Cabinet has decided to scrap the controversial electronic toll scheme in the Gauteng Highway Improvement Project (GFIP).
Transport Minister Fikile Mbalula confirmed this on Friday, but said that the National Treasury had halted implementation of the decision.
Black Friday – Cyber Monday
Sign up for our annual subscription and get full access to our award-winning articles, market indicators, and data tools.
R630 R530 *
SAVE R226 vs monthly subscription.
* Valid until November 29, 2021. Terms and conditions apply.
“When we went to the Cabinet, a decision was made. When it was supposed to be implemented to eliminate electronic tolls, the Treasury said ‘don’t wait,’ “Mbalula said during a briefing on the state of transport entities in Johannesburg.
“So that’s where we are. We have worked a lot from then until today, so in February we will be ready to make an announcement on this matter and how we are going to handle the electronic toll issue in South Africa.
“The Finance Minister will be in a position to make the announcement in the Budget speech in February.
“Otherwise, we can make that announcement even before the budget speech if the Cabinet and we agree on the way forward. The deadline is now February ,” he said.
Mbalula stressed that an announcement on the future of electronic tolls cannot be delayed beyond February 2022 because it will create “a crisis for Sanral [SA National Roads Agency] forever and ever ”and continuously affect Sanral’s balance sheet.
Mbalula confirmed to Moneyweb on the sidelines of the briefing that the government has gone beyond the nine options it previously presented to Cabinet to consider when making a decision on the future of electronic tolls.
Mbalula has previously confirmed that nine options were being considered to resolve the electronic toll boundary. This followed President Cyril Ramaphosa in 2019 who appointed Mbalula to head a task force to report on the options available for the future of electronic tolls by August 2019.
“We narrowed down all of those options and are looking at scrapping and the implications. That is the option we are looking at.
“If we do away with electronic tolls in the current way, how do we approach financial models, including financing the improvement of roads in the country?
“Remember that the user payment principle is … [what] it was helping us in terms of intervention and income generation to improve our roads, “he said.
Mbalula said the user payment principle gave Sanral its strong balance sheet and borrowing capacity to allow it to borrow money and be able to pay it back.
“So when you see the beautiful highways in Gauteng, it is because of the intervention of electronic tolls. Once that is removed, it means that we have to redirect the money for the department’s road improvement to pay for electronic tolls, “he said.
Mbalula said the government is considering how scrapping electronic tolls will affect future financing of road infrastructure and in different models to finance road infrastructure in the future.
He admitted that the fuel tax has been on the agenda, adding that both the Organization Undo Fiscal Abuse (Outa) and the Cosatu union federation have been in favor of using the fuel tax to finance the refund of GFIP bonds. .
“We are seeing that, but the Treasury said it is not possible. It is not sustainable.
“We know that the user payment principle in relation to electronic tolls has been boycotted. People are not paying and there is a huge debt, so those are the challenges we must address, ”he said.
The 2021 Medium-Term Budget Policy Statement (MTBPS) addressed the political uncertainty about the government’s position on the user payment principle.
He said the Sanral had incurred annual average losses of R2.5 billion since 2014/15 and had not been able to successfully issue a bond since 2017, largely due to uncertainty about the government’s position on the issue.
The MTBPS said that the government has extended a total guarantee line of R37.9 billion to Sanral, of which R28.4 billion had been used up to March 31, 2021.
“While political uncertainty persists, Sanral remains responsible for maintaining its toll portfolio and continues to service the debt used to finance construction.
“To date, 5.5 billion rand in toll revenue has been collected compared to an initial projection of 20.2 billion rand.
“Without a political decision to restore government support for the user-pay principle, Sanral will continue to be a significant burden on public finances,” he said.
Dr. Mampho Modise, deputy director general responsible for public finances at the National Treasury, told Moneyweb last month that they were still calculating the risks for possible options for the future of electronic tolls.
Mbalula said earlier this year that Finance Minister Enoch Godongwana would make a pronouncement on electronic tolls in the GFIP in his MTBPS, but confirmed on Friday that this was not done because the consultation process with the National Treasury had not finalized.
“There have been delays on this and the delays are reported in part because the decision we have to make, either way, has financial implications and we must respond to those financial implications.
“While we tackle another problem, we cannot open a hole on the other side,” he said.
Outa Chief Executive Wayne Duvenage said on Friday that the government’s decision to eliminate electronic tolls is “excellent” news, but stressed that Outa does not believe the government has a choice.
However, Duvenage questioned why the government was taking so long to make a decision on the alternative to electronic tolls.
“They have already been practicing the alternative. They have already been allocating funds through the Treasury to offset those bonds.
“The social infrastructure cannot be subject to a user payment scheme, especially if they cannot manage it and if they cannot enforce it.
“They had to go this route. They should have made this decision years ago. It should have been a long time ago, ”he said.