Sanral reveals the staggering amount of money it expects to lose from e-tolls this year

Roads agency Sanral has published its annual report for 2017, showing how much money the company expects to earn from tolling – and how much is expected to be lost due to non-payment of its controversial e-toll system.

For the year ended March 2017, Sanral reported total revenue of R13.95 billion, with revenue from non-toll operations at R8.7 billion for the year, which is a 31.8% increase on the previous year. Toll revenue from operations was R5.3 billion for the year, up 7.9% from 2016.

The Gauteng Freeway Improvement Project (GFIP) – which includes e-tolls – contributed 4.3% to the increase in revenue, the group said, not excluding the balance of the 60% discounted e-toll fees, which was not recognised as revenue.

An amount of R372.9 million, net of VAT, was received from the fiscus as a grant to recover the loss in revenue as a result of the implementation of the new dispensation for GFIP that was announced by the deputy president in May 2015.

Sanral reported a loss – after deducting finance costs – of R4.96 billion (2016: R1.2 billion), with an operating loss of R2.27 billion.

The non-toll operating loss after finance charges, for the year ended March 2017 was R380 million (2016: loss of R61.1 million), while the toll operating loss after finance charges for the year ended 31 March 2017 was R4.6 billion.

E-tolls

Looking at e-tolls specifically, Sanral said that its material impairments amounted to R3.75 billion in the year, recognising the decrease in estimated future cash flows from trade and other receivables (ie, tolling). A total of R3.61 billion of this impairment relates to the impairment of e-toll debtors, it said.

In 2016, Sanral was criticised for including unpaid e-toll fees in its trade and receivables, related to tolling, where it reported an increase in trade receivables from R1.15 billion in 2014 to R4.96 billion in 2015 and R7.66 billion in 2016.

This, critics said, was disingenuous, as impairment losses (what it expects won’t be paid) for that year were only listed at R90 million, meaning Sanral was not accounting for the large amount of unpaid toll fees.

In 2017, Sanral reported an increase in trade and receivables to R8.8 billion, it also reported a massive jump in its impairment losses – from R90 million to R3.61 billion.

The figure was based on an assessment of the trends and current paying habits of e-toll road users, it said, though this was a “highly subjective estimate”.

Sanral said that its R8.8 billion figure for trade and receivables is mostly e-tolls, and the amount is what it deems as recoverable. The group has recently kicked up its campaign to get motorists to pay, sending out SMSes and emails, asking drivers to pay outstanding fees.

Reviewing the year, the group noted that “the debt collection process for accounts in arrears continued and civil litigation for outstanding toll fees and associated costs commenced. Summonses were issued for prosecutions in magistrates’ courts and the high court.”

Irregular, fruitless and wasteful expenditure 

Irregular expenditure of R424.9 million was incurred, due to noncompliance with prescribed procurement processes, the group said.

Fruitless and wasteful expenditure to the amount of R15 million was incurred, due to additional costs incurred on a project that was cancelled as the approval process for the project had not been followed.

Further, the group noted that an investigation on allegations of maladministration and irregular procurement processes relating to the Gauteng e-toll contracts is still being conducted by the Public Protector. This investigation has been ongoing since 2012.

Salaries

New Sanral CEO, Skhumbuzo Macozoma took home R1.2 million having served just four months on the board. He took over from Nazir Alli, who originally announced his resignation from the group in 2016.

Alli’s pay amounted to R2.87 million, which included a R1.3 million ‘performance bonus and long service award’.

Additional executive members shared R19.5 million, with CFO Inge Mulder getting R3.2 million.


Read: Sanral outlines toll plans for the next 10 years

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Sanral reveals the staggering amount of money it expects to lose from e-tolls this year