Johannesburg – Civil body, the Organisation Undoing Tax Abuse (Outa) is of the view that the South African National Roads Agency’s (Sanral) annual financial statements are a misrepresentation of reality.
In a statement, Outa highlighted some of the discrepancies it found in the report. Outa’s qualm is that Sanral is counting “unpaid e-tolls” as an asset on its balance sheet.
“The most alarming aspect of Sanral’s 2016 financial statements is the increase in trade receivables from R1.15bn in 2014 to R4.96bn in 2015 and R7.66bn in 2016.” Outa claims that if Sanral reported on the unrecoverable amounts, then the operating loss would be greater than the R954m on the income statement. The total loss for the year came to R48m.
Only one in five freeway users pay for e-tolls, and 2.9m users in default, according to Outa. “There appears to be no acknowledgement in Sanral’s annual report that the scheme has largely failed in achieving its aim to repay the debt borrowed for the upgrade.”
The fiscus funds 85.5% of the national road network and the remaining 14.5% is funded through tolls, CEO Nazir Alli stated in the annual report.
Of the trade receivables, some of the e-toll bills are over two years old and past the “write-off” stage according to accounting practice, explained Outa. “Conventional accounting practice requires that unrecoverable receivables which are clearly unrecoverable must be expensed through the income statement.”
Outa estimated that 80% of Gauteng road users do not pay e-tolls. As a result, it is not plausible for Sanral to report a 46% increase in trade receivables, specifically on tolls.
Trade receivables went up from R4.9bn in 2015 to R7.2bn in 2016.
Impairment losses on tolls and other receivables were at R91.8m, an improvement from the previous year at R144m.
Outa also highlighted that ratings agency Moody’s changed Sanral’s ratings outlook from stable to negative in 2015. “The first downgrade was in the 2012/13 financial year, then again in September 2013.”
Moody’s confirmed its negative outlook in 2016. The rating is currently Baa3.
According to the auditor general, the financial statements are a fair representation of Sanral’s financial position.
As for the going concern over the Gauteng Freeway Improvement Project (GFIP), Sanral’s less60 campaign offering a discount of 60% to encourage more road users to adopt e-tags, and the success of its auctions ensured that the project can continue.