Sanral CEO Nazir Alli has some ­real explaining to do

2011-02-26 10:39

Who does Sanral, the national roads agency, work for: the road user, or private investors?

This is the question I’ve asked myself in the debate on the new toll-road system for Gauteng.

Road users of the Gauteng Freeway Project are faced with the ­prospect of financial ruin while private investors and toll-operating ­companies will reap more profits from a public-sector project than the benefits derived by road users.

The project is not funded by the fiscus, but by Sanral – a government agency that is responsible for the management and building of ­our national roads.

As a government agency, ­Sanral’s objective is to ease the constraints on public expenditure that the Department of Transport might encounter were it to undertake the responsibility of maintaining the national road network.

To maintain and improve this ­national road network, Sanral ­raises money from the markets and it also has to undertake a ­cost/benefit analysis to provide rates of ­return to lenders.

Sanral has raised about R22?billion from local and private investors to fund development of the Gauteng Freeway Project, and it undertook to repay the loans and bonds within 30 years.

According to experts, Sanral should be able to repay the loans with interest in just more than eight years, as the agency has forecast that it will earn, from toll fees, more than R300 million a month.

On this basis, Sanral’s proposal of a fee of 66c/km would place an ­excessive burden on road users.

This has caused an outcry which has seen the project put on hold.

It is good that the transport ­minister has acted decisively, as this case would definitely have been in the fast lane to the ­Constitutional Court.

The suggested toll fees would have excessively taxed Gauteng residents and this would have made Sanral and the government ­vulnerable to legal action – on the grounds of discrimination – by communities as well as business ­sectors.

I look forward to seeing how ­Sanral will try to rebut the public perception that it has built a public road on “hire purchase”, as its pricing ­regime puts it in a position to repay the bonds in a period far shorter than necessary, in a contract which suggests that somebody other than you and I, the road user, was going to benefit.

This will represent a failure by the roads agency to meet its ­mandate to secure a pricing regime that is affordable to the South ­African public.

It will also be interesting to hear how Sanral justifies trying to give the private sector excessive returns on the Gauteng Freeway Project, while the risk of construction and maintenance in the project is carried by government and not the private sector.

In addition, government has guaranteed repayment of the loans and bonds.

The failure of Sanral to operate or cooperate on its own toll operations and infrastructure will need to be explained, as that also has the effect of increasing the ­burden on road users.

I come away with the impression that the tolls are a public-sector project funded by government, in which private investors and toll operators enjoy bonanza profits without assuming any risk ­whatsoever.

Sanral CEO Nazir Alli has some ­real explaining to do.

» Langa is the owner of Langa Attorneys in Rosebank, Johannesburg

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