E-tolling – other side of the coin

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By Piet Coetzer

Should rest of the country pay for Gauteng’s road-upgrades

The Gauteng e-toll saga has become fully politicised with the Democratic Alliance in that province smelling political capital to be made out of it, illustrated by billboards on the edge of violating electoral law.  The core issues and serious implications for the country as a whole mostly get lost.

Whatever the final outcome of the saga, it will have an effect on the country as a whole.

There should really be only two questions: Who should pay for the roads and what is the best and most efficient way of collecting that payment?

Some secondary questions then revolve around issues like the “user-pay” principle, or whether all road users country-wide should pay via indirect taxes like a levy on fuel, or taxpayers in general should pick up the tab?

The goose and the gander

Historically the use of tolls to fund roads goes back (please see last week’s Final word) at least 2 700 years to the time of the Neo-Assyrian Empire.

Raising tolls on roads based on the “user-pay’ principle has been extensively used in Europe since the 18th century and the United States since the mid-19th century. In South Africa early examples also existed, but it made its modern appearance  especially during the 1980s.

If the user-pay principle does not apply, why should all tolls in other areas of the country then not be scrapped. Surely, what is good for the goose should be good for the gander.

The Western Cape’s Huguenot-tunnel, which opened in 1988 and is subject to tolling and other tolls on the N1north-south highway also have an economic cost implications in terms of the wines, fresh produce and other products moving along that route.

Surely the argument by opponents of the tolling of the upgraded roads in Gauteng that it will imply “higher costs of doing business and that these costs will be passed on to consumers in the form of higher food and commodity prices,” also applies to the tolled roads in other provinces?

Fact is that Gauteng’s upgraded freeways constitute only 1% of Sanral’s total road portfolio while tolled roads are about 16% of its network of 19704km.

Why should the daily and other regular commuters in the Western Cape, in terms of the argument of Outa and other opponents of the e-toll plan for Gauteng, subsidise the wine from their region going to the good people of Gauteng?

Is e-tolling really such an “irrational” system and policy as Mr. Wayne Duvenage of Outa argues? In an article written by him, he argues that, among others, “… the sheer volume of close on 3-million gantry transactions per day will in itself throw a myriad of complications and administrative challenges into the pot.”

But imagine the impact on the flow of traffic if those three-million transactions per day have to take place at a toll gate where every vehicle has to stop to hand over cash and in many instances change has to be handed back. Besides the logistical and security nightmare this will cause it will probably leave commuters with a very much worse traffic congestion than they had before the multi-billion upgrades to the grid.

Clearly the real target is not the e-tolling system per se, but the broad system of tolling as such and the principle of “user-pay” that underpins it.

The question also arises why should roads in general and the roads in Gauteng specifically, be treated differently from other infrastructure investments, like water and energy, which are funded by consumers based on the “user-pay” principle?

Users of Gauteng’s major road grid, and especially the Ben Schoeman highway between Johannesburg and Pretoria, has had the benefit of major upgrades for some time now by way of smoother traffic flow and the improved fuel consumption that stems from that.

What are the implications of alternative sources to finance the outlay that has already been incurred to improve the road grid in Gauteng?

E-tolling is expected to generate R250m-R300m/month or between R3- and R3.6 billion per annum. If that is to be replaced by an increase on the general fuel levy, it would imply country-wide an up to R8.00 extra every time the average motorist fills up his tank.

 National impact

But in the meantime, thanks to the st the campaign and legal action delaying of the implementation of raising tolls to pay for those upgrades due to the campaign and legal action of Outa and others, to the detriment of the country as a whole, Sanral has seen its credit rating being downgraded while its debt burden mounts by the day.

Being the national agency responsible for the construction of national roads in the country, the financial health of Sanral is a national concern. Wrecking that will have an impact on the country as a whole.

Fact is that Sanral needs to find a massive R5bn to repay debt. And it cannot wait for ever to start doing so. Its R1,48bn, NRA013 bond matures at the end of this month and a second bond matures on April 30 2014.

In the meantime nation-wide other road users are effectively being held to ransom by the delays to the implementation of the tolls that are supposed to help pay for the upgrades that Gauteng road-users already enjoy.

Sanral last tried to raise money on the bond market in September 2011 but in the face of the uncertainties and its financial position, that bond auction was a disaster. It had to abandon further attempts to borrow on capital markets until tolling begins.

And as for the R20 billion debt incurred to improve Gauteng’s road grid, in the words of Clem Sunter, “… the ‘elephant in the room’ …(is) the compounding effect of interest which makes the figure, currently standing at R20 billion, worse by the day.  

Further delays in implementing revenue-raising measures just worsen the problem.”

It is important that this matter should now be put to rest once and for all before the damage to Sanral and the economy as a whole becomes irreparable. President Zuma’s decision to sign the Transport Laws and Related Matters Amendment Bill into law hopefully has brought the country closer to closure on this saga.

 

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