Sanral plans to raise R600m
The SA National Roads Agency (Sanral), crippled by the refusal of Gauteng drivers to pay controversial e-tolls, wants to raise about R600m in capital markets to fund capital projects.
Sanral has had to cut spending on capital projects, repair and maintenance to make up for a R6bn hole resulting from the nonpayment of the tolls.
The agency became the focus of public anger and protests when it introduced electronic tolling in SA’s richest province to fund improvements to freeways. Sanral reported a R260m annual loss on Monday, which was down sharply from R4.96bn in the previous year.
GM Vusi Mona said this week that Sanral was aiming to “commence with our funding programme, probably in the first quarter of 2019”.
“The agency has not decided yet whether it will do an auction or private placement. We plan to issue about R600m in this financial year,” Mona said.
Transport minister Blade Nzimande has acknowledged that debt owed by Sanral due to the Gauteng Freeway Improvement Project (GFIP), meant to improve infrastructure and cope
with growing traffic demand in a province that accounts for nearly 40% of SA’s economy, had ballooned to R67bn.
The project was completed in 2010 at a cost of about R20bn. But tolling started only in 2013, meaning that interest, advertising and legal fees escalated the cost.
The tolls have also been a political headache for the governing ANC, which is facing a challenge in Gauteng from the DA in the 2019 election.
ANC provincial deputy chairman Panyaza Lesufi said in July that the region had resolved to scrap the e-tolls, which he said were harming the ANC brand. The Organisation Undoing Tax Abuse has said that only about a quarter of drivers were paying, making the system unviable.
But Nzimande has said that while talks were under way no decision had been made.
Although Sanral had made a R2.5bn provision for impairment for the year, the e-tolling debt had not been written off, Mona said.
Global markets analyst at Rand Merchant Bank, Elena Ilkova, said there was nothing unusual in the agency issuing new debt to service its current debt and to fund new projects.
“In fact, it would be unusual if Sanral did not explore all options, including going to the markets to raise funds.”
But going to the markets to raise funds was a bad idea, said Chris Malikane, a development economist at Wits University.
“If Sanral goes to the bond markets it will not raise the required funds. The capital base of the debt will increase and raise the interest burden.”
He said Sanral coped by postponing repairs and maintenance of the nontoll roads, and by not expanding the roll-out to preserve cash, which is “not sustainable for the development of the country”.
In June, credit-ratings agency Moody’s downgraded Sanral’s long-term local and foreign currency global scale ratings to Ba2, two levels below investment grade. This reflected uncertainty over whether government would be able to introduce a long-term viable funding model for the GFIP.
“It also reflects uncertainty over whether Sanral will be able to honour its financial commitments, including the upcoming redemption in November of R2.4bn,” Moody’s said.