Report: Gauteng toll costs excessive

2011-04-05 11:37
Johannesburg - The per-kilometre cost of the Gauteng Freeway Improvement Project (GFIP) appears to be much higher than similar international projects, a report released on Tuesday shows.

"... An examination of the GFIP construction costs suggests that the per kilometre cost is extremely high - possibly as much as 106% to 228% higher than that of equivalent international projects," according to the report prepared by economist Mike Schussler.

The report said although there was not much information available on how the SA National Roads Agency (Sanral), which manages the GFIP, determined the toll fees, it must have considered road construction costs.

The Gauteng toll fees were set at 66c/km before a public outcry led to them being put on hold and a committee formed to reassess the pricing.

The report, prepared for presentation to the GFIP e-toll steering committee which is looking into the price of toll fees, used two data sources to make international comparisons.

Far above international costs

The first was highway projects recently financed by the World Bank.

Many of these projects were green fields - that is not new upgrades -highway construction projects in countries with per capita gross domestic product levels much lower than South Africa.

"On a per kilometre basis, the GFIP costs 228% more than the World Bank funded projects."

The second was the Washington State Department of Transport (WSDOT), which compiled a database of US highway construction costs.

"The United States is a much wealthier nation compared to South Africa, which should tend to increase its labour and land costs in construction," the report read.

"However, of the GFIP comparable projects outlined by the WSDOT, per kilometre construction costs averaged $6.59m in 2004 (or $7.49m in 2009 terms).

"The GFIP's estimated costs are 106% higher."

‘Excessive’ inflation of costs

The report warns that many factors influence construction costs so caution should be applied in interpreting cost comparisons.

"However, the size of the difference in price is too large to leave questions in this regard unanswered.

"Indeed, if the costs of the GFIP are inflated excessively, due to inefficiencies or other factors during the commissioning and construction processes, it will be inappropriate for Sanral to simply transfer the excess costs to the commuter and commercial road freight industry," the report read.

Transport regulator recommended

It said there was a "clear need" for a neutral party to investigate the Sanral figures to determine if the construction costs were excessive.

"As most of the project only involved the building of a single additional lane in each direction, there must be concerns about the high cost of the GFIP compared to other countries - even compared to (higher) first-world building costs."

The sector had no price regulator, so the potential for excessive construction costs was a threat.

The report recommends that government consider establishing a transport regulating authority to oversee and regulate toll tariffs in South Africa.

The report was commissioned by the Road Freight Association and AfriForum.

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