Toll road system will raise costs of doing business in Gauteng

Time of article published Feb 15, 2011

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The SA National Roads Agency Limited (Sanral) has announced the fee structure for the extensive open road or e-tolling system it plans to launch in Gauteng in June.

Toll collections from the 49 toll points that will be distributed across 185km of existing national road, will be used to help fund Sanral’s six-phase Gauteng Freeway Improvement Project (GFIP). The first phase, which involved upgrading 185km of existing freeway and 34 interchanges, is now almost complete.

Sanral has emphasised that the benefits associated with the GFIP are substantial and include improved traffic flow, improved incident management and services, and accessibility in Gauteng, reduced travel times, the creation of 30 000 jobs (over the lifespan of the project) and an injection of approximately R29 billion into the South African economy.

But much less has been said about the costs of the project or about who will bear them. There is little doubt that the e-tolling network will result in significantly higher transport, distribution and related services costs in Gauteng (including the cost of commuting), inflate producer and consumer prices, alter road-use patterns and potentially change the spatial distribution of economic activity. While the improvements to Gauteng’s freeway system are needed and are welcome, it is not clear that all stakeholders have given adequate consideration to the broader economic consequences.

The open road tolling system will consist of 49 electronically operated toll gantries distributed on sections of the N1, N3, N12 and R21 freeways in greater Johannesburg, and main links between Johannesburg and Pretoria. The system allows for tolls to be automatically charged without vehicles stopping or slowing down.

The overhead gantries, 30 of which have already been installed, are fitted with toll collection equipment that will automatically communicate with vehicles fitted with an electronic tag and deduct the toll amount from the owner’s linked pre-paid account. Vehicles without e-tags will be recognised by their number plates.

The main advantage of e-tolling as compared to regular boom-tolls is that it causes no disruption to traffic flow. Sanral said the installation of many toll points meant road users should only end up paying for the portion of the road they have used.

The finalised and approved toll tariffs and discount structures for the e-tolling system were released to the public on February 6. The 97.6km return trip from the Rivonia road onramp to the N1 in Sandton, along the N1 to Hatfield in Pretoria will cost the driver of a light vehicle with an e-tag R24.84 in toll fees on the way there and R20.58 on the way back.

With a return trip of 97.6km costing a total of R45.42, drivers of light vehicles who have registered for an e-tag can expect to pay around 47c/km.

Vehicles that have not registered for an e-tag will pay R60.58 for the same trip, which is 33 percent more than e-tag users (e-tag registration is expected to take place between March and June). Sanral has, however, announced significant frequent user discounts for drivers of passenger vehicles and off-peak travel discounts of up to 25 percent (between 11pm and 5am).

A commuter travelling the Rivonia-Hatfield route 20 days a month will clock up a total of R908.40 in toll fees but will then be eligible for a 45 percent discount. This means that the tolls will add a more manageable R500 to the transport costs of a regular commuter, or R25 a day.

While the direct toll fees on commuters are not as high as perhaps many initially feared, toll fees will also hit the wallets of Gauteng producers and consumers indirectly – higher toll fees result in higher freight transport costs and in turn feed through to producer and consumer prices.

The fee schedule for freight vehicles of 12.5m and longer with an e-tag work out to R2.80\km. There is no escaping these fees because there are no frequent user discounts for heavy vehicles.

Significantly higher toll fees for road freight are usually justified on the basis that trucks cause far greater damage to roads than passenger vehicles and should therefore contribute proportionately more to road maintenance. The unfortunate reality in South Africa is that there are few viable alternatives to road freight since the parastatal-managed rail freight network continues to be hamstrung by inefficiencies.

Higher toll fees on road freight will increase the cost of transporting goods and services into and out of the country’s major economic hub, increasing the price of goods and services both regionally and in some cases nationally.

It is likely that e-tolling of most existing national routes in Gauteng will result in the diversion of traffic onto local and provincial alternative routes as road users try to avoid toll fees. The increased traffic on roads ill-equipped to handle large volumes could lead to a much more rapid deterioration of the adjacent roads and increased congestion and inefficiencies.

The cost associated with increased wear and tear on adjacent roads will not be borne by Sanral, but by the Gauteng Department of Transport, which is responsible for maintaining provincial roads, and local municipalities and their agencies. Any indirect costs that may arise because of increased congestion and inefficiencies on the adjacent road network will be borne by residents and firms within the region.

The fact that 49 toll points will be evenly dispersed across 185km of road should help to minimise the costly relocation of manufacturing and distribution centres.

Experience has shown that firms will strategically locate or even relocate their facilities to avoid toll fees – the large industrial development in Durban just before the Mariannhill toll plaza on the N3 is a case in point. That said, the e-tolling system will inevitably have an impact on the spatial distribution of economic activity within Gauteng as there are undoubtedly cost efficiencies to be gained by locating transport and distribution hubs strategically.

Municipalities and provincial government entities can benefit from investigating and understanding the potential socioeconomic impact the e-tolling system could have in their jurisdictions.

It is important that public entities are cognisant of the potential implications of the e-tolling network for their jurisdictions, so that they are able to monitor risks and associated costs, and are able to engage effectively with the relevant stakeholders.

Municipal authorities should be aware of the fact that the tolling of major access routes could make their municipality less attractive as a location for residential, commercial and industrial activity.

The entities responsible for the maintenance of roads should be aware of the risk of increased traffic and damage to adjacent routes, so that they can monitor traffic flows and engage proactively with the relevant stakeholders to seek compensation or find alternative solutions.

It is important that individual firms and industry associations investigate the likely impact that e-tolling will have on their business operations, relative competitiveness and bottom line, so that they can engage proactively with relevant government stakeholders and identify opportunities to mitigate the negative impacts

Kay Walsh is a senior economist at Deloitte.

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