Treasury releases lower estimates of e-tolling costs

Outa's April court application relied strongly on the argument that the cost of e-toll collections amounted to about R20bn, which was close to the cost of building the road.

In other words, the government was spending R20bn to collect R20bn. Judge Bill Prinsloo considered this grounds for a full judicial review of e-tolling.

However, Treasury director-general Lungisa Fuzile said last week that based on a set of "conservative assumptions", collection costs amounted to 75% of total costs in only the first few years and would then drop sharply.

By 2017, it was expected that collection costs would be only 20% of total costs. At that stage, a far higher proportion of revenue would be going towards repaying debt.

Finance Minister Pravin Gordhan said last week that R20bn of the roughly R60bn value of the entire project contract was for construction costs and R38bn for debt costs.

Outa representative Wayne Duvenhage said the alliance had very limited information at the time of going to court.

On the basis of the knowledge that the first five-year contract to collect toll fees was worth R1bn a year (excluding set-up costs), over the 20 years of the road, this would amount to R20bn.

Collection costs 'not static'

However, Fuzile said that due to a range of variable factors such as the set-up costs and the much higher costs of collection during the first phase when fewer people had e-tags, "collection costs are not static and will move".

"The biggest reason for high costs in the beginning is the set-up costs, which include the physical infrastructure.

Secondly, costs of enforcement are higher initially because where people don't have e-tags; accounts must be sent out and so on. But as most people get e-tags and their accounts are managed electronically, those costs drop," Fuzile said.

Duvenhage said Outa had challenged the South African National Roads Agency (Sanral) and the Treasury in court to prove their calculations.

"They couldn't. So we argued that this therefore needs review. When the review starts, that is when we will unpack what the costs really are," Duvenhage said.

The government has appealed against Judge Prinsloo's ruling and his orders to the Constitutional Court on the grounds that he had overstepped the authority of the courts and interfered in the legitimate work of the executive.

Where are the real figures?

On Friday, Outa criticised Gordhan and the Treasury for their failure to provide real figures to the public.

During a briefing on the project by Deputy President Kgalema Motlanthe and five Cabinet ministers the previous day, Gordhan would not say how much cash Sanral was losing each month due to the interdict against tolling.

Instead, he quoted ratings agency Moody's estimate of R270m a month, and said "other estimates" put Sanral's monthly losses at R500m a month.

Gordhan said this money would most likely be transferred to Sanral through a special appropriation bill. It would come out of the current fiscus and would not lead to a bigger than anticipated budget deficit.

Fuzile said that, based on information collected from the gantries over the past three weeks, the economic effect of tolls on users was not as high as had been previously expected.

In a bid to soften the blow for regular users, the government had set a cap of R550 a month per user.

"Our information is that less than 5% of users are reaching that cap. Toll fees for most people are about R250 a month or below."

Source: Business Day via I-Net Bridge