E-toll alternative could pay for South Africa’s roads: Sanral
The total estimated funding requirements to sustain the South African road network – including addressing backlogs in surfacing and capacity expansion – is R116.1 billion.
This is according to Sanral’s General Manager of Communications, Vusi Mona, who said that questions must now be asked about the most suitable funding model for road infrastructure.
In an opinion piece published on Sanral’s blog, Mona said that the fuel levy alone is currently insufficient.
“The future contribution of the fuel levy to the Central Revenue Fund is uncertain, with the projected electric car take-off in 2022 and established vehicle efficiency technologies,” he said.
“In less than five years, electric cars will cost the same as their internal combustion counterparts and that’s the point of lift-off for sales.”
Alternative?
While there are a number of possible alternative funding models, South Africa should look at is Colombia’s road project said Mona.
He added that Colombia not only has some of the worst roads in South America – but also not enough of them.
“To get around the problem, it launched the National Development Finance Corporation (FDN) in 2013.
“What makes it different from other such corporations is that it funds, at most, 25% of any project.
“The implication is clear: the rest of the project must be packaged in such a way that private investors would find it attractive enough.”
Mona added that the project is also attractive in that its shareholding is not only held by the Colombian state, but also by private, albeit foreign banks, as well as international and regional development institutions.
All these parties are represented on the board, which has to approve all tenders. This makes it very difficult and unlikely that there will be any corruption in a tender, he said.
“The project also has to offer acceptable risks and returns to interest private investors. The result is that pie-in-the-sky-projects, or those beloved by politicians but of no immediate value to the economy or nearby communities, will not see the light of day.
“Almost by definition, this means that if the FDN is involved, there is an acceptance that it will be a high-quality project. ”
Mona said that while conversation has started on funding models, an example exists that is similar enough, yet different enough, to warrant attention.
More tolls
Central to this project is that private investors won’t go near to such a state project if there is not some guarantee that the funds invested will supply a return comparable or better than the open market could have done, Mona said.
“The only way to do this is for users of the infrastructure, partly funded by the private sector, to continuously pay when they use the supplied facility – in this case a road.
“In plain English, these roads have to be tolled and the toll must be paid. In addition, there must be an undertaking that where tolls are not paid, the state will make up for losses through a subsidy.
“The advantages of the Colombian approach are enormous: less chance of corruption, a guarantee of necessity and quality, users pay for the use of the infrastructure and there is political will to ensure that the payment occurs.”
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