Opinionista Wayne Duvenage 3 May 2021

Transparency tussle: Sanral secrecy indicates roads agency has something to hide

When it comes to obtaining basic information of services paid for by the public to state-owned entities, why is it that civil society is all too often fobbed off and forced to resort to court action to obtain information that rightly belongs in the public domain?

What is it about many government entities and departments which arrogantly believe that public information is theirs and theirs alone, despite the fact that their revenues come from the public purse, especially in relation to user-pays revenue streams? In many instances, this information is so clearly relevant and obviously of public interest, that it ought to be regularly updated and available on their websites.

Here we’re talking about information such as: Eskom’s daily energy generation data by power plant (including coal volumes purchased and burn rates); road tolling revenues (including annual profits accruing to toll route concessionaires); the number of low-income houses constructed by each region and the costs thereof per contracting company… the list goes on. Such transparency is very important to civil action NGOs which conduct assessments of these areas of state expenditure and performance, thereby ensuring the public is receiving the best results from their tax money.

Transparency enables scrutiny and negates suspicion or speculation of corruption and maladministration, which is why transparency is the ultimate enemy of corruption. When state departments have nothing to hide, they should strive to ensure that the highest level of transparency is attained at all times.

The concerns outlined below give context to how serious the issue of transparency (or the willing lack thereof) is when it comes to the South African National Roads Agency Ltd (Sanral), and this time it has nothing to do with the Gauteng e-toll debacle. Instead, this issue has everything to do with the long distance toll-road concessionaires we have become accustomed to paying tolls fees to, along the N3, N1 and N4 between Gauteng and KwaZulu-Natal, Limpopo, Mpumalanga and North West, for the past two decades or more.

The tussle for information sought by a civil action organisation, the Organisation Undoing Tax Abuse (Outa), from Sanral bears testament to the frustrations endured when it comes to a gross lack of transparency. Heaven knows what kind of run-around is endured by ordinary individuals, if this is how state-owned entities (SOEs) deal with organised civil society.

The background

Years ago, our government decided to enter into concessionaire agreements with professional companies that secure and provide the financing, expertise and work to build and maintain new highways, and roads that provide efficient movement of traffic and freight along inter-city corridors. Such public-private partnerships (PPPs) are commonplace and acceptable mechanisms for governments around the world to finance costly infrastructure projects, relieving the state of massive short-term expenditure requirements.

In return, the winning bidders of these road concessions are allowed to subject the users to a toll fee — in line with the well-known user-pays principle — to recoup funds to settle the finance bonds and cover the costs of toll operations, maintenance and upgrading. The “build-operate-transfer” (BOT) concessionaire contracts contain certain conditions and are limited to a specific period, which in the case of South Africa’s three tolled route concessions is 30 years, during which period the concessionaire is entitled to make a reasonable profit for its efforts. 

Thereafter, the management and control of these tolled routes are transferred back to the state, which is then able to substantially reduce the toll charges to society, as the capital debt undertaken for initial construction has been settled and there is no longer a need for profits to accrue to the private concessionaire companies. In many countries, not only are the toll tariffs significantly reduced, the state goes so far as to discontinue the toll charges in full.

The BOT concessionaire process enables significant economic benefits to flow to business, motorists and the country as a whole, with very few being able to argue against the benefits of this mechanism of road financing, especially when it is transparent and in the best interests of society as a whole.

Unfortunately, the gross lack of transparency in South Africa has underpinned many a situation of excessive and unnecessary profits accruing to private companies, at the expense of the taxpayer.

The challenge

Imagine for a moment that within these concessionaire agreements, clauses exist to clearly outline and limit the extent of profits allowed to accrue to these private companies, beyond which the state is able to benefit from the higher profits, or, better still, toll tariffs are reduced to the road-users along these routes over time, thereby being true to the user-pays principle.

Outa’s research suggests that something is amiss, especially when concession route toll tariffs have increased year on year at a rate of CPI or more, along with traffic volumes, due to rail usage falling into a state of disrepair and mismanagement. It is very reasonable to speculate that the toll revenues anticipated at the outset of the concessionaire contracts might be well above initial projections, and for all we know these private concessionaires could be earning excessive profits, well beyond what they are entitled to. Scrutiny of Sanral’s annual financial statements indicates no meaningful flow or variation of the relatively small concessionaire revenues accrued to Sanral each year.

Imagine also that within these concessionaire contracts clauses exist to ensure the concessionaire companies apply good governance and procurement practices in the best interests of the public (as is required by the Public Finance Management Act in relation to the state’s service providers on such matters), and ensuring that work carried out by contractors commissioned by concessionaires does not suffer from conflicts of interest or unnecessary revenues lost to the public.

This means that companies contracted by concessionaires to maintain and construct upgrades to these routes are not linked in any way to the concessionaires, or their directors and their families, and that the price paid for contracted services is in the best interest of the public.

Imagine if such scrutiny was not undertaken, thereby allowing profits made by the concessionaires to appear to be in line with “acceptable contracted levels”, only to find that the high costs of conflicted contractor services are where the excessive profits have been made.

These are just some of many scenarios that could very well be at play within our tolling concession arrangements; however, society will never know if and by how much the public or state may be losing out, unless they are given access to this information.

In the real world, we are not supposed to worry about this stuff, as the state and its business leadership are supposed to have our backs and guard against any unnecessary private company profiteering from public revenues. But unfortunately, we don’t live in a normal government environment and this particular SOE has an atrocious record when it comes to managing the price of road construction and tolling projects that ought to be in the best interests of society.

So what are we to make of Sanral’s conduct when it ignores society’s request for this basic information, fobbing it off in an arrogant manner without so much as an acknowledgment? Well, for one, we now have every reason to believe Sanral has something to hide. That there could very well be unnecessary profits going to private companies and connected entities or cronies. That our tolled routes are overpriced, or that these tolling concessions might be used as a conduit for public money to be siphoned offshore, or used to finance political interests. 

Why the secrecy, Sanral? To find out, Outa will once again head off to court to compel the SOE to provide society with this information, that which is rightfully the public’s to know and have. DM

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All Comments 6

  • Good on you OUTA. Will you also include the Huguenot Tunnel toll in your investigation? This tunnel was opened in 1988 and is now more than 30 years old! The toll rates should have reduced significantly in 2019 onwards but have instead kept increasing with CPI. Time for SANRAL to be transparent!

  • Go for it OUTA. While busy, data on calculation of toll fees would help. Particularly interesting to know how heavy trucks pay less than 4x tolls paid by ordinary cars. At 30 tons plus, with 6 or 7 axles, trucks do 100s times more road damage than cars, so their toll fee should be 100s times more

  • Glad that OUTA acknowledges that tolling is a proven world-wide mechanism for financing roads. However he is flying a kite with the rest of his story. Why is it that SANRAL toll roads are universally rated amongst the best roads in the world, whilst the rest of our roads are hardly fit for purpose?

    • The real question is in how many countries drivers ADDITIONALLY pay 1/3 of your fuel cost as a “fuel levy” (tax). Tolling of an already-built road amounts to a double tax by road-users/petrol-buyers. In what universe does “a fuel tax” not amount to “a user-pays” system, except in SA?

  • Quite. Am very interested to see the results. Back of the envelope math suggests that once you start digging here Mr Duvenage, you are going to uncover a can of worms with the familiar fetid stench of corruption about it.

  • 1. The fuel levy doesn’t go towards roads. 2. The fuel levy is just a fiscus tax. 3. Driving on a road means you also have to pay the road toll, in addition to fuel taxes of about R6.50 per litre. 4. Thin edge of the wedge: fuel levy plus tolls on every road. Hello the future.

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