Sanral losses increase by more than 300% to R4.96bn

LOSSES by the South African National Road Agency (Sanral) increased by more than 300 percent to R4.96 billion in the year to March this year from the R1.2bn loss in the previous year, with an operating loss from its toll roads accounting for the bulk of it.

Sanral’s latest annual report revealed a R4.58bn toll operating loss after finances for the year, despite a 12.4 percent increase income from toll operations, including grants and other income.

In its previous financial year, the toll operating loss after finance charges was R1.125bn.

The non-toll operating loss after finance charges for the year to March increased to R380m from the loss of R61.1m in the previous year.

Revenue from non-toll operations increased by 31.8 percent to R8.67bn for the year.

The agency said that toll revenue from operations increased year-on-year by 7.9 percent to R5.28bn in the year to March, with the Gauteng Freeway Improvement Project (GFIP) contributing 4.3 percent to this increase in revenue.

“GFIP tariffs were not adjusted for inflation in 2016, so this increase is mainly as a result of an increase in traffic volume,” Sanral said.

The company reported an increase in trade receivables (toll) to R8.79bn from R6.6bn, but impairment losses from toll and other receivables rocketed to R3.84bn from R91.8m.

It said trade and other receivables comprised mainly e-toll debtors and a share of joint project costs from other spheres of the government and the private sector.

The agency added that R3.6bn of the impairment losses in the year to March related to the impairment of e-toll debtors, which compared to R89.9m in the previous financial year.

Sanral has been given an unqualified audit report by the auditor-general.

In its report to Parliament on Sanral, the auditor-general said that he was satisfied that the trade receivables (toll) were fairly valued and adequately provided for where doubt existed.

Further funding

The auditor-general drew attention to Sanral financial statements, indicating that its cash requirements for the next 12 months related to toll operations was dependent on its ability to successfully raise further funding through auctions and private placements and Sanral’s board had requested the shareholder (the government) to address the impact of the poor collection rate on the GFIP, with the cabinet to ensure the sustainability of the agency.

“These events or conditions, along with other matters… indicate that a material uncertainty exists that may cast significant doubt on the public entity’s ability to continue as a going concern.

“My opinion is not modified in respect of this matter.”

Irregular expenditure of R424.9m was incurred by Sanral due to non compliance with prescribed procurement processes.

Fruitless and wasteful expenditure amounted to R15m and also resulted from additional costs incurred on a project that was cancelled, because the approval process for the project had not been followed.

Sanral said that in reviewing its cash requirements for the next 12 months to September next year, it required a minimum of R2.56bn, which increased to R5.53bn when the redemption of the NRA018 that matured in November next year was added.

It said its funding strategy for 2017/18 included auctions and private placements as well as extending the use of R1bn of facilities while various guarantees from the government totalled R37.9bn, of which R28.9bn had been utilised at end-August this year.

Sanral submitted a request to the government late last year to increase the total guarantee to R43bn and the borrowing limit to R54bn from R47.91bn, of which R39.46bn had been used at end-August.

“The government has also committed to provide an additional grant of R372.9 million per annum, adjusted for inflation, supplement GFIP revenues. This clearly reflects the government’s continued support for Sanral,” it said.