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The route to funding roads

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Nazir Alli

Everybody agrees – roads are vital. However, building and maintaining them require funding. At this point, disagreement starts. Must they be funded by those using them, or by everyone whether they use them or not? Is the best funding model the fuel levy, tolls, concessions, or treasury allocations?

There should be agreement that the fuel levy is not an option, especially in the context of pushing back the frontiers of inequality, although that’s what the general populists and dissenters keep punting. That leaves us with three options on the table.

First, some background. What is being funded? And how much is needed?

At some 750 000 km, South Africa has the tenth longest road network in the world. The 158 000 km of the network that is surfaced, 38% is considered to be in good condition, 36% in fair condition and 26% in poor condition. For the remaining 592 000 km of the network that is gravel, only eight percent is considered to be in good condition, 25% in fair condition and 67 % in poor condition.

These roads are controlled by national, provincial and municipal entities. The national routes fall under the Department of Transport through the South African National Roads Agency SOC Ltd (SANRAL). They make up just under 2, 85% (21 403 km) of the total of 750 000 km, and 13, 55% of the 158 000 km surfaced network. These are the identified strategic and primary routes on which the economy relies for growth and job creation.

It is expected that in the coming years SANRAL’s writ will reach 35 000 km.

Which brings us back to the question: how should this be funded? But look first at what is needed. To maintain the condition of our road network according to international norms, which allows for maximum 10% of a country’s network to be in poor condition at any one time, requires an estimated budget of R58 billion a year. Besides this annual requirement from all levels of government to maintain the roads they control, R197 billion is needed to catch up with the maintenance backlog (roads in poor condition referred to above) and improve all roads to an acceptable condition. In this respect, the national roads agency needs R20 billion.

Then there is the capacity-related backlog in and around our major metropolitan areas. These are the roads that are reaching their maximum capacity during peak hour, resulting in increased congestion which in turn contributes to driver frustration, decreased safety on the roads and negative economic consequences. To alleviate congestion, additional lanes or new roads need to be constructed. For this the national road agency needs further R120 billion.

These are massive sums of money and if one takes into account that currently some 87% of all goods and services in the country move by road, it is really important to keep road traffic moving. In the light of the needs elsewhere in the economy, it is unlikely that funding at that level will be forthcoming.

More context: of the 21 403 km under SANRAL’s jurisdiction, only 3 120 km are tolled. This year the treasury allocated R11, 9 billion to improve and maintain the remaining non-toll roads, which is being spent as follows: R4, 4 billion on maintenance and R7, 5 billion to strengthen, improve and provide new facilities on this network.

The fact is that the percentage growth in the length of roads that SANRAL has to manage is not matched by an equal percentage allocation increase from the treasury – which means the agency must be innovative, smart and very prudent with allocated funds.

If one looks at the quality of the SANRAL roads, with only 11% in poor condition, it is meeting its mandate.

Of the toll roads, the agency manages 1 832 km – which includes the inner Gauteng highways. The remaining 1 288 km are managed, developed and maintained by three private concessions on behalf of SANRAL.

It must be noted that all the road assets remain in the hands of the national roads agency, and those managed by concessionaires have to be returned in the specified condition at the end of the concession period.

So any talk of even partial privatisation is just hot air.

SANRAL also issues bonds to raise money from institutional investors on capital markets. The monies raised are used exclusively to invest in its toll roads portfolio. There was a temporary setback in this respect when the implementation of e-tolling was at first delayed, but at present investors are reacting positively to the agency’s bond issues.

Which then leaves the fuel levy, which currently is R2, 24 per litre of petrol and R2, 09 per litre of diesel, and generating an estimated R43, 7 billion rand of income for 2013/14 after rebates.

The allocation from treasury for the current year is as follows:
• National (SANRAL) – R11, 9 billion.
• Provinces – R9, 7 billion.
• Metros and Municipalities – R17, 7 billion.
• Public Transport Subsidies – R5, 7 billion.

This aggregate of about R45 billion is allocated by national treasury for transport-related expenditure, actually exceeding the income from the fuel levy. Important to remember is that since 1988 the fuel levy is channelled into the national tax pool, from where all government expenses are defrayed – it is not ring-fenced for transport-related expenditure only. This provides national treasury with more flexibility in addressing changing needs within our country.

But why not change the appropriate law and ring-fence the fuel levy for roads only?

There are many reasons why this will not and should not happen. Keeping in mind the large sums of money required for road construction and maintenance mentioned above, it is obvious that the levy would have to rise between R1, 35 and R2, 80 a litre, depending on time frames in which current backlogs should be addressed –and go up every year, in line with the consumer price index (CPI) thereafter to compensate for cost increases and the anticipated decrease in the consumption of fuel used by newer vehicles.

That will hit the poor really hard, given the long distances people have to travel to get to work, in Gauteng nearly 64% of commuters rely on mini-bus taxis – the preferred mode of the poor – which currently receives no transport subsidy, yet is exempt from e-tolling. Increasing the fuel levy may result in increasing pressure from the taxi industry for a transport subsidy.

An important toll principle is that those who use a road should directly pay for it – the direct user-pay principle. In simple terms, if you live in Springbok, you will not pay for the road between Johannesburg and Pretoria if it is a toll road.

Also, a cost-benefit study has shown that those in the higher income brackets will be paying some 94% of the passenger vehicle toll, that is, those who can afford it.

We need to understand that the e-tolling system enables different tariffs to the charged for time of day and day of week, providing a mechanism to reduce demand during peak hours and thus for costly capacity upgrades – something that is not possible with the fuel levy.

Going the fuel levy route or waiting for the treasury to find the considerable sums needed, has a very simple and too often over-looked consequence – it would be virtually impossible to deliver large infrastructure projects in short time periods when they are needed – due to a very high fuel levy that will be required to achieve this. It also encourages people not to use public transport.

Tolling makes it possible to raise loans immediately, complete the work in short time period and pay over time – and those who use the road in the future help to pay the debt. With the fuel levy the current generation needs to pay in full for infrastructure that has a 20- or 30-year life expectancy, which may result in less infrastructure than needed.

Trying to find another way to fund the needs to keep our national roads at the current standard, is difficult. The route we have taken is a practical one in response to current realities, although it does mean that under-funding is a constant. Should the fuel levy become the only funding model, we may be facing the risk of diverting funding from other much-needed services, such as education or health. We believe this would be devastating to our national development goals.

Nazir Alli is the Chief Executive Officer of SANRAL.

What is ‘right’ in a constitutional state?

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By Anton van Niekerk

Not everything is going well in South Africa – to put it mildly. I am not going to list all of our worries: there are enough such lists.

A central aspect of many things that the citizenry is wrestling with the authorities about, is a concern about the sustained application of law and order, and in particular, respecting and upholding our liberal-democratic constitution.

The latter is central to the concern about crime, about corruption (think particularly about the President and parliament’s apparent disregard of the constitution regarding the Nkandla-affair), the worries over affirmative action and the struggle in rightwing circles over language rights for minority groups at universities. In all of these disputes we hear a continuing and wishful refrain: ”Respect the laws on our statute book and apply them. Respect the constitution.”

We are a constitutional state – a constitutional system typified by the rule of law, i.e. a government by laws and not people. The constitutional state in its liberal-democratic form is probably the most important and valuable institution of the modern world (that is, Western European civilization since 1600). Before that time (and sometimes during it) we saw what societies look like which are not ruled by laws, but people – almost without any exception, despotic.

Stalin, Hitler and Mussolini are a painful 20th century reminder. Many aspects of apartheid equally remind us of this. One should therefore think carefully in a constitutional state before one begins propagating and doing things which undermine central aspects of the rule of law. It is in this regard that, in my view, we have to think again about the widespread rejection of the e-toll system in Gauteng, as it is presently done under the leadership of OUTA. Whatever else can be said about this controversial system, there is no doubt that it was legally implemented.

Despite disagreements as to whether the public was consulted enough, the system was legally designed and promulgated by the Gauteng legislature [sic]. The system was not designed illegally and just thrust down people’s throats.

I am the first one to recognise people’s right not to like the system. In a democracy we should also have the right to protest (in a legal way) against it. It is very likely that a different form of tax could have reduced the burden on the Gauteng public or spread it more evenly. It is simply true that the poor who often live far from where they work and are reliant on public transport (which will inevitably become more expensive as a result of the new system) will be badly affected. All these things are true.

It is likely that we have a kind of road- and transport tax here which has not been thought through properly and could be improved significantly. The question remains, though: what are we as the public doing when, fired on by organisations like OUTA, the protest against the new system takes the form of completely refusing to participate in it? What implication does this have for the rule of law? What happens in a democratic society when the citizenry simply refuse to abide by promulgated laws made by legitimate legislative bodies (like the Gauteng legislature)?

For most people in Gauteng the shortcomings of the e-toll system are probably clear and thus the call to civil disobedience is acceptable and popular. But we have to consider this a little more. If such civil disobedience is in order, what else can it lead to? Are we really prepared for all the implications? What do we do, for example, when a substantial part of the poor people of South Africa, fired up by the EFF or some other group, simply starts confiscating property (not just farms) left and right for its own purposes. Do we then protest in the name of the rule of law and legitimate legislation on our statute book – particularly in the name of the constitutional article which now protects property rights? Why should the reliance on the rule of law and the legislation which exist in a constitutional state be in order in such a situation but not in our current situation when we ignore the laws that enforce e-tolls?

One of the most valid critical comments on apartheid is that that system undermined people’s respect for the law. There simply were too many discriminatory laws on the statute book for which the majority of the population had no respect and which consequently were less and less applied. Thus an alarming, widespread climate of disdain for legality and laws was created – something, particularly in the phenomenon of crime and corruption, we still see twenty years after democratisation.

With the reaction to e-toll, we now see in the new democratic South Africa exactly the same phenomenon: people do not take notice of laws and thus contribute (perhaps unintentionally) directly to a climate of undermining the constitutional state. In a democracy we do not have to agree with the government. We can protest against unfair and unworkable laws and regulations.

But heaven help us if, on a massive scale, we start taking the law into our hands.

Then we all lose, not just the government. Then it is the end for all of us. People who ignore valid laws (even if they are laws that should be removed or improved) must count the cost of what they are doing and seek change in other ways – as should happen in a constitutional state.

(Prof Anton van Niekerk is Director of the Centre for Applied Ethics at the University of Stellenbosch. The article appeared in Die Burger on Tuesday 14 October 2014)

How to keep SA roads on track

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By Minister Dipuo Peters

The prospects for accelerated economic growth in South Africa and the capacity of the country’s infrastructure to support this, will rekindle the debate about how our roads should be financed in the future.

Unfortunately, this debate has, in recent years become bogged down in the mire of political contestation. People have taken entrenched positions about the “how” of funding, while the “why” questions have fallen by the wayside.

It might, therefore be an opportune time to lift this debate out of the current ebb and to conduct a more sober and rational exchange of views on the options and resources available to fund our much-needed road infrastructure.

Today South Africa has the best road highway network on the continent and the 10th largest in the world. However, the research shows that most of the freeways have reached their capacity and are simply getting clogged. The time spent in traffic jams during peak hours is extended every year – with the resultant knock-on effects on productivity, vehicle costs and carbon emissions.

Clearly, people want more and better quality roads. But the debate is raging on how do you fund the maintenance of the existing roads and pay for the construction of the much-needed future infrastructure.

A key feature of the first 20 years of democracy has been the roll-out of social infrastructure to address basic needs and redress the inherent inequalities within the society. The next phase, as indicated by Government’s multibillion investment programme, is to address economic infrastructure backlogs that have become constraints on economic growth.

The National Development Plan provides a good starting point for a new debate about the role played by road infrastructure in the country’s economic development and the need to consider various funding options. There is a broad agreement about the principles underlying the NDP among the bulk of the South African electorate, the political parties who represent their opinions and across the public and private sectors.

A fundamental question to consider is how do we deal with the enormous backlog in road maintenance and rehabilitation? The reality is that more than 75% of South Africa’s road network of nearly 750 000km is 20 years or older and that R150-billion is needed to address just the maintenance backlog.

When you add to this the requirements for new roads and rehabilitation, the monetary value of the road infrastructure backlog is estimated at R340-billion, about one third of the national budget.

The shift away from rail freight onto road over the past three decades has placed significant pressure on the road network and resulted in the deterioration of the pavement structures and major congestion within major urban areas. Our long term strategy is to reverse this trend and revive the rail freight sector, but the pressures on road infrastructure will remain for the foreseeable future.

Provincial road infrastructure has gradually deteriorated because of low levels of maintenance and rehabilitation. The South African National Roads Agency (SANRAL) has taken over the responsibility for a number of provincial roads in the North West, the Eastern Cape and Limpopo but it will require significant future investments to restore these roads to acceptable levels and to ensure safe road conditions for its users.

The direct user-pay principle was introduced by SANRAL to arrive at a sustainable model for the financing of the national road network. In many circles the opposition appears to be not against the principle of user pay through toll roads – but about the specific method used on the Gauteng network.

After all, toll roads have been a feature of our road network on many highways since 1996 and the majority of road users have accepted it as a legitimate way of paying for infrastructure although they might raise objections about the specific fee structures.

The National Development Plan also supports the long term view that users must pay for the bulk of the costs of economic infrastructure. Quite correctly it qualifies this approach with the need for protection of the poor as well as the need for greater transparency regarding the full costs associated with services.

Another option is to grow the model of partnerships with the private sector where SANRAL issues concessions to private companies to finance, build, operate and maintain national roads while collecting toll fees. After a fixed period the roads revert back to SANRAL at no charge and in a specified condition.

Government has already indicated that it sees a bigger role for the private sector and development finance institutions to fund the multibillion rand infrastructure drive.

Strategic infrastructure programmes represent large and long-term financial commitments and state-owned companies are already making substantial investments to fund these projects from their own balance sheets. However, we also want to mobilise more funds from the private sector.

It is important to heed the warnings expressed by the Development Bank of Southern Africa in its recent (2012) report on the State of Economic Infrastructure: “… the failure to deliver the infrastructure required for the economy to grow will effectively act as a brake on an inclusive growth path in South Africa.”

It is quite clear that we need the private sector to help fund our infrastructure needs.

But we also need a mature debate on the models that are available, taking into account best practices and international experiences.

Dipuo Peters is the Minister of Transport.

The user-pay principle: it’s policy

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By Anthony Julies

There has been much controversy surrounding the user-pay principle recently but the reasons for using it as the funding model for the Gauteng Freeway Improvement Project (GFIP) are sound and need to be underscored at this time when there is so much confusion on the subject in the public domain.

The user-pay principle – when it comes to the financing of roads through tolling – remains government policy. This decision is in alignment with government objectives to support public over private transport, find the right balance between socio- economic development and economic infrastructure, ensure equity in the allocation of resources, reduce inefficiencies arising from congestion and ensure long-term efficiency in spatial planning.

The vast majority of national roads (85% of the 21 403 km national road network) are in fact funded through the fiscus and the balance (15%) is funded through tolling.

However, it is accepted good fiscal practice that tax revenues should not be earmarked for specific purposes as this reduces the integrity of the budget process due to reduced transparency and accountability. As such, South Africa currently enjoys the reputation of being second on the Open Budget Index of the International Budget Partnership.

Cash raised by the fuel levy, often punted as an alternative to tolling, accrues to the national revenue account and is distributed through the normal budget process for government expenditure, which may (or may not) be used for road infrastructure and maintenance. It is not earmarked specifically for roads and to do so would not be prudent fiscal policy.

In fact, government’s allocation to transport and roads exceeds what is collected through the fuel levy. Research from the Development Bank of Southern Africa (DBSA) titled The State of South Africa’s Economic Infrastructure: Opportunities and Challenges 2012, categorically states this as a fact.

In order for the fuel levy to cover all costs of South Africa’s road network it would have to increase significantly.

The use of selective tolling, on the other hand, offers many advantages and e-tolling, where the process is fully automated, especially so. And it is not as if the tolls collected from motorists will flow directly into the pockets of foreign businessmen. SANRAL has a contract with ETC which designed, built and operates e-tolls in Gauteng, which stipulates that it will be paid for services rendered – not a retainer or a fixed contract fee.

All tolls go to SANRAL. ETC is paid for services on a monthly basis and the payment is strictly according to a bill of quantities as specified in the tender contract. Only dividends declared may be paid to the foreign companies involved – that is, after tax is paid in South Africa. And the Reserve Bank is satisfied that all foreign currency control regulations have been met.

Of every rand paid in tolls, only 17c goes to collection while 83 cent goes to a variety of needs – debt repayment, maintenance, operating the system plus value-added services such as the provision of tow trucks, improved lighting and stand-by medical assistance.

Add in the normal internal administrative costs, payment to service providers, plus salaries and only then can ETC declare a profit – if it makes one – part of which will go to the foreign partners.

Toll fees are calculated based on the cost of providing, maintaining and refurbishing that particular road. And don’t forget, almost the entire ETC workforce is South African and local service providers are used.

To disparage foreign investment as has been done, sends the wrong message – South Africa needs foreign investment, has to do its best to attract and keep it. Any other approach is beyond a disservice to the unemployed in the country.

The user-pay principle is also a much fairer system, because only those who choose to enjoy the benefits of the toll road pay for it, while those who do not, make no contribution. And it is to be noted that registered public transport, including busses and taxis, is exempted.

The model makes it possible to mobilise substantial capital resources upfront, usually through debt or public private partnership (PPP) arrangements.

In the case of debt, the government or its road implementing agency, raises a loan from domestic or international capital markets and builds the required road infrastructure. Depending on the ratings of the implementing agency and/or its government, the interest rate charged could be higher or lower. For example, if the country or agency borrowing has been downgraded, the interest rate is likely to be higher.

In the case of a PPP, capital is mobilised from the private sector, for a reasonable return on investment. The private sector is generally not enthusiastic about investing in infrastructure assets because of the inherent risk given the large upfront costs, political/policy uncertainties and long lead times from conception to delivery and revenue generation.

In South Africa, and with specific reference to a few select national roads, the private sector has demonstrated its willingness to share some of the financial burden of road infrastructure investment with government, for the right to collect toll fees for a specified period of time.

This has relieved the fiscus, as it makes resources that would otherwise have gone to roads, available for other needs consistent with government priorities. The overarching strategic themes of the current administration, as reflected in the 2014-19 Medium-Term Strategic Framework (MTSF), are radical economic transformation and improving service delivery.

Given the limitations on government’s fiscus, and this is not unique to our country, South Africa does not have the luxury to shun private sector capital. Also, toll financing has the distinct advantage of providing infrastructure earlier than would have been possible with financing through general taxation. As a result, the benefit of increased roadway capacity is available to the public much sooner

Internationally, the user- pay principle is well-accepted and has been introduced in many jurisdictions, reflecting a simple philosophy that consumers must pay for the costs of the goods and services they consume. Monthly municipal bills for water and electricity have been based on the user-pay principle for decades. The more you consume the higher the tariff.

There are other tangible benefits that are a reality because of the improvements flowing from the GFIP. For businesses there is the improved level of access and the reduction in transport times. Motorists will experience lower wear and tear on their vehicles because the world-class road surface and improvements in productivity will help to grow the provincial economy with a knock-on effect into the region. A reduction in traffic congestion will also result in reduced occurrences of vehicle accidents and thereby further alleviating pressures on the health budget.

When implementing the user- pay principle these are the things government took into consideration. Those who accuse us of being careless and not considering all the options will do well to examine international best practice when it comes to funding roads. We remain convinced that the user- pay principle remains the most equitable and sustainable way of funding projects such as the Gauteng Freeway Improvement Project. Selectively and carefully applied in a manner that cushions the economically vulnerable, it can speed up the delivery of infrastructure and contribute meaningfully toward placing our economy on a higher growth trajectory.

Anthony Julies works for Treasury and is a member of SANRAL’s Board of Directors.

Tolling is the most sustainable way to raise funds for highway maintenance and upkeep

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By Sipho Madonsela

The phantom arguments about the alleged virtues in funding the construction of the Gauteng Freeway project through the fuel levy as opposed to e-tolling continue to be raised. After more than four years of rehashing the same arguments over and over, opponents of e-tolling have not moved the debate any closer to a conclusion.

Neither will raising the volume or launching personal attacks on the integrity of the national government improve the quality of the argument. It is time to move on beyond the debate or South Africa will be the loser.

One myth that is being perpetuated about the introduction of open-road tolling in Gauteng is that it was a whimsical decision taken by government without the consideration of alternative options. Nothing could be further from the truth.

In reality both the government and SANRAL, as the implementing agency, spent a considerable amount of time and consulted widely with industry leaders, economists, engineers, technical experts, and the Gauteng Provincial Government.

The latest stance taken by the Gauteng Provincial Government is unfortunate. During the mid 1990’s, the provincial government investigated tolling as an option to upgrade and expand freeways in Gauteng. The impact of traffic congestion on the province’s ability to sustain economic growth was already identified at that stage as a major constraint.

Over a period of about three years, the Gauteng Province together with SANRAL explored the implementation of the project as a concession project. An unsolicited proposal received in accordance with SANRAL’s policy on Unsolicited Bids was entertained as a public, private partnership (PPP). This proposal was found to be unacceptable for, inter alia, the tariffs to be charged to the motorist. The Gauteng Provincial Government initiated the project, including proposing provincial legislation to implement toll roads.

In the end, a decision was taken by Cabinet after weighing up all the evidence and considering the specific needs and requirements of Gauteng that SANRAL would implement the project and the method of funding would be tolling.

A hike in the fuel levy was considered but in the end it did not pass the requirements of equity and sustainability.

The fuel levy is a nationally raised tax. Government took a considered decision that taxes raised at a national level should go into a single revenue pool, administered by the Treasury, from where allocations are made in the annual to national departments provinces, municipalities and government agencies. The money collected from the fuel levy is not ring-fenced for roads, in terms of government’s fiscal policies and SANRAL is not involved in its collection or administration.

The fact is that hiking the fuel levy is not the most sustainable and cost-effective way to fund improvements and upkeeps to the Gauteng Roads. A recent study by the Los Angeles-based Reason Foundation shows that a fuel levy has several disadvantages.

First, it does not keep up with inflation. Second, increased fuel prices plus a lagging economy will result in slower traffic volume growth. Third, hybrid and more fuel efficient vehicles – and the emergence of electric cars – will, over time, result in lower fuel sales.

The cumulative effect of these factors is that the income from the fuel levy will decline over time.

It would be easy for government to add another R1 or more across the board to the fuel price, so goes the argument. For certain pressure groups with a narrow interest in a predominantly urban economy, this has become the option of choice but they fail to spell out the implications to the rest of the country’s citizens.

Why should a motorist in Mahikeng or Kakamas, or Cape Town – for that matter – have to fork out an extra amount per litre every time he fills up at the pump? Why should he pay for upgrades to a road connecting Pretoria to Johannesburg if it is unlikely that he will ever make use of this road? What will the cumulative impact be on inflation when transport companies, distributors and retailers start to hike their prices to cater for higher fuel prices? Why should poorer communities who usually own older or less fuel-efficient vehicles subsidise the rich? And why should users of public transport – taxis and buses – pay more when fares are raised – while the e-toll system has the flexibility to exempt registered owners of such vehicles from paying?

Clearly to use the fuel levy as a funding model for the upkeep and improvement of our road network is neither equitable, nor fair, nor sustainable.

Toll roads have been operational in South Africa for more than two decades. The overwhelming majority of road users would agree that the construction and maintenance of our world-class highway network would not have been possible without the income derived from the toll roads that are managed by SANRAL together with private sector concessionaires.

The more rational opponents of e-tolling agree that the new upgraded Gauteng road network is a significant improvement on the old roads and has led to improvements in safety, efficiency, productivity and time spent in traffic.

But, the inevitable question is how do you pay for better roads that bring major benefits to the hub of our country’s economic activities?

Open road tolling on the Gauteng freeway network did not introduce a new principle for South African road users. It merely provides for a modern method to collect tolls on busy highways where road users don’t have to stop or pass through boom gates, resulting in the inevitable delays, time wasting and traffic snarl-ups.

Despite the claims that the e-toll system leads to inflated costs because of built-in costs of collection, the reality is that the costs are not as high as the detractors claim.

The cost of toll collection is only 17c for every rand received. This means that 83c in the rand is ploughed back directly into the maintenance and upkeep of the road network.

Tolling is equitable, sustainable and sensible.

Sipho Madonsela is a member of SANRAL’s Board of Directors.

Confidential and secret are different concepts

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By Vusi Mona

A number of red herrings were dragged into SANRAL’s application to keep certain aspects of the Winelands Toll project confidential at this stage. This has clouded the real issues at stake and contributed nothing to a greater public understanding of the tender and bid processes.

The ruling by the Western Cape High Court brought much-needed clarity on an issue, helped to dispel some of the untruths and half-truths spread about SANRAL and corrected the most glaring misconceptions.

The decision by the City of Cape Town to apply for leave to appeal does not change SANRAL’s position. Obviously, as a responsible corporate citizen we abide by the outcome of the judicial processes. This is an approach which is in stark contrast to many of our critics who often encourage the public to defy court rulings and the country’s laws.

An appeal hearing will provide SANRAL with another opportunity to refute the often repeated accusation that it engaged in a secret tender process and intends to withhold information from the public. This is then equated with the so-called “Secrecy Bill” and a doomsday scenario is painted of a future South Africa where citizens will have no access to information that is in the possession of the state.

Such an approach demonstrates a lamentable lack of understanding about tender processes and fails to distinguish between the concepts of “confidentiality” and “secrecy.” Unfortunately, this appears to be a strategy employed by our opponents to deliberately create confusion in the minds of the public.

The High Court now ruled that no person will be permitted to, unless authorised by SANRAL or the Court, to disseminate, publish or distribute any part of the administrative record.

It confirmed the argument advanced by SANRAL that papers filed by parties to any litigation should only be available to parties and persons who have a direct legal interest in the matter.

What is at issue is that SANRAL has a legislative mandate to maintain and upgrade the national road network in South Africa. In this process SANRAL implements national policies and legislation which have, for more than 20 years, included provisions for tolling.

Recognising the substantial constraints on the national fiscus government introduced tolling as a funding mechanism to ensure the ongoing maintenance and upgrading of national roads in a manner which is both cost effective and ensures the best value for money for South African citizens.

In the Western Cape there is already tolling in place at the Huguenot Tunnel. The City of Cape Town has its own tolling initiative at Chapman’s Peak – all under this legislation.

Thus, it was not a new concept for South Africa, or the Western Cape, when SANRAL commenced the tender process for the tolling of sections of the N1 and N2, better known as the Winelands Route. In line with normal tendering processes SANRAL invited companies and consortiums to submit competitive bids for this project.

The tender bids are by definition confidential. Bidding companies provide confidential commercial information including their engineering and construction plans, their allocation of legal and financial risks and, in this case, their intended toll fee structure. This is the information used by SANRAL to reach a decision on the successful bidder, to shortlist candidates, or to negotiate better terms and conditions.

It is important to note that when the initial action was launched by the City, the process had reached a stage where a preferred bidder had been identified by SANRAL following a comprehensive technical evaluation of the different submissions. The tender has not yet been awarded.

As the recipient of this sensitive information SANRAL has a solemn duty to keep it confidential. To disclose it prematurely would be a gross dereliction by SANRAL and put all future bidding processes at risk. It would have a ripple effect on the integrity, not only of SANRAL, but of all state agencies and organs at national, provincial and local government levels.

Why would any commercial company trust SANRAL, or a government department, or even the City of Cape Town, if there is a possibility that sensitive information will be divulged to competitors before a final tender has been awarded?

It was therefore, we believe, exceptionally irresponsible of the City of Cape Town to launch such an application in court, knowing full well that a judgement in its favour might blow up in its own face in time to come.

The Western Cape High Court ruling was a landmark judgement with implications for the disclosure of any administrative records in the future and is especially relevant for future challenges against state institutions during tender processes. We are confident that this ruling will be confirmed by other courts should leave for appeal be granted.

SANRAL is committed to transparency and fully supports the right of the public to have access to information pertaining to our business and our decisions. Our position has got nothing to do with secrecy but is only intended to ensure the integrity of a competitive bidding process which is currently at a sensitive stage. We will make full disclosure of information pertaining to the Winelands toll tender once the final tenders have been awarded.

*Vusi Mona heads communication at SANRAL.

Mirage, Mirage on the road, who is the tollest of them all

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It was a wonder to see a Mirage on the N1 between Pretoria and Johannesburg. It paid a national road visit in the early hours of 24 September, Heritage Day.

The aircraft left the Waterkloof Air Force Base at 5:30 amMirage 4
and reached the Halfway house in Midrand by 9: 00 am.
It involved the cooperation of SANRAL and the Gauteng Traffic Police.

Mirage 3

The public was asked to avoid the affected routes and alternatively, those who had to use the route were asked to exercise caution and patience. What was allowed was passing to the right of the aircraft; after all, it is the slowest on the road.

In addition, Mobile Police Vehicles (MPVs) and SANRAL’s Routine Road Maintenance team were on hand to provide assistance. All necessary permits had been applied for and approved.

Surprise, surprise!
Mirage 2

As the Mirage passed under gantries, it had to pay toll, setting an example to many road users.

Women in Construction continue to face major hurdles

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Despite the progress made in closing the gender gap and making more opportunities available for women in business, South Africa’s construction industry is one place where being a woman is still a major challenge.

To give you some perspective, according to South African Women in Construction (SAWIC) women hold just 9 % of the jobs in the construction sector. This is a very small number, and not one that shows that any real advancement has been made; especially when you take into account that most (76%) of the positions held by women in the sector fall into the category of office support and other clerical duties.

The public sector in particular has made efforts to address this. There are changes that are not yet reflected in these figures that are slowly but surely happening on the ground. As a woman owner of a construction company these are efforts I can fully appreciate.

Semi government institutions have led the way in enabling this advancement. Their training seminars and workshops, free of charge, have been a marvel in capacitating and developing me. One parastatal that I can mention, without dismissing others, is SANRAL. Through them I underwent comprehensive training and coaching which motivated me to move higher in the industry.

Government has also played its role – their policies for the advancement of women participation in businesses that were previously male dominated has opened up exciting opportunities. Many women, like me, have taken them up and made the most of them despite the many the challenges they may encounter along the way.

There are many things I learned as I struggled to make something of myself in the industry. On top of being a woman, I ventured into the construction business at a very young age. It’s not a business you get into for the sake of being in business; you need to be self-motivated in order to succeed.

The obstacles I came across could have very easily discouraged me. During the time I was undergoing my SANRAL learnership, I had to return my bakkie to the bank because I couldn’t continue with instalments. It was my only means of getting around. This was made worse by the fact that as a single parent I couldn’t stay in Port St Johns in order to be closer to the programme as I would have liked to. The daily commute was both physically and emotionally draining.

I was greatly marginalised as a woman. How I was treated in business had an emotional impact on me. I still remember the feeling of losing confidence in myself, losing my drive and ability to achieve set goals. I constantly struggled with thoughts of never succeeding in what seemed to be male-only territory. This is something that women must overcome and I am grateful for the support and coaching that I received along the way.

It is my strong wish within the next two years to own plant and machinery. I want to go from being a subcontractor to a fully-fledged independent contractor that is involved in the construction of national roads. I would like to attain the highest grading in CIDB sector through hard work and excellent workmanship and keep my feet firmly embedded in the construction sector in order to set benchmarks that other women can be proud of.

I would also like to contribute to the growth of other women owned businesses by way of capacity building, skills transfer and so on. There are a number of things that women can do that will give them an edge in the industry:

  • Find a good trainer / mentor – I am fortunate enough to have been part of the SANRAL learnership. Look out for similar opportunities. This will be invaluable if you want to really succeed in this industry.
  • Passion is key – it’s not just about chasing the rewards – you must have a love for the work. That way you will avoid becoming more interested in what material things the business offers and neglect the nitty-gritties of the enterprise resulting in your venture sinking before it has even surfaced.
  • Be vigilant – every business has its risks and it needs to be approached with caution and alertness. Don’t be deceived by the large amounts of money you receive; avoid extravagance and learn to reinvest for the growth of the business.
  • Be bold – As a business woman you must be able to enter where angels fear to tread. Not only will you need to have a firm grip on developments in the industry, you will also need to network and establish strategic alliances with other business people.
  • Have confidence – It’s been said that cowards die many times before their actual death. I agree – if you have no confidence in yourself you will never get anywhere in life. Admittedly, you will fall along the way but another saying puts it: Never say die!

 

Thabile Nkonki

Owner: Talinko Construction Enterprise

SANRAL Commits To Address E-Toll Issues Raised By President Zuma

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By Vusi Mona

vusimonaThe recent concern expressed by President Jacob Zuma regarding the e-tolling system made constructive contributions to the public debate.

It also enables SANRAL to address some of the positive issues around e-tolling which often get lost in the media and public frenzy about the teething problems we are experiencing.

President Zuma, quite correctly, said that problems in the billing system should be fixed. This has been seized upon by SANRAL’s critics and their uncritical supporters in certain media as if the President expressed reservations about the principle of e-tolling in Gauteng.

This is obviously not true.

The President and Cabinet have been among the most consistent supporters of e-tolling and the system was introduced under their leadership and in terms of their decisions.

What is conveniently forgotten about President Zuma’s interview with the SABC was his broader reference to e-tolling as “… an efficient system.”

Indeed, it is intended as an efficient system, introduced on one of the most efficient highway systems in the world – the Gauteng Freeway network. And since the start of e-tolling in December 2013, SANRAL – with its contractor Electronic Toll Collection (ETC) – is ensuring that the billing system gets progressively more efficient every week.

SANRAL never claimed that the system would be faultless right from the start. It is not realistic to expect that an information technology project of this magnitude will not experience hiccups – especially in the early stages.

The world’s most sophisticated technology leader, the USA, introduced a new healthcare system – better known as “Obamacare” – in exactly the same week in which e-tolling went live in Gauteng. It is public knowledge that the online registration system for Obamacare experienced severe difficulties right from the start.

Some of the technical issues have not yet been resolved two months down the line – providing on-going fodder for political opponents, media critics and late-night comedians.

The reality is that a number of issues come with the territory of any new system of this magnitude. In the case of e-tolling, there are already more close to 1 million registered users who have provided SANRAL with their billing details and requisite information.

The system processes approximately 2.5 million transactions every day. OUTA recently claimed that it has received 900 complaints and the Democratic Alliance referred to 300 people who contacted its public representatives.

One thousand two hundred complaints in a system which handles more than more than 13 million transactions a week can hardly be called a “crisis.” Also, from the 1 million registered users, complaints we have to date received constitute 0.3 percent and of those only 10 percent were found to be valid.

However, SANRAL together with ETC takes every complaint seriously and has undertaken to resolve every issues raised by road users. This is at the core of our undertaking and response to the President to provide the users of our roads with a quality experience.

An analysis of the complaints indicate that a good number of them emanate from inaccurate data on the national traffic information system. As a result, bills are sent are being sent to wrong people. SANRAL and the traffic authorities will soon be engaging in an exercise meant to improve the integrity of the data stored on the national traffic information system.

Some of the complaints relate to users, especially the unregistered ones, not understanding the different tariff categories. If a user does not pay within the 7 days grace period from date of first gantry pass, they get transferred to the Violation Processing Centre (VPC) which attracts a tariff three times higher than the standard tariff. There is a lot of aggravation coming from users who have received notification about having been transferred to the VPC.

The challenges that are there are significant to us – no single complaint is regarded as inconsequential – but not insurmountable. However, to characterise them as a crisis or a mess is a bit on the hyperbole.

*Vusi Mona is head of communications at SANRAL

e-Toll Terror Attacks Threaten our Democracy

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The recent terror-related incidents at SANRAL’s Central Operations Centre in Midrand should be of serious concern to all fair-minded South Africans. It shows that reckless calls for civil disobedience against the e-tolls system can quickly slide into terrorist activity aimed at inducing insecurity within the public and intimidating a state-owned entity and its employees.

While hoax bomb calls and the posting of harmless chemical substances may be a source of humour around dinner tables, it is no laughing matter for the scores of employees who had to evacuate SANRAL premises on three separate occasions. They were subjected to terror threats that traumatised them and their families.

Let’s do some straight talking here – this is no silly prank. It is a crime to endanger the lives of people through real or imaginary threats. It is a crime to violently disrupt transport infrastructure based on ideological and political grounds. Therefore, government is pleased that our investigative agencies have already arrested and charged a suspect.

Many of us will recall the anthrax attacks launched on Washington DC one week after the 9/11 tragedy in September 2001. Letters containing spores of the deadly substance were sent to senior congressional leaders, three television networks and two major publications. It caused the traumatic deaths of five innocent people who handled the envelopes in the mail system and the hospitalisation of 17 more.

Terrorist activities are criminalised under the Protection of Constitutional Democracy Against Terrorist and Related Activities Act. Section 13 of the Act deals specifically with hoaxes and states that “any person who, with the intention of inducing in a person anywhere in the world a false belief that a substance, thing or device is, or contains, or likely to be, or contains a noxious substance or thing or an exclusive or other lethal device” is guilty of an offense.

To its credit, responsible editorial comments in the media have condemned the terror tactics without equivocation. There is no middle road about this. You either condemn it and desist from tacitly encouraging such actions or condone it.

Not so for some groupings opposed to e-tolling, which issue generic statements condemning the incidents, but then call on the public not to over react. Tell that to the employees who were traumatized and had to suffer the indignity of being hosed down and decontaminated.

There are a number of common threads running through the campaign against e-tolling that should concern South Africans who value the democratic processes. The core is that it is open season against SANRAL and the policies of a legitimately elected government. One can not simply abuse the entity at will and threaten its employees without any regard for the consequences.

If one continues to encourage civil disobedience; show no respect for the democratic processes in parliament, and disregard the decisions by the judiciary, one should not be surprised when people resort unlawful, violent and terror activities.

Laws in our country are debated and processed through our democratic parliament. While some political parties lose the debate there, they have the option to take matters further with our courts where they feel aggrieved. But once courts have pronounced on a matter, those who proclaim to believe in the rule of law and the independence of the judiciary should not malign the same judiciary simply because it has ruled against their favour.

SANRAL is obligated to implement the mandate given to it by a democratically-elected government and enacted in legislation passed by parliament. It is discharging its legal mandate in operating the tolling system in our country.

Government, on its part, will strengthen its security systems and give all the support it can to the law enforcement agencies to investigate terror threats; apprehend the perpetrators, and expose the planners.

In the final instance, SANRAL will continue to respect the rule of law. It will abide by the decisions of the court. We expect those opposed to e-tolling to give the people of South Africa the same unequivocal assurance.

(Dr Ismail Vadi is the Gauteng MEC for Roads and Transport)