Johannesburg- Weaker-than-expected e-toll collections from the Gauteng Freeway Improvement Project (GFIP) have dented the SA National Roads Agency Limited’s (Sanral) credit ratings and increased the cost of its debt.
Ratings agency Moody’s said late on Monday that it had changed its outlook on Sanral’s issuer rating from stable to negative and downgraded Sanral’s baseline credit assessment. It affirmed Sanral’s Baa3/P-3 (global scale, local and foreign currency) and A3.za/P-2.za (South African national scale) ratings.
Sanral spokesman Vusi Mona said yesterday that it was not surprised by the downgrade because Moody’s had warned at the time of its previous two ratings last year that failure by Sanral to generate e-toll revenue, leading to deteriorating cash flows and growing borrowing needs, would lead to a downgrade.
Mona said Sanral was ahead of forecasted income when the e-toll review panel was announced by the Gauteng provincial government, but income had “dipped appreciably” since then. He indicated that there was little Sanral could do to improve its outlook and ratings.
“We await the outcome of the process led by Deputy President Cyril Ramaphosa on e-tolling to provide policy clarity, as well as the funding model for the GFIP. With policy certainty, we can devise a plan to repay our debt, which should improve our rating,” he said.
Wayne Duvenage, the chairman of the Opposition to Urban Tolling Alliance, said the change in Moody’s outlook and downgrade of Sanral’s baseline credit was expected and justified. But he added that the alliance was concerned because it did not want Sanral to collapse; rather it wanted Sanral to be able to improve its ratings.
However, Duvenage said Sanral needed to look introspectively at what it had done with regard to the implementation of e-tolls.
Azar Jammine, the chief economist at Econometrix, said Sanral’s ratings and downgrading would probably raise the interest rate it had to pay on its debt, and the government would probably have to step up to make good on any shortfall.
PRESSURE ON GOVERNMENT
He said that the shortfall from e-tolls had put pressure on the government to resolve the issue more speedily and in a manner that was more friendly to the people.
He said there was a need for more decisiveness on the way forward for e-tolls, if Sanral was to prevent its credit ratings being downgraded further.
It appears Sanral is still reluctant to try and legally enforce e-toll payments.
Mona said although Sanral had issued final letters of demand, it was still following the normal process of following up on outstanding toll fees and the issuing of summonses was “the last resort”.
He said: “We would much rather have road users register for their e-toll accounts, thereby avoiding the legal route.”
Mona confirmed that Sanral would co-operate with the National Prosecuting Authority (NPA) on the criminal prosecution of motorists for non-payment of e-tolls, but stressed “prosecution is a function that falls within the purview of the justice authorities”.
Moody’s said the change in its outlook and the lower baseline credit assessment assigned to Sanral reflected its assessment of the decrease in Sanral’s financial strength following weaker-than-expected e-toll revenue collection from the GFIP and the agency’s plan to increase debt issuance.
It anticipates Sanral’s debt will increase more than expected and reach R44.1 billion by March from R39.6bn in March last year.
Moody’s said the stabilisation of Sanral’s outlook would require evidence of its capacity to generate strong e-toll revenue collections.