15c between sense and insanity
It figures – a fuel levy could pay for e-toll project and fix all roads
MID all the dust of confusing figures that swirled around at the Gauteng e-toll review committee hearings this week, one thing emerged clearly: a fuel levy of 15 cents a litre – or less – would be enough to pay for the highway project.
This is something that the South African National Roads Agency (Sanral) and Transport Minister Dipuo Peters probably don’t want you to realise because they have so much invested in e-tolls, which will cost motorists at least 10 times as much as a fuel levy would.
Peters was quoted as telling the panel that the national fuel levy would have to be increased to R3.65 a litre to pay for the Gauteng toll roads.
It has now emerged, however – from the official PowerPoint presentation – that the fuel levy figure of R3.65 would be enough to take care of the backlog in maintenance for the entire country.
Confused? Maybe that is the intention.
Right through the implementation of the Gauteng Freeway Improvement Project (GFIP) and the e-toll mechanisms, Sanral has produced a tsunami of incorrect facts and figures, misleading calculations and arrogant obfuscation.
It has been extremely difficult, even for those with a mathematical bent, to cut through all the waffle, hot air and deception. Let’s start with the latest figures. The levy on petrol is R2.24 a litre and that on diesel R2.09 a litre – or an average of R2.18. The figures are from the website of oil giant Shell, which has a table showing the components of the pump cost of fuel.
To get to the minister’s figure of R3.65 a litre, there would have to be
Aan increase of R1.47 a litre. The levy hike as proposed by Peters is 67 percent, as a round figure.
The government’s revenue for 2013/14 was R985.7 billion – according to economist Kevin Lings, who analysed the Budget last year for Stanlib.
Of this amount, the fuel levy accounts for 5.2 percent or about R51.2bn.
An increase in the levy of the size contemplated by Peters – 67 percent – would mean revenue from the levy would be R85.5bn, or R34.3bn more.
Wherever that amount is channelled, you cannot escape the mathematical conclusion that an increase of R1.47 a litre in the levy would bring in R34.3bn.
That is about 10 times the amount needed each year to service the GFIP debt.
That debt, as stated by Sanral and government officials, is about R20bn, and R3bn a year would be sufficient to pay it off – and the interest accrued – within 10 years.
Logically, therefore, a 10th of that increase would be required to pay for the GFIP alone.
In other words R0.147. Or in layman’s terms, 14.7 cents a litre.
And that is where the minister and Sanral cannot duck and dive by claiming that a fuel levy to fund the GFIP would be unfair and unaffordable. Fifteen cents a litre would be sufficient.
Nowhere in the 108-page presentation, which is littered with calculations about the dire state of roads funding, is there any mention of what a possible fuel levy would need to be to pay for the GFIP. Perhaps because that would open a nasty can of worms?
All the presentation says about a fuel levy to pay for Gauteng’s highways is that this option was considered and rejected.
“A fuel levy is, unfortunately, not considered an equitable solution as all South African citizens (would) have to pay for infrastructure in Gauteng, and fuel consumption does not represent the full structural, congestion and environmental impact of the cost responsibility of especially heavy vehicles.”
That also conveniently ducks two issues.
First, it is not a difficult adminis- trative exercise to calculate and impose a regional fuel levy. Different prices are charged for fuel on the coast and inland.
Our calculations show that a Gauteng-only levy of about 20 cents a litre would be sufficient to pay off the GFIP.
I have put forward this figure before and challenged Sanral or its acolytes to refute it with logic and maths. But so far there has been a deafening silence.
Interestingly, fuel levy estimates by the Justice Project SA, the Automobile Association and the Opposi- tion to Urban Tolling Alliance have been within a few cents of the 15 cents a litre mark.
The position of Sanral and the minister on the unfairness of a national fuel levy does not take into account that Gauteng generates the bulk of economic activity in South Africa and that its roads are directly related to economic development and well-being in the rest of the country.
Second, if the “full structural, congestion and environmental impact of the cost responsibility of especially heavy vehicles” is a serious issue, then the levy can be increased by a sizeable amount in percentage terms – but in small amounts in reality – to take this into account.
A fuel levy, of a comparatively minimal amount, is the easiest and most equitable solution.
Yet just about every time Sanral has used figures or logic in this whole process, it has been proved to have been wrong.
Right at the beginning, Sanral chief executive officer Nazir Alli argued that paying tolls saved money because it reduced wear and tear and maintenance costs for vehicles. Fair enough. But the extraordinary thing was that, to support his claim, Alli produced “research” – carried out jointly by the Council for Scientific and Industrial Research (CSIR) and Stellenbosch University – that compared the costs of running two trucks on tolled and non-tolled roads in KwaZulu-Natal and Gauteng. This produced an extra maintenance and repair cost for the nontolled roads.
The amazing thing, though, is that this conclusion was arrived at without including the costs of tolls on the tolled roads.
If these are included in the cost calculations for the trucks, it is still clearly cheaper to use non-tolled roads because toll road charges are so high.
Alli didn’t hang on to that bit of voodoo economics for long and, despite repeated challenges from me and others over the past three years, neither he nor anyone connected with that study has stepped forward to justify it.
Then, when The Star discovered that, at R20bn for 186km of the whole road package – in effect merely resurfaced highways, with additional lanes and interchanges in some places and, of course, toll gantries and the associated infrastructure – we are paying more for each kilometre than it costs to build a similar four-lane highway in an urban area in the US.
Alli reacted to this by claiming the reporter got her figures wrong and that they were distorted because she did not understand the difference between miles and kilometres.
At the time, The Star found that a mile (which is 1.6km, Mr Alli) of four-lane urban highway in the US cost $10 million (about R80m at the then-exchange rate).
This is R50m a kilometre. Even at today’s exchange rate, that is about R60m a kilometre.
The GFIP cost us just over R100m a kilometre. Maybe that is because of all the added infrastructure of the e-toll edifice, which has to be paid for.
Bottom line: a fuel levy is workable.
Apart from the costs being lower for motorists, billions of rand of our money won’t go abroad to the whiteowned multinational conglomerates who run the e-toll system.
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