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Sanral to develop new funding model

Outa condemns potential criminal prosecution for e-toll defaulters.

The South African National Roads Agency (Sanral) is developing a new funding model that will see it generating own revenue for the first time and do away with the strict separation between its toll and non-toll portfolios.

That would enable Sanral to keep toll tariffs within an affordable range by supplementing toll revenue on a specific project from either the public money or revenue it generates itself.

Sanral CEO Skhumbuzo Macozoma, told Moneyweb about these developments during an interview at the Sanral head office in Pretoria. Macozoma assumed office on December 1, succeeding Nazir Alli who retired earlier.

Ideally Macozoma would like Sanral to limit itself to road building: plan, design, submit a budget, get allocations, build the road and maintain it. That is what it does best.

Private capital

Unfortunately available allocations are not enough and as is being done globally, Sanral has successfully tapped into private capital through tolling. Traditionally state tolls and toll concessions worked well. The capital markets were supportive and rates of return were good.

The Gauteng Freeway Improvement Project was Sanral’s first venture into urban tolling and the problems associated with it are well-known. “People say we did not consult enough,” he says. “We need to listen to our people. We need to consult better.”

Putting this attitude into action, Macozoma says Sanral has requested transport minister Dipuo Peters to develop a new toll roads policy and consult the public in the process. “We hope to contextualise tolling properly so that we can agree when, where and how we toll.”

He hopes to have such a policy passed in parliament and says “it must be given the time it requires”.

At the same time Sanral is developing its own long-term strategy with a 2030 horizon, that aligns with the National Development Plan.

While the process is still on-going, he says there is emerging consensus about an integrated funding model. At the moment, Sanral gets 86% of its funding from the state and the balance from tolls.

Own revenue

The new model would add a third revenue stream, namely own revenue. Macozoma does not want to expand much on this as the work has not been completed yet, but mentions the possibility of selling the services of Sanral’s experts, leveraging its huge land portfolio and income from hosting advertising.

On the expenditure side, Sanral would propose hybrid funding, that would open up the opportunity for utilising more than one source on the same project. Sanral is talking to the Western Cape Government in this regard to find funding solutions for the N1, N2 Winelands road, where resistance to tolling has stalled the project.

Macozoma is solutions driven. “If we cannot toll, we have to find other funding. If we don’t, everybody will suffer,” he says.

GFIP phase 2

He is concerned about the lack of progress with the next phases of the Gauteng Freeway Improvement Project (GFIP). “In five years we will be back to the (congested) situation we had in 2008.” Planning for the project has to go ahead and be done in conjunction with the cities who own most of the land reserves involved, he says.

Macozoma warns against an approach where some parts of the planned network are built on an ad hoc basis. You have to approach it as a network to get the full benefit of mobility, he says. But for that, he needs R46 billion….

He emphasises that mobility is a prerequisite for economic growth and says that unless Sanral can find the funding, it would have to prioritise over the medium term. That would see some provinces left behind though.

Sanral’s allocations from national government for its non-toll portfolio has increased from R12 billion in the current year to R15 billion in 2017/18, which will enable it to embark on major capital works on the provincial roads it has taken over from provincial authorities.

Macozoma says Sanral has pushed back some projects in an effort to manage its debt, keeping in mind the lower than anticipated revenue from the Gauteng e-toll project.

This would see its monthly debt auctions reduce from R600 million each last year to R300 million each. Macozoma says this was done by applying the actual e-toll income of about R65 million per month, rather than higher forecasts. The e-toll risk has been reduced through this approach and the ratings agency Moody’s has indicated that it is comfortable with this.

Chasing debt

Nevertheless Sanral will “continue to chase our debt” in compliance with the Public Finance Management Act, Macozoma says. The test case with Outa is currently scheduled for around September, “but we want it sooner”, he says. Until there is legal certainty, everybody is in limbo, he says.

Apart from the test case, Sanral will proceed with its civil action against defaulters and expects the first default judgements in the first half of this year.

Macozoma however wants to go further. He has given instruction for the few biggest defaulters to be criminally charged. “If we can start with at least one.”

These are typically large trucking companies or fleet owners. “We know that 80% of the money is owed by 20% of the clients,” he says.

Maczoma feels strongly that “it is not correct to willfully ignore the laws of the country”. He says government has made meaningful concessions on e-toll fees, but there are not concessions “from the other side”.

Sanral is further pursuing license blocking for outstanding e-tolls, but that is dependent on the efficient functioning of the Administrative Adjudication of Road Traffic Offences Act (Aarto).

Winning hearts

On the other hand Sanral hopes to win the hearts of Gauteng road users by demonstrating the value of the e-toll system. Macozoma says the e-toll system with its huge clearing house has tremendous potential. Sanral could, for example, offer the Airports Company South Africa (Acsa) the option of e-tag holders paying for parking at the airport through their e-toll accounts, he says.

About stepping into Alli’s shoes, Macozoma says he has his own approach. “I don’t talk to the media unless I have to. I’m an engineer. I build roads.” But he is conscious of his own limitations, he says. “I don’t play politics.” That he will leave for the politicians while he sticks to the administrations. There won’t be any mud slinging in response to his detractors, but he would set the record straight on content that is not factual.

The most important thing is that he won’t allow Sanral’s engineers to be derailed from exercising their mandate. “I’ll take my own path and restore the technical reputation of Sanral.”

Outa condemns plans to lay criminal charges

The Organisations Undoing Tax Abuse (Outa) said in a statement it would seek an urgent meeting with the head of the NPA adv. Shaun Abrahams about plans by Sanral to criminally prosecute large fleet owners for outstanding e-tolls.

Sandal CEO Macozoma told Moneyweb on Monday that 80% of the outstanding tolls fees were owed by 20% of its customers – all large fleet owners. Macozoma also said Sanral expects the first default judgement in its civil cases in the next six months.

Outa said that after having agreed to a test case on the e-toll matter, “Sanral is now attempting to circumvent this agreement by pushing for civil and criminal charges” the organisation said.

“Sanral’s lawyers had agreed with Outa that the best way forward was to proceed with a test case to settle the legal issues against e-tolling – as soon as all the necessary documents were made available by Sanral.”

Outa says it will seek an urgent meeting with the head of the NPA, to discuss what it calls “this transparent attempt to use the courts to bully the public” before the legal issues have been determined in the test case.

“In our opinion, Sanral should be focusing on preparing for the test case to ensure it proceeds on an urgent basis, rather than taking advantage of members of the public who are not Outa members,” says Ben Theron, Outa Portfolio Director.

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The people of Gauteng know that eToll was a corrupt system and you will never win the hearts and minds of the people of Gauteng on that!!! NEVER.

Perhaps the new funding model should be the return of the overspent and missing billions which seem to have disappeared into thin air some when the tender process took place, and some by some other mysterious means. Once the missing money is returned, then, and only then will the public trust Sanral, its major shareholder, its staff, its comrades, and its principle advisors.

Until then, have a nice day.

SANRAL and the E-tolling system is now history. We as the Gauteng road users will never contribute a cent to the system which was corruptly set up by the Guptas and Jacob Zuma. The whole awarding system is still a mystery and they still do not want to release the shareholders names as well as how all of this was conceptualized and awarded.

My advice is to write off the whole thing and restart the process and make us the public the shareholders into something we should own, appreciate and value and not some foreign and unknown entities.

What never fails to amaze me is the OBVIOUS solution to this insanity called the daily freeway commute and that is to DECENTRALIZE society.
Surely a group of heavy hitters in the business community can get together in a brainstorming session work out a better way to conduct our lives here in the 21st century? Surely it doesn’t take a retiree such as myself to point out this glaring 2 ton elephant in the board room?
Oh, and that Gautrain lunacy? How is that working out? Thought so, another ANC inspired criminal waste of time and treasure which will never be paid off! Shilowa’s folly indeed.

One has to remember that e-tolls and several and other state managed entities like electricity, water and others are in essence monopolies. The population has no choice but to pay whatever is charged. If the population believes prices are inflated because of corruption or other inefficiencies there will be pushback from citizens in a free society.

“Macozoma feels strongly that “it is not correct to willfully ignore the laws of the country”. ”
Oh, you mean like Scamral has done throughout the e-toll fiasco, and is still doing as we speak? Please, please, prosecute someone and see how that works out for you.

A quick check on the Engineering Council of South Africa’s website reveals that the esteemed CEO used to be registered in the “candidate engineer” category for eight years – which registration was cancelled 11 years ago. He is currently not registered with ECSA.

Well, I believe that we, the road users feel that it is not correct for Macozoma, a failed ECSA registrant, to support a corrupt system and thereby willfully ignore the laws of the country. Put that in your pipe and smoke it.

Well, I believe that we, the road users feel that it is not correct for a failed ECSA registrant, to support a corrupt system and thereby willfully ignore the laws of the country. Put that in your pipe and smoke it.

Nazir Alli departure from Sanral is the best thing that has happened to Sanral since it was created. He was the “Zuma of Sanral” and singlehandedly destroyed Sanral’s reputation, credibility and trust. Sanral has a lot of work to repair the damage he did.

Nazir Alli’s departure from Sanral is the best thing that has happened to Sanral since it was created. He was the “Zuma of Sanral” and singlehandedly destroyed Sanral’s reputation, credibility and trust. Sanral has a lot of work to repair the damage he did.

The one thing that SANRAL should do is to stop being dishonest. The “user pay” principle, as sold to us, is a fake. The whole tolling portfolio was designed as a revenue generating mechanism so that urban tolling could be used to pay for building other toll roads which would never support themselves.

Note how Macozoma says that some projects have been pushed back to manage debt. This would not happen if each toll road supported itself. With regard to using the fuel levy, SANRAL asks why should non-Gauteng road users pay for the GFIP? The same could be asked in return, why should GFIP toll-road users pay for other roads, notably the Wild Coast toll road, which could never support itself from tolls?

As to a source of more money, how about increasing the allocation from the fiscus by reducing allocations to those entities where all the corruption and theft is taking place? Then infrastructure capital is increased, corruption and theft is reduced and there is no extra burden on the tax payer. Win-win all around. Start talking about it SANRAL.

Does next phase of GFIP congestion control include dedicated truck lanes on N3 inclines and declines, e.g. N3 north and south between Linksfield and Gillooly’s, as is the case on stretches of KZN N3? And/or truck exclusion times?


Person : Macozoma, Dennis Skhumbuzo
Registration Number : 985225
Registration Status : Cancelled
Since : 08 March 2006
Discipline : Civil
Category : Candidate Engineer

Thanks for saving me the lookup, which I intended to do.

SANRAL’s new CEO doesn’t seem to understand why there has never yet been a criminal prosecution. But it’s simple really:

The moment the first prosecution takes place, the defendant will raise the “collateral challenge” which in essence says that system the system was implemented in an illegal fashion, all toll fees levied are also unlawful. That is what SANRAL has been trying to avoid all these years, and it thought that going the civil claims route would enable it to duck the collateral challenge. They’re wrong there too, because the defence, as in the criminal case, is that no debt can arise from an unlawful system. If SANRAL thought they could win the collateral challenge, they would have gone ahead with criminal prosecutions three years ago.

SANRAL wouldn’t have a problem if they didn’t break the law so much.

And as for their funding model, there is a better idea: go back to the days when SANRAL was actually an arm of the Department of Transport and roads were funded inexpensively and transparently through taxation. That way we don’t have to pay hundreds of millions for an arm of government to pretend it is a private company with JSE-style opulence et al. Nobody will take SANRAL seriously as long as they have to drive past its ostentatious glass palace in Samrand every day.

The SOE experiment has failed. Now it is time for us to stop disguising government functions up as private companies, to the detriment of all citizens.

An illustration of how you can damage a sure bet by being overly greedy. As pointed out, SANRAL has a monopoly and, due to Prasa/Transnet’s hopelessness, it has a real monopoly on providing the transport of goods and people; just about everywhere. Then add that the abundant passenger vehicle subsidise the heavies, for whom the most costly aspect of the roads are built.

But somehow, in true ANC fashion, SANRAL have done their best to abuse public trust, conduct illegal activities, rip off the travelling public and continue to do so; unashamed. SA history being written.

>> Sanral CEO Skhumbuzo Macozoma

I pray to whichever gods may be listening that this Macozoma is not related to Saki Macozoma, but with little hope.

How can you have a test case in September but default judgements in the first half of the year. Surely the test case must come first?
Macozoma says “People say we did not consult enough,” he says. “We need to listen to our people. We need to consult better.” Public consultation was dismal to non-existent as firstly not all of us have access to Government Gazettes and hiding an “Intention to toll” advert in the back end of a newspaper is an old ploy but legally acceptable unfortunately.
The only way to “listen to our people” is to call a referendum. The ANC, however, know full well that it would be 100% against so that would be the last thing they want.
Macozoma in the second paragraph above is still talking about the affordability of tolls when with the GFIP it’s been proved time and time again that it’s not the amount of the toll but the toll itself (on Facebook it was asked “If e-tolls were one cent would you pay?” and the answer was resounding NO).
Instead of upgrading an existing road and then tolling it (which should be illegal) they should have built a completely new ring road and a completely new highway between JHBG and PTA. This would have left the old road network for those of us who don’t want to or can’t pay tolls. But if this halfhearted job cost R 27 Billion what would a new road have cost.

SANRAL is asking us, the road users, to support a known corrupt practice. Corruption is so extremely entrenched (embedded?) that SANRAL cannot separate honest practice from dishonesty.

We, the honest road users, will NEVER support e-tolling.

End of comments.





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