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

Low e-toll collection rates one of the major reasons for the decision.
One condition for the issuance of the loan was that it would be guaranteed by the government. Image: Moneyweb

Concerns about low e-toll collection rates on the Gauteng Freeway Improvement Project (GFIP) were a major reason for National Treasury rejecting a request for a government guarantee of R7 billion to cover a loan to the South African National Roads Agency (Sanral) by the New Development Bank (NDB) of the Brics (Brazil, Russia, India, China, SA) economic bloc.

The request to National Treasury was made by Transport Minister Fikile Mbalula in October 2019.

This has emerged after Sanral chief financial officer Inge Mulder disputed allegations made by the Organisation Undoing Tax Abuse (Outa) in an article published by Moneyweb last Tuesday (November 16).

The article referred to a judgment handed down by Judge J van der Schyff in the North Gauteng High Court last week setting aside Sanral and former CEO Skhumbuzo Macozoma’s refusal of Outa’s request for information about Trans African Concessions (TRAC), one of Sanral’s long distance toll concessionaires, through a Promotion of Access to Information Act application.

Judge van der Schyff directed Sanral to provide Outa with the requested records within 15 days of the order being served on the agency.

Outa’s application, which is an attempt to obtain more transparency from the Sanral about possible “excessive profits” being made by the agency’s long distance toll concessionaires, was unopposed.


Outa’s accountability division executive head Advocate Stefanie Fick confirmed on Wednesday (November 24) that the order has been served on Sanral.

Statements disputed

Mulder disputed statements by Fick in a founding affidavit to the application, and reported by Moneyweb, that Sanral received a R7 billion loan from the NDB (popularly referred to as the Brics Bank) that is repayable over a period of 15 years but the purpose of the loan is unknown.

“The aforementioned allegation, contained in a Moneyweb article dated 16 November 2021 and titled ‘Court order could expose ‘excessive profits’ by Sanral long distance toll concessionaire’, is incorrect,” she stated.

“Sanral wishes to place on record that it did not receive any loan, of any amount, from the Brics’ New Development Bank at all.

“The New Development Bank approved a loan from their side, but the loan was never approved by the SA Government, through National Treasury, and has therefore not been taken up,” said Mulder.

“No loan agreement has been signed between Sanral and the NDB either, which would constitute a facility which could be used.”

The approval by the NDB of the loan to Sanral, based on a statement issued by NDB, was widely reported in the media in September 2019.

The directors’ report in Sanral’s 2020 Integrated Report for the year to March 31, 2020, mentioned the NDB loan.

It said: “During the year, the New Development Bank (NDB) approved a R7 billion loan to Sanral’s Toll programme, which will be used to fund various recently completed toll projects and toll projects currently in construction.”

However, Sanral’s 2021 Integrated Report did not mention that National Treasury had rejected the request for a R7 billion guarantee to cover the NDB loan.


Mulder said the letter from Mbalula informing Sanral of National Treasury’s rejection of the request for the guarantee is dated February 12, 2020.

National Treasury confirmed it took this decision in December 2019.

Mulder said for Sanral to utilise the NDB loan, it required National Treasury’s approval for the loan and guarantee agreements “even though Sanral would utilise the existing government guarantee of R31.91 billion for this loan”.

“National Treasury, through the Department of Transport, indicated that the GFIP/e-toll issue must be resolved before National Treasury would agree to this or any other loan,” she said.

National Treasury was more forthright in explaining why it rejected the request for a guarantee to cover the R7 billion NDB loan.

It said the Minister of Finance (National Treasury) does not approve loan facilities to state-owned companies, adding that the specific terms and conditions of the loan agreement are determined by the lender concerned and the state-owned company, in this case NDB and Sanral respectively.

Risk to the fiscus

One of the conditions for the issuance of the loan from the NDB to Sanral was that the R7 billion loan would be guaranteed by the government, according to National Treasury.

“A guarantee by the government results in government guaranteeing payment to the NDB from the fiscus, if Sanral were to default on any of the principal or interest payments under the R7 billion NDB loan.

“Therefore, the issuance of a guarantee to Sanral for the purposes of raising a loan with the NDB has the potential of binding the National Revenue Fund (NRF) for any default of Sanral under the repayment terms of the loan.

“Sanral would then utilise the guarantee granted by the state to raise the R7 billion loan from the NDB and thereby meet the condition agreed to between Sanral and NDB for the issuance of the loan.

“Having considered the relevant information provided by Sanral and the Department of Transport, the then Minister of Finance did not concur to the issuance of a guarantee for Sanral,” it said.


Treasury said several issues were identified in the decision not to concur with Mbalula’s request.

It said the most salient of these was that “given the low toll collection rates on the GFIP, there was uncertainty regarding Sanral’s ability to generate sufficient operational revenues that would enable the entity to repay the principal and interest amounts due under the NDB loan so as to not trigger a default, which would then require government to settle the guaranteed obligation on Sanral’s behalf”.

Mulder said the intended purpose of the NDB loan was to fund large capital projects on existing toll routes, which were urgently required, such as the N3 and N2 in KwaZulu-Natal.

She added that Sanral has sufficient capacity available under its R31.91 billion guarantee to fund these projects, but that the NDB loan would have been more cost effective and more accessible than the capital markets at that time.

Moneyweb asked Sanral why it applied for a loan facility for toll roads when these roads are supposed to be funded and maintained with the income from the toll fees received.

Mulder said all large infrastructure projects are funded through borrowing because public entities do not have access to large sums of cash to apply on capital projects upfront.

“This is called the J-curve, where Initial Capital Costs are borrowed and paid back over time,” she said.

“Sanral (Roads Board previously) has been issuing bonds in the capital markets to fund its toll road programme since the 1990s. Sanral has also previously done loans with the European Investment Bank as well as an Export Credit Agency loan with a local bank.

“To expand (capital works) existing infrastructure, the initial construction cost is borrowed and repaid with existing toll revenue. This is called the Loan Supportable by Revenue (LSR) model.

“Prior to commencing with capital works, it must be proven that the costs can be repaid with the existing revenue, given that maintenance must also continue,” she said.

Mulder added that Sanral has tapped its existing bonds to ensure the cash is available once construction commences on the projects that were earmarked for funding through the NDB loan facility.

“The R7 billion loan would have been released during construction and not as a single lump sum,” she said. “Effectively, the bond issuance is doing the same, the rate is just more expensive.”

Why no update?

Outa CEO Wayne Duvenage said Sanral should have provided an update and disclosed that it had not taken up the NDB loan.

“It’s frustrating that they [Sanral] are not transparent. But they aren’t. They keep you in the dark,” he said.

Fick said the fact that Sanral did not take up the NDB loan does not change the reasons why Outa wants specific information about the concessionaire contracts.

“These roads are supposed to support themselves but the toll fees keep going up. They [the concessionaires] are in the business of making money but not to the detriment of taxpayers.

“At some point they are breaking even and everything they earn, they put in their pocket.

“Shouldn’t the toll fees then become less, not more?” she asked.



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The rating agencies are more transparent than the SOEs. The ANC government has a junk status because they borrow too much and they issue too many guarantees to bankrupt SOEs. Government debt plus guarantees to bankrupt entities stands at R5 trillion. What do we have to show for the R5 trillion debt?

The largest social grant project relative to GDP on earth. The largest overburden of incompetent and counterproductive government employees, relative to GDP, in the world. Tripartite Alliance members extract salaries at bankrupt SOEs, where they produce little and consume much. The highest spending on education in the world, with nothing to show for it. All of these expenses are merely an extension of the social grant. The SADTU and Cosatu members consume more than they produce. They are wealth-destructive and not wealth-generative. The entire government project is a glorified social grant. So is the BEE scheme. BEE schemes rely on long-term debt to finance the short-term consumption habits of beneficiaries.

We borrow to finance consumption. We are eating the capital and savings of the nation, and we turn it into sewage that fills the potholes and pollutes the rivers. The debt/equity swap at Eskom is part of a process that turns productive pension savings into effluent.

The ANC turns the wealth-generating and job-creating assets of the nation into a sewage problem. If we recognize the extent to which the socialist ANC policies consume productive capital, it is clear that Luthuli House is one huge pit latrine at the center of the economy.

Mr Sensei encapsulates the state scenario perfectly. And about that J-Curve mentioned by Ms Mulder: “This is called the J-curve, where Initial Capital Costs are borrowed and paid back over time, she said.” Errr … no …

Investopedia, the premier go-to for these definitions and everything trading and finance related defines a J-curve as: “A J-curve is a trendline that shows an initial loss immediately followed by a dramatic gain. In a chart, this pattern of activity would follow the shape of a capital “J”.”

In the case of SANRAL her J-Curve would show no dramatic rise in profits but would rather look like a J lying on its back like this ↪︎ where the money comes in at the top, heads down to the curve and then is channeled into oblivion shown by the arrow at the end.

Looks like borrow your way to oblivion!

At last…sanity prevails! The powers that be within the CR faction have realized that BRICS loans come with all sorts of hidden agendas! Gone at last ( one hopes) are the Zuma years where loans to the country only benefitted a politically connected few, maginalised the taxpayer and exhausted our DM journalists trying to keep up with reporting the incidence of corruption.

End of comments.




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