Skhumbuzo Macozoma on why Sanral is running out of road
Gauteng debt leaves agency ‘scurrying … to ensure our liquidity’
● Skhumbuzo Macozoma, CEO of the South African National Roads Agency, says government dithering about the future of e-tolls is putting Sanral’s status as an ongoing concern at risk.
The refusal of drivers in Gauteng to pay etolls since their introduction in 2013 and the absence of an alternative revenue source are drowning the state-owned agency in debt.
“We’re having to scurry around to ensure our liquidity. Until you solve the e-tolls problem we won’t get out of this quagmire,” says Macozoma.
Gauteng premier David Makhura, who sees e-tolls as a political liability, has vowed to get them scrapped, but finance minister Tito Mboweni insists they’re here to stay.
President Cyril Ramaphosa appointed a task team more than a year ago to find a solution to the e-tolls debacle but promises of a speedy resolution have come to nothing.
Macozoma, who announced recently that the lockdown has cost the cash-strapped roads agency at least R620m, says only 20% of users are paying the e-tolls. As a result, Sanral owes more than R40bn on the Gauteng Freeway Improvement Project (GFIP).
“We need an answer and we need it urgently. The matter is sitting with cabinet and we must push for a decision to be made as soon as possible.”
He says the technical work, financial projections and permutations — including cancelling the scheme — have long been done.
“The trouble is that none of the options on the table do not have implications financially for government. It’s a difficult decision, but it must be made so that we can move on and deal with the implications.”
If the system is cancelled, the government is going to have to recover the money from taxes, including a fuel tax or infrastructure levy, he says.
“All we’re interested in is being funded so that we can do the work we need to do,” he says. “We’re not pushing the e-toll agenda at all costs any more.”
However, this doesn’t mean it has given up on e-tolls.
“We have not. But we’re allowing ratioBy nality to prevail.”
Sanral’s current debt levels for the GFIP are just above R40bn, but should a decision be taken to scrap e-tolls then immediately the debt that is repayable would be about
There’s a reason why you’ve got a government — to make these difficult decisions
Skhumbuzo Macozoma
CEO of national roads agency Sanral
R67bn, says Macozoma.
Sanral has been borrowing from the bond market to service the debt it owes as a result of nonpayment of e-tolls.
“If you default on GFIP you’d default on our entire debt, meaning there’d be a crossdefault and all our investors would want their money back.”
He says there’s a threat of the e-tolls revolt spreading to Sanral’s other toll schemes.
“If e-tolls in Gauteng are scrapped, the danger is that the rest of the country will question why they have to pay if drivers in Gauteng are not paying.
“Then you may find that the toll portfolio at Sanral fails. We’d have to close down the toll business completely, and revert all of the roads currently funded through private finance to being funded by the fiscus.”
The roads that carry the most traffic would take the lion’s share of the limited budget that would be available to Sanral.
“If the N3, for instance, reverts to public funds there is no way we’re going to delay maintaining the N3 because it moves the bulk of the economy. So it’s going to gobble up most of the budget, leaving many other roads across the country unfunded.”
The quality of those roads will deteriorate, he says.
“What you don’t want is an inability to maintain the national road network.” Maintenance that is delayed comes back “multiple-fold” in terms of costs when eventually the roads have to be fixed.
“That’s where we’re going if the impasse continues.”
Already Sanral has a backlog of R150bn of urgently needed toll road expansion and maintenance projects that cannot be funded, including R50bn to expand and patch up the GFIP.
They’re without funding because of the “anti-toll sentiment” around the country, which he blames on the e-toll revolt, and because Sanral can’t access funding from the bond market because of its GFIP debt.
He says anti-toll sentiment has set back plans to develop the N3 and N2 in Durban .
“These new sections were earmarked to be tolled, but with the anti-toll sentiment now we couldn’t do that. Our consultations with stakeholders indicated a complete refusal to consider the toll option.”
As a result, these sections are being funded by the fiscus, which will lead to a six-year delay in completion.
“With toll money from the private sector we could have completed these sections in four years. But because we’re delivering it through the fiscus it will take 10.”
Three years ago Sanral lost a court case in Cape Town preventing it from tolling the N2, which Macozoma says has put necessary expansions on hold, which will lead to an unmanageable traffic congestion problem.
What about the steeply escalating costs of these toll roads for motorists?
“If you’re going to improve roads it’s going to cost people. The question is, who funds it? Government or the users?”
In fact, this is “a fictitious debate”, he says,• “because in the end it’s the citizen who pays”.
Macozoma, 44, an MSc civil engineering graduate from Wits University who replaced Nazir Alli as CEO in 2016 from the Johannesburg Roads Agency, says the government needs to stop kicking the can down the road.
“These are very difficult decisions, but we don’t all have to agree. There’s a reason why you’ve got a government — to make these difficult decisions in the interests of the people even when people don’t realise that those decisions are in their interest.”
Sanral’s board announced last year that there’ll be no more issuing of summonses for nonpayment, but Macozoma says even if etolls are scrapped, the agency will continue to pursue users, who owe about R30bn in outstanding payments.
“According to the Public Finance Management Act the debt does not prescribe. Which means they will be indebted to us for a very long time, which means we will always have the option of pursuing them legally.
“If government decides we have to recover the money, we must recover the money.”