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Government to finally scrap e-tolls on GFIP

Official announcement to be made in the February 2022 Budget once National Treasury agrees on an alternative funding model, says transport minister.
Transport Minister Fikile Mbalula. Image: Moneyweb

The Cabinet has decided to scrap the controversial e-tolls scheme on the Gauteng Freeway Improvement Project (GFIP).

Transport Minister Fikile Mbalula confirmed this on Friday but said National Treasury had stopped the implementation of the decision.

Read:

Outa is keeping ‘the champagne on ice’ for final e-toll decision

Sanral’s R7bn ‘Brics bank’ loan stopped by National Treasury

“When we went to Cabinet, a decision was taken. When it was supposed to be implemented to scrap the e-tolls, Treasury said ‘no wait’,” Mbalula said during a briefing on the state of transport entities in Johannesburg.

“So that is where we are. We have done a lot of work between then and today so we will be ready by February to make an announcement on this matter and how we are going to handle the e-toll thing in South Africa.

“The Minister of Finance will be in a position to make the announcement in the Budget speech in February.

“If not, we may make that announcement even before the Budget speech if Cabinet and us are in agreement on the way forward. The deadline now is February [2022],” he said.

Mbalula stressed that an announcement on the future of e-tolls cannot be delayed beyond February 2022 because it will create “a crisis for Sanral [SA National Roads Agency] forever and forever” and continuously affect Sanral’s balance sheet.

The minister confirmed to Moneyweb on the sidelines of the briefing that the government has moved beyond the nine options he previously presented to Cabinet to consider when taking a decision on the future of e-tolls.

Read: Government must ‘bite the bullet’ and make a decision on e-tolls, says Sanral CEO

Mbalula has previously confirmed that nine options were being considered to resolve the e-toll impasse. This followed President Cyril Ramaphosa in 2019 appointing  Mbalula to head a task team to report on the options available for the future of e-tolls by August 2019.

“We reduced all those options and we are looking at the scrapping and the implications. That is the option we are looking at.

“If we scrap e-tolls in the current form, how do we then address the financial models, including financing of the upgrading of roads in the country?

“Remember the user-pay principle is… [what] was assisting us in terms of intervening and generating revenue to upgrade our roads,” he said.

Mbalula said the user-pay principle gave Sanral its solid balance sheet and borrowing capacity to enable it to borrow money and to be able to pay it back.

“So when you see the beautiful freeways in Gauteng, it’s because of the e-tolls intervention. Once that is taken away, it means we have to redirect the money that is meant for road upgrades from the department to pay for e-tolls,” he said.

Mbalula indicated the government is currently considering how the scrapping of e-tolls will affect the future financing of road infrastructure and at different models to finance road infrastructure in the future.

He admitted the fuel levy has been on the agenda, adding that both the Organisation Undoing Tax Abuse (Outa) and trade union federation Cosatu have been in favour of using the fuel levy to fund the repayment of GFIP bonds.

Read: Cracks appear in government’s e-toll user-pay principle

“We are looking at that but Treasury said that is not possible. It’s not sustainable.

“We know that the user-pay principle in relation to the e-tolls has been boycotted. People are not paying and there is a huge debt that is there so those are the challenges we need to address,” he said.

The 2021 Medium-Term Budget Policy Statement (MTBPS) referred to policy uncertainty about government’s position on the user-pay principle.

It said the Sanral had incurred annual average losses of R2.5 billion since 2014/15 and had been unable to successfully issue a bond since 2017, largely due to uncertainty about government’s position on the issue.

The MTBPS said government has extended a total guarantee facility of R37.9 billion to Sanral, of which R28.4 billion had been used by March 31, 2021.

“While policy uncertainty remains, Sanral is still responsible for maintaining its toll portfolio and continues to service the debt used to fund construction.

“To date, R5.5 billion has been collected in toll revenue against an initial projection of R20.2 billion.

“Without a policy decision that reinstates government support for the user-pays principle, Sanral will remain a significant burden on the public finances,” it said.

Dr Mampho Modise, the deputy director-general responsible for public finance at National Treasury, told Moneyweb last month they were still calculating the risks to the possible options for the future of e-tolls.

Mbalula said earlier this year a pronouncement on e-tolls on the GFIP would be made by Finance Minister Enoch Godongwana in his MTBPS but confirmed on Friday this was not done because the consultation process with National Treasury had not been finalised.

“There have been delays with regard to this and the delays are informed partly because the decision we have got to make, either way, has got financial implications and we need to respond to those financial implications.

“While we address another problem, we can’t open a hole on the other side,” he said.

Outa CEO Wayne Duvenage said on Friday the decision by the government to scrap e-tolls is “excellent” news but stressed Outa did not believe the government had any other choice.

However, Duvenage questioned why it was taking government so long to make a decision on the alternative to e-tolls.

Read: Court order could expose ‘excessive profits’ by Sanral long distance toll concessionaire

“They’ve already been practicing the alternative. They have already been allocating funds through Treasury to offset those bonds.

“Social infrastructure cannot be subjected to a user-pay scheme, especially if they can’t administer it and if they can’t enforce it.

“They had to go this route. They should have made this decision years ago. It’s long overdue,” he said.

* Minister Mbalula’s department issued a statement on Monday, November 29, claiming the suggestion that he had indicated (in Friday’s briefing) that cabinet had made a final decision on e-tolls is “misleading and inaccurate”.

However, Moneyweb stands by its story and has a recording (see link below) of the briefing in which Mbalula did say a cabinet decision had been made.

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Goes to show that public defiance works !!
Welcome news – My account is R25 000+ and I will NOT pay !!!

Ouch!

Has anybody said what will they do in regard the arrears? R15b seems to be unpaid in total if compare budgeted revenue to actual collections.

They can’t just write it off (the message) but they could give a time period for paying say 25% and writing off the rest

So everybody in the country, including loadshed generators a 1000km away and without any wheels, will now pay for Gauteng highways.

It is thus in ANC SA Johan. Alarm bells were rung by David Gleason (RIP) as regards the original costs (a feeding frenzy of colluding contractors and their BEE parasites). Then came OUTA trying to expose the opaque deals with a foreign flavour, kept secret even to today. End result; stupidly high toll fees, lies as regards user pays and dithering by the ANC; again and again. So, like Eskom’s debt, everyone in SA will pay for the uncaring profligacy, mostly for personal gain, of the ANC elites sooner or later.

On the one hand yes, on the other…
Who funded the roads between Kuruman and Hotazel, or the R339 between Jansenville and Klipplaat? These are not toll roads. And even if they were, tolls collected would not even be enough to pay for the toll booth or the operator’s salary.
The best way to fund roads is via the fuel levy i.e. those that use roads more, pay more, and it’s inevitable that less used roads will be subsidised by users using roads that are being more ‘effectively utilised’. But that’s ok.

The only unsurmountable little problem in SA is that very little of any tax make its way to where it’s supposed to end up. And we all know why.

toll roads were supposed to offer easier faster than the old route. So old slow road over the mountain or new toll road through the tunnel. It all went wrong when for example Tsitsikama toll road has no alternative. SANRAL should not be trying to look after commuter routes like nearly all of Gauteng Highway is. The roads should be paid for and run by Gauteng.

The whole thing was poorly conceived and poorly / corruptly executed.

They will simply shift a tax that is easily avoidable to a form of taxation that cannot be avoided, like the income tax or the fuel levy. They will nationalize the cost of a regional benefit in the process, and force people in Cape Town to pay for freeways in Gauteng.

There are no workable solutions under an ANC government. People refuse to use their hard-earned money to finance the ANC looting spree any further. People across the economy are implementing drastic measures to avoid taxes. Some are emigrating, while most are exiting the formal economy to join the informal economy. The anemic GDP growth, the growing informal economy, and the huge unemployment rate are manifestations of a tax revolt.

The refusal to pay e-tolls is part of a general tax revolt against the incompetence and looting at all spheres of government. This protest forms part of a popular uprising against the ANC and its rules and regulations that are enforced upon non-ANC members. The e-toll boycott is the law-abiding citizen’s version of the Zuma riots.

The ANC has run out of runway. The government has painted itself into a corner. This capitulation on e-tolls is merely one more step in the direction of a failed state.

Good grief Fikele! Is that a real Rolex Oyster Perpetual GMT-Master II costing R359,000 on your chubby wrist???

Is it real of fake, did you buy it or was it a “gift”? I think your voters either out of work or on the breadline living on a couple of thousand Rands a month should be told.

Ugh!

…. I also remember you sitting in the bar at La Perla on the Sea Point beachfront when you were still Minister of Sports and Recreation watching some match on the television and smoking a fat cigar which according to the waiter whom I asked later cost a few hundred Rands.

Nice life at the top nè?

His spending and consumption habits are typical of the system he represents. They are far too incompetent and stupid to add any value, but they stand first in line when it comes to spending other people’s hard-earned money.

The rest of us can only earn income by serving consumers and by adding value to society. The ANC cadres extract cash flow by extortive means, either through SARS, a BEE contract, a loaded tender contract, or directly through corruption. Making false promises to ignorant voters allows these parasites to live with impunity.

They serve only themselves, while they don’t add any value. On the contrary, they consume value. This is valid for 90% of ANC members. They rely on the social grant, the government wage, BEE which is legalized plunder, tenderpreneurship, and state capture to “mine” society and to extract value from taxpayers.

They are a drag on society and a source of pollution to nature.

Jip – But remember that he is the founder of “Idiots Anonymous” to which most ANC members contribute so it is just a show of gratitude from them !!

Just as far as a return on investment is concerned, nothing on earth beats being a freedom fighter or starting a church. Nothing even comes close. The gifts that just keep on giving, day in and day out. Meanwhile in the real world, the tradies sitting outside Builder’s Warehouse looking for work everyday just increase in number every day. Check out the body language next time you stop to buy something.

The ANC politicians live in another world, driving Aston Martins and wearing a Rolex.

Yep I noticed the watch too! Very impressive! I’ve also noticed that when any politician travels it’s in Business Class! And all their cars are luxury vehicles….all this on taxpayers time and money! Enjoy it whilst you can boys and girls…it ain’t going to last forever…the taxpayer is getting restless AND sick and tired of racist BEE policies! The time is coming….

End of comments.

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