On the road to e-tolls solution
Minister engages Ramaphosa, Mboweni on payment and how funding will be streamlined
TRANSPORT MINISTER Blade Nzimande has said that he is engaging President Cyril Ramaphosa and Finance Minister Tito Mboweni over the payment of e-tolls in Gauteng.
“I am engaging with the president and the minister of finance to find a lasting solution to the e-toll challenge, and it is my intention to have the premier of the Gauteng province involved in these engagements.
“What is important, beyond the current GFIP (Gauteng Freeway Improvement Project) e-toll challenge, is a need for consensus to be reached on how road infrastructure in South Africa will be funded going forward,” Nzimande said.
He made the comments in a written response to a parliamentary question from the ANC’s Dikeledi Magadzi, who asked about measures he has put in place to stabilise the South African National Roads Agency (Sanral) and Road Accident Fund (RAF) and ensure their financial stability.
This takes place as the ANC in Gauteng and other interest groups push for the e-tolls to be scrapped.
In his written response, Nzimande said Sanral’s financial sustainability was healthy in all aspects except for the e-toll portion of its business, which represents 1% of the total national roads. “The e-toll uncertainty has rendered Sanral’s going concern status as uncertain due to the significant debt owed to investors, which requires servicing,” he said.
“In order to circumvent either a qualified audit or an event of default, I have obtained the approval of the minister of finance to un-earmark R5.75 billion of non-toll funds to transfer to the toll portfolio. This will assist the cash flow situation of Sanral for a period of 12 months from the date of the audit report,” Nzimande added.
He also said Sanral’s board had the confidence to approach the capital market soon to re-finance some of its short-dated bonds.
Nzimande also said the RAF has been technically insolvent for a considerable time. “The current scheme of arrangement, under the RAF, being based on fault, insurance principles and common law, remains inequitable, wasteful and open to abuse,” he said.
Nzimande said the RAF continued to complete and settle more claims than it could honour from available funding. “As a result, the RAF has continued to experience material cash flow constraints for the past five years to the extent that meeting the ‘going concern’ requirement is deemed problematic.”
Independent Media reported last month that Auditor-General Kimi Makwetu found that the RAF incurred a net deficit of R26.3bn as at March 2018 and its liabilities exceeded assets by R206bn.
“A material uncertainty exists that may cast significant doubt on the public entity’s ability to continue as a going concern,” he said.
Nzimande said the transformation of the RAF as envisaged in the Road Accident Benefit Scheme Bill (RABS) would address many of the challenges facing the fund.
“The ultimate promulgation of this piece of legislation will address many of the current challenges experienced by the RAF. Active pursuit of the promulgation of the RABS will see a financially viable social security system introduced, via a mechanism like the RAF, become affordable and appropriately funded going forward.”