time low in January of R45 million but improved to R61 million in February. She suspects it may be a timing issue as road users who were on holiday delayed payment in January, but even the average for the two months of R53 million is way below forecast collections of R200 million and R206 million for January and February respectively.

Sanral initially hoped to collect R300 million per month from e-tolls, once collections have stabilised, before concessions were made on tariffs and a monthly cap was introduced in an effort to mitigate the consumer resistance against the system.

GFIP Toll receipts v forecast

GFIP debt maturity profile

Mulder says compliance levels are currrently very low and largely bolstered by 262 000 key account holders who pay their e-tolls regularly. These are commercial vehicles, mostly class B and C (trucks) and rental vehicles and represent more than 22% of all registered road users. Only 1.2 million vehicles are registered for e-tolls, not even half of the 2.5 million vehicles using the Gauteng freeways every month. 

Sanral’s budgeted expenditure of almost R8 billion on its toll portfolio (e-toll and other toll projects) for the financial year ended March 31 2016, with R3.8 billion of that to be financed from borrowings and R4.1 billion from toll income (e-toll and other toll projects). Both those sources are currently not performing as expected.

The result is that Sanral’s e-toll operations are currently being funded by debt. To add insult to injury, the agency has short-term obligations of R2 billion in September and R2.8 billion in April next year as earlier debt matures. Unless these bonds can be refinanced either by rolling (extending maturity date) or through successful bonds auctions, the agency will have to cough up – with money it won’t have, unless something changes fundamentally.

 

GFIP Toll receipts v forecast - orig

 

Source: Sanral

An announcement by deputy president Cyril Ramapohosa may bring that fundamental shift. Government is currently pondering a sustainable solution for the Gauteng e-toll headache and an annoucement is imminent.  The solution is expected to address issues raised during the investigation of the Gauteng e-toll review panel that assessed the social impact of e-tolls on road users.

Government has made it clear that it will not abandon the e-toll system, but it is expected to take steps to simplify it. This may entail further concessions on the tariffs and the monthly cap, as well as the very punitive alternative tariffs for late payments.

Most importantly, it is also expected to address the enforcement of e-tolls. At the moment compliant road users who regularly pay their e-tolls feel increasingly prejudiced by the lack of consequences for the defaulters and increasingly also revert to non-payment.

Clarity is also expected about the next phases of the Gauteng Freeway Improvement Project, especially the funding model.

The controversy and political uncertainty has been devastating for Sanral’s toll portfolio. It was downgraded from Moody’s very respectable investment grade A3 long-term rating with a stable outlook in August 2009 to the current one notch above junk status (Baa3) with a negative outlook.

The brief stabilization followed after tolling commenced on December 2013, but the downgradings resumed after Gauteng premier David Makhura announced the appointment of the review panel in July last year.

Mulder says the biggest impact of the downgrades are that fund managers are limited by their mandates to invest in low investment grade bonds and would certainly not be able to lend their money to sub-investment grade issuers.

Moodys Rating    

   

Global Rating

 

 

National Scale Rating

 

Outlook

   

Long Term

Short Term

 

Long Term

Short Term

   

27-Aug-09

 

A3

P-2

 

Aa2.za

P-1.za

 

Stable

29-Feb-12

 

Baa1

P-2

 

Aa3.za

P-1.za

 

Negative

04-May-12

 

Baa2

P-3

 

A2.za

P-2.za

 

Negative

06-Sep-13

 

Baa3

P-3

 

A3.za

P-2.za

 

Negative

27-Jun-14

 

Baa3

P-3

 

A3.za

P-2.za

 

Stable

19-Jan-15

 

Baa3

P-3

 

A3.za

P-2.za

 

Negative

16-Mar-15

 

Baa3

P-3

 

A3.za

P-2.za

 

Negative

Source: Sanral

Mulder points out that the problems in the toll portfolio does not affect the agency’s non-toll portfolio that makes out 85% of its business and carries 80% of the country’s freight. The non-toll portfolio is funded from the national budget and road maintenance and expansion continues, she says.

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The question remains; why was SANRAL so determined to force through a system that was so staunchly opposed at the outset?
Simple really – just follow the money. Who was going to make a killing? Simple really! !
Ha ha – it has backfired comrades!

May the rot continue. Still don’t know why anybody is still paying e-tolls.

I’m not sure which is worse, incompetence or lies, but either way heads should roll at sanral.
We the public were told on numerous occasions that over 80% of users had registered for etolls but now we hear only 1.2 out of 2.5, 48% !!! As an indirect shareholder in sanral (taxpayer) I demand that either the liars at sanral or the incompetents (how difficult is it to divide 1.2 by 2.5 and multiply by 100) who got the calculations wrong, be fired immediately. This article simply proves that we were right all along not to believe the rubbish coming from sanral and their ethically challenged spokesperson.

And keep your thieving hands off the N1 and N2 in the Western Cape. You will get a worse reception than in Gauteng. We already pay for road maintenance by way of the fuel levy, but most of it does not get used for that purpose.

Yes were fed lies, lies, deceit and then more lies. As one contributor states below “follow the money”. I’ll bet that this is just another “arms deal scam” for enrichment of the politicos. And I’ll bet that the reason that the politicos are ignoring public sentiment is that the bribes have already been paid so the politicos “must perform”.

My wife’s e-toll account is in credit. However, when passing through a gantry it registers as being in debit (double peep). Maybe Ms Muller could explain this ‘malfunction’ ?

Sanral (Nazeer Ali) was hoping to make R300m a month!!!*%@
Staggering!

So at 3 times that it must be hoping to make R900m (nine hundred million – almost a billion) a month in the western cape on the tolls it wants to build on the N2!
I can foresee MUCH more than mere protests by motorists when/ if Sanral arrives outside Cape Town with the 1st bulldozer on the N2….

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