No winners in the e-toll fiasco

Independent Newspapers

A toll gate on the N1 North just before the Beyers Naude offramp in Gauteng. Photo: Dumisani Sibeko

The row around e-tolling has many dimensions. The North Gauteng High Court decision last week resolved one of them. Judge Louis Vorster ruled that the government had done what was needed to communicate with the public, opening the way for e-tolling to start.

But lots of buts are still dangling.

For one, trade union federation Cosatu and the Opposition to Urban Tolling Alliance are urging civil disobedience. If motorists respond and refuse to buy e-tags, it will complicate the already unwieldy process of collecting money from unwilling payers, for example of fines for transgressions on the road.

Collections will prove costly, which is particularly relevant because the method chosen to fund the upgrade of Gauteng’s highway system seems ill-conceived.

One of the many criticisms of the SA National Roads Agency Limited’s (Sanral’s) Gauteng project is that much of the money collected will go to the collectors rather than the roads. This seems an exercise in futility when the money could have been efficiently collected along with the levy for the Road Accident Fund.

What is completely irrelevant is that the major beneficiaries of the collection system will be foreigners. Foreign investors, like local investors, must earn returns or they won’t invest. And, yes, we need foreign investment. We are a nation of dissavers and without foreign funding we would be on the bones of our derrières.

The “why” is relevant. Why did the government choose a complex method rather than a simple one to fund the highway system around Gauteng?

But then again, why did it take critics so long to wake up to the realities of the Gauteng Freeway Improvement Project? The problem with the belated opposition was that plans were well under way and delaying the launch damaged South Africa’s image abroad, not least among rating agencies. And the damage had financial consequences.

After two downgrades earlier this year, Moody’s Investors Service rates Sanral Baa2 with a negative outlook. The lower the rating, the higher the agency’s cost of borrowing. And the spill-over effects of rising costs will inevitably wash over the users, now that tolling is on its way. If not the users, then taxpayers will fund any shortfall.

Moody’s credit downgrades came after delays to the project, which was due to start in February. The launch was first postponed for further consideration in response to popular opposition. And in April it was delayed further when a court order blocked the launch. In September, the Constitutional Court overturned the lower court ruling. However, the project was still subject to a full review.

The series of delays reduced the road operator’s ability to service its loans, without assistance. After the initial delay, the Treasury came to the rescue, announcing a R5.7 billion subsidy in the budget to reduce the “debt to be repaid through the toll system, and make a steeper discount possible for regular road users”.

Moody’s noted in September that Sanral had R20bn in debt related to the Gauteng project, out of total debt of R37.5bn at the end of August.

Allowing the plans to reach such an advanced stage before protesting has proved counterproductive.

And, despite the court ruling in its favour, the government does not emerge well from what can only be called a public relations fiasco. Neither investors nor public are impressed. Essentially the episode has ended in a lose-lose scenario.