State panics over toll delay dangersComment on this story
If Gauteng tolls don’t start on Monday, then the government might have to pay off the full R19 billion it guaranteed in toll road debt immediately.
That is what the acting director-general of the National Treasury, Andrew Donaldson, said in court papers arguing that tolling on the Gauteng Freeway Improvement Project (GFIP) must go ahead.
“The total debt incurred by Sanral (SA National Roads Agency Limited) to fund GFIP in the first phase is R20 billion,” he said.
Sanral raised this by issuing bonds through its Domestic Medium Term Note, which Donaldson called effectively repayable loans. He said R19bn of that was guaranteed by the government through the Treasury.
“Under the note, should Sanral fail to implement the GFIP, that is, should it fail to collect tolls from April 30, 2012, that will be an event of default, triggering the immediate repayment of the entire loan. In practice, this will mean that the guarantee stands to be called on,” said Donaldson.
He said that if that happened, the consequences for the country could be very serious.
“The credit rating of Sanral in the money markets in the first instance will be severely affected, since it raises money by issuing bonds. The credit rating of South Africa, and therefore the government’s ability to raise sovereign debt, would be in jeopardy, since governments raise money by selling government bonds.
“If a country cannot raise funds because it has been downgraded, it follows that it cannot meet some of its commitments, which in South Africa’s case include such pressing needs as poverty alleviation and reduction of unemployment.”
He said Sanral had been downgraded by credit rating agency Moody’s in February because of uncertainty over the start of tolling.
The legal fight over the tolling of the GFIP roads was set to start on Tuesday in the Pretoria High Court. The urgent application to halt the tolling was brought by the Opposition to Urban Tolling Alliance (Outa), the SA Vehicle Renting and Leasing Association and others.
On Monday, the Freedom Front Plus, the National Ratepayers Union, TAU SA and the SA Federation of Caravans and Camping Clubs formed a Tollgate Action Group that hopes to join Outa in the court fight. AfriForum and the Road Freight Association are also joining Outa.
The National Treasury on Monday filed court papers calling for the right to intervene to oppose the Outa action, arguing it was not urgent and that any delay in the tolling would have “very serious public finance implications”.
Donaldson argued Outa had unnecessarily brought its application at the last minute and had not tried to discuss its problems with the Treasury. He said even if the tolls were stopped, South Africans would have to pay for the GFIP.
“This is because a way of funding GFIP will have to be found, and in the absence of the toll collection system, this can only be by resort to the national revenue fund, with the attendant higher tax burden and re-allocation of funds which would be necessary in consequence.”
Donaldson said the Treasury had adopted a user-pays toll system for the GFIP partly because it would be higher-than-standard infrastructure that shouldn’t be subsidised by those who didn’t use it.
He said the highest income-earning quintile in Gauteng would pay more than 94 percent of the total toll fees, and the second highest quintile would bring this to 99 percent.
Donaldson dismissed as insignificant claims by some of the businesses that the tolls would increase their “new basic costs” by more than R1m a year.
Nothing left to pay debt:
More than 70 percent of the Gauteng toll income over the next two years will be spent on collecting those tolls.
After some spending on road maintenance, there is nothing left over for repaying the R20 billion debt run up building the roads.
The costs emerged from areply in the National Council of Provinces by Minister of Transport S’bu Ndebele to questions by the DA’s Alf Lees.
The minister said the Gauteng tolls should bring in a total of R3.513bn during the 2013 and 2014 financial years. During the same time, it will cost R2.543bn to collect those tolls.
The SA National Roads Agency Limited (Sanral) will also spend R1.042bn on maintenance and improvement of those roads during those two years.
That means the toll income of R3.5bn will not be enough to cover the R3.6bn cost of collecting tolls and maintaining the upgraded roads.
The debt costs are not included in the answer.
Sanral and the government have previously said R20bn was spent on upgrading the Gauteng toll system and that this would be repaid – plus interest – over 30 years.
The Star had previously calculated that the costs were probably considerably higher, due to the hidden costs of toll collection. – The Star