ANALYSIS

E-tolls have failed: Now for the R20bn question — how to pay the debt?

By Greg Nicolson 9 July 2019
Caption
E-tolling in Gauteng has failed because the public never bought into the plan. (Photo: REUTERS / Siphiwe Sibeko)

Motorists have crippled the e-toll system simply by refusing to pay. Various incentives and punishments have been used to save it, but the only remaining question is how Sanral’s debts will be paid once e-tolls are inevitably scrapped.

In 2015 a panel of experts commissioned by the Gauteng government released a report on the state of e-tolls, which were introduced to cover the costs of the Gauteng Freeway Improvement Project (GFIP). It went far beyond the costs of tolls (the poor and middle class were more adversely affected) and analysed e-tolls in relation to the post-apartheid state and the legacy of spatial inequality.

Elements of the e-tolls policy should be reviewed as a matter of urgency, and, to avoid further protracted conflict, the process must be transparent, deliberative and participatory,” read the report.

Cyril Ramaphosa, deputy president at the time, led discussions between the provincial and national governments to overcome the impasse between road users who refused to pay and the SA National Roads Agency (Sanral), which needed to pay its debts for the infrastructure upgrade.

Various tariffs were reduced, somewhat in line with the report’s recommendations, but the stalemate remained between road users and Sanral. The national government did not want to buckle and provide a solution.

Tariff reductions — the carrot — and the threat of court summonses for non-paying consumers — the stick — were the last real attempt to save the system. Neither worked.

Almost five years later, e-tolling has failed because the public never bought into the plan and instead employed a convenient strategy of popular resistance: Don’t pay and hope others don’t pay; cripple the system by making it administratively impossible to punish everyone.

Gauteng Premier David Makhura, in his State of the Province Address on Monday 1 July 2019, said the government and provincial ANC are committed to scrapping e-tolls. That task, however, is the responsibility of the national government. Finance Minister Tito Mboweni took a break from tweeting about his dinner last week to support the user-pays system on social media.

It’s been more than five years since the e-toll panel released its report — and the national and provincial governments still can’t agree on a way forward.

President Ramaphosa on Saturday condemned the online exchanges between Makhura and Mboweni and said they had to work with Transport Minister Fikile Mbalula to present a workable solution to Cabinet by the end of August.

While the user-pay principle remains a policy of government, the electronic tolling system as part of the Gauteng Freeway Improvement Plan (GFIP) presents challenges in its current form,” said a statement from the Presidency.

The public interest is best served through collaboration, not conflict, and the appropriate platform for leaders to express and reconcile differing views is Cabinet and other co-ordination forums,” it continued.

Mbalula, Makhura and Mboweni have less than two months to find a solution to a problem that has not been solved in years, one that Ramaphosa failed to resolve as deputy president.

Mboweni’s tweets summed up Treasury’s challenge.

The freeway improvements included 201km of upgraded freeways, 585km of new traffic lanes, 265km of fully reconstructed lanes, 47 new bridges, 134 existing bridges widened, 186km of freeway lighting installed, 127km of concrete median barriers erected, 34 interchanges upgraded and four new directional ramps.

Sanral took on more than R20-billion in debt to cover the upgrades and agreed to pay the Austrian-owned company Electronic Toll Solutions (ETC) more than R8-billion to administer the system. Sanral is reportedly owed R11-billion in unpaid tolls, with only 20% of users paying their share.

Mboweni essentially said road users had to pay for the services (otherwise Treasury, already with so many competing demands, might have to pay) drawing criticism from Makhura, the Gauteng ANC and Cosatu.

It’s not so simple. The GFIP upgrades cost double what some analysts estimated and ETC’s fee appears inflated. Sanral funded the project with a government-backed bond from the Public Investment Corporation (PIC) and is presently trying to pay only the interest rather than its debts.

E-tolls never received public support, without which they can never work unless there’s a feasible plan to punish those who don’t pay, attempts at which have already failed.

But someone has to pay Sanral’s debts.

Makhura has said the Gauteng government could pay a portion, which drew criticism from the DA as throwing good money after bad.

In principle, citizens of Gauteng don’t want e-tolls. If part of the solution is for us to contribute some money it’s something we are open to,” said Makhura’s spokesperson Vuyo Mhaga.

There’s talk of reallocating some of the Passenger Rail Agency of SA’s (Prasa) budget to Sanral to assist with debts incurred through e-tolls, but that would only be a short-term solution.

Under Mboweni, Treasury appears determined to make the current system work, perhaps through stricter enforcement measures, a system proposed by ETC’s Coenie Vermaak. It’s unlikely, however, that such measures would be legally or administratively enforceable and even if they are, it would lead to protests and the ANC would suffer further in a province it won by only a slim majority in the May 2019 general elections.

The Organisation Undoing Tax Abuse (Outa) and the DA, the staunchest opponents of e-tolls, along with trade union federation Cosatu, propose using existing taxes and levies.

Outa’s Wayne Duvenage has suggested Treasury increase Sanral’s budget, which it has been doing already to cover the costs of the failing system and impose a ring-fenced increase in the fuel levy on Gauteng motorists of 20c a litre so that e-tolls can be scrapped and Sanral covers its debts in the long term.

DA Gauteng caucus leader Solly Msimanga said the fuel levy could be increased and car renewal fees used.

Gauteng has over a million cars registered and on the road, which means that there’s revenue through the car renewal fee (tare amount). Ring-fencing a chunk of the fuel levy could also be explored with our colleagues at a national level,” said Msimanga.

Unlike Mboweni, Mbalula and the national Department of Transport have been tight-lipped about potential solutions while engagements continue. Asked about the various proposals, Makhura’s spokesperson said, “all possibilities will be looked at”.

The 2015 e-tolls report cautioned against taking binary positions and simplistic solutions.

Disturbingly, in times of crisis, complexity, uncertainty, or faced with potential chaos, there is a tendency to seek certainty, rationality, logic, simplicity, and an analytical framework that will make sense of the world and reduce anxiety,” it read.

The report analysed various costing scenarios, but its solution was to look to democracy to overcome the stalemate.

Almost five years and two elections later, the people have spoken and e-tolls have failed. The user-pay system has not and will not work. It’s now a question of whether the national government will bite the bullet — or prolong the crisis. DM

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