N1/N2 Winelands: SANRAL weighing its options

Cape Town, 30 September 2015

The Western Cape High Court handed down judgement today in the review application brought by the City of Cape Town regarding the N1/N2 Winelands Project. Decisions taken to implement the project, some of which were taken more than eight years ago, were the subject of the application.

Vusi Mona, spokesperson of the South African National Roads Agency SOC Ltd (SANRAL), said that although he was pleased that environmental authorisations regarding the implementation of the project were upheld, he is disappointed that the court set aside the decisions concerning the procedure of the declaration to toll.

 “The agency’s legal team is reviewing the details of the decision and will assess the legal options available to SANRAL.”

Mona added that it seems that the City’s real complaint with the N1/N2 Winelands Toll Project is about tolling as the funding choice. Cllr Brett Herron, Cape Town’s mayoral committee member for transport, conceded in a recent media statement that the litigation was the city’s last resort to prevent tolling.

Mona pointed out that the Constitutional Court had already ruled that it is not the judiciary that determines what kind of funding should be used and who should bear the brunt of that cost. The remedy lies in the political process.

The N1/N2 Winelands project is more than a decade in the making. It was conceived to improve the link between the Western Cape and the rest of the country. Substantial time, effort and investment have been put into its development.  It was earmarked to facilitate the movement of large volumes of export and import freight, business, tourism, recreational and commuter traffic. 

The court’s decision, Mona said, means that the realisation of the benefits of the project will either be delayed or may never eventuate. These include safety benefits to road users and the economic benefits to South Africa and the region.It will also prevent the direct and indirect  creation of  some 5 000 jobs for the initial construction  period over the first three years of the project and thereafter approximately 500 jobs per annum for the duration of the thirty-year concession period.

Infrastructure investment is critical to economic success. South Africa needs a project such as the N1/N2 Winelands which brings with it employment and stimulation of the economy which is particularly beneficial in the current economic climate.

“If SANRAL is not allowed to proceed with the project now, the province, the city and their constituents will not have the upgrades for at least the next 20 years, if at all.” 

There is just no money from Treasury to fund the project. The only option is to have it operated by a concessionaire who will finance the cost of upgrading and expanding the road through equity and borrowings, which have to be repaid through tolls.

Commenting on the matter, economist Dr Iraj Abedian said:

“One of the critical requirements is to ensure that economic growth and job creation are sustained, if not accelerated. To this end, accessing and mobilising private sector funding for infrastructure finance are vital.

 By so doing the developmental process is not held back by the lack of public finance, or by the absence of potential taxation capacity of the economy to finance long-term infrastructure projects.

 One of the key requirements of success in infrastructure planning and financing is the socio-economic value of time. In other words, not only timeous planning but also a timeous implementation of an infrastructure project, be it a power station or a roads network, is often the difference between success or failure, viability or otherwise.

In South Africa, the delayed completion of Eskom’s Medupi Power Station is a very instructive case in point. The delay of two years has cost the SA economy many jobs, a substantial reduction in GDP growth momentum, and a host of associated complications including reputational damage to the country’s investment brand.”