Big road projects in budget

A pronounced shift towards future investment in infrastructure – including the construction and rehabilitation of sections of the national road network – was one of the prominent features of the 2018/19 Budget.

Delivering his first budget speech, Finance Minister Tito Mboweni allocated an additional R3.5bn to SANRAL over the next three years to improve non-toll roads. This represents an increase of an average annual rate of 25.5% – from R6.9bn in 2018/19 to R13.7bn in 2021/2022.

However, this should be viewed against a reduction of R5.8bn in 2018/19 to meet SANRAL’s cash requirements for the Gauteng Freeway Improvement Project (GFIP). Thus, transfers for GFIP are expected to decrease from R6.3bn in 2018/19 to only R633m in 2021/22.

Mr Mboweni did not step back from his earlier support for the user-pay principle expressed in his 2018 medium-term budget speech in which he called on people to pay their e-tolls. This time around he said: “I emphasised the importance of the user-pay principle. It is a principle which we should uphold. In any future negotiations this should be borne in mind.”

Contained within the Department of Transport’s budget of R64.2bn are some indications of major road construction projects that are on the cards. Among these are:

  • 5bn for all non-toll roads over the medium-term period
  • 3bn for the upgrade of the Moloto Road (R573)
  • 2bn for the construction of the two bridges on the N2 Wild Coast Road
  • Major allocations for the upgrades to the N2 (Cape Town), N3 (Mariannhill) and N2 North and South Roads
  • The resurfacing of 3 300km and improvements to 1 500km of roads, upgrading of intersections to interchanges and the building of new interchanges and bridges.

The budget notes that SANRAL will continue to focus on its programme to undertake preventative maintenance to preserve and improve the national road network. Total expenditure is expected to increase at an average annual rate of 5.1% – from R33.2bn in 2018/19 to R38.6bn in 20201/22.

The bulk of SANRAL’s total expenditure comprises payments to service providers for routine road maintenance and construction. As a result, goods and services expenditure accounts for 74.3% of total expenditure over the medium term.

SANRAL also expects its personnel to increase by 98 over the medium term – from 392 in 2018/19 to 490. This means an increase in expenditure on compensation at an average annual rate of 17.5%.

The agency generates revenue from transfers from the Department of Transport – for the non-toll network – and fees on the toll network. Revenue is expected to increase from R25.6bn in 2018/19 to R29.3bn in 2021/22. This includes an expected increase in toll revenue at an annual rate of 1.9%.