Sanral ‘can scrape through next six months’

2012-05-08 14:37

The embattled SA National Roads Agency Ltd (Sanral) can scrape by for the next six months in the absence of Gauteng freeway toll revenue, finance director general Lungisa Fuzile has told MPs.

“It is very important to understand that in the immediate term, anything up to six months, Sanral will exist and by scraping and removing resources that were intended for other purposes, and using them to make sure it meets its immediate financial obligations, that is going to be okay,” Fuzile said.

“But, only through major sacrifices and only for a very limited short time, as I’ve indicated, about six or seven months.

“Beyond that, the situation has got to be cleared, which is why the Cabinet process has been set in place with the idea to run very fast to reach the end of this thing parallel to the court process.”

Fuzile was briefing Parliament’s standing committee on finance.

Deputy Finance Minister Nhlanhla Nene declined to be drawn on whether a solution would entail a second, extraordinary allocation from National Treasury to Sanral.

“Let’s cross that bridge when we come to it,” he said.

In his annual budget, Finance Minister Pravin Gordhan gave Sanral a R5.7 billion windfall to help the agency service the debt on the R20 billion Gauteng Freeway Improvement Project and bring down e-tolling rates.

However, Sanral’s stability was dealt a blow on April 28 when North Gauteng High Court granted an interdict to suspend implementation of the project, pending a final review.

There were more jitters last week when it emerged that only half of the R15.7 billion worth of its bonds bought by the Government Employees Pension Fund were government guaranteed.

Fuzile stressed that the government was committed to stepping in if Sanral failed to make payments, regardless of whether there was a formal guarantee.

“Sanral is very different from other institutions. Sanral has always had a strongly implicit guarantee. Essentially, the legislation that establishes Sanral is written in such a way that Sanral cannot be liquidated.

“In other words, when Sanral reaches a point where it cannot meet its financial obligations, government will have to step in, regardless of whether there is an explicit guarantee or not.

“The government can never walk away from Sanral’s liabilities.”

He said that by underwriting the bonds, the government had limited the debt costs and had hoped to pass this saving on to motorists in the form of lower tolls.

“With the guarantee, we wanted to make sure that the benefits of the guarantee will lower debt costs on the users of the roads.

“Prior to guarantee, Sanral would raise money at about 1.2 percentage points above the interest rate ... but with the guarantee, Sanral has been able to raise money at amounts reduced by 0.6 to 0.7% in interest.”

Fuzile was cut short by committee chairperson Themba Mufamadi who implored him not to make pronouncements on Sanral until a Cabinet committee appointed on Friday tackled the problem.

“Cabinet is seized with it.... Once the process has been done, properly co-ordinated and there are responses that we can share with everybody else, National Treasury can come back ... and that will be the right moment to deal with the issue.”

Opposition MPs objected strongly to Mufamadi’s decision.

The Cabinet committee, headed by Deputy President Kgalema Motlanthe, has to co-ordinate all work around the freeway project and safeguard Sanral’s financial stability.

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