E-tolls cannot be resurrected: here’s what needs to happen next

The Organisation Undoing Tax Abuse (OUTA) says that a social media spat among politicians has strengthened its resolve to see an end to the e-toll debacle which has failed to achieve its purpose since launch, nearly six years ago.

OUTA said it is willing to assist government in finding legitimate solutions to end the e-tolls impasse.

On Saturday (6 July) president Cyril Ramaphosa instructed minister of Transport Fikile Mbalula to work alongside finance minister Tito Mboweni and Gauteng premier David Makhura to find a solution to e-tolls.

Ramaphosa said that the trio should submit a solution to cabinet, dealing with the impasse around electronic tolling in Gauteng.

The president’s note comes after a public Twitter spat between Mboweni and Makhura on social media this week.

Makhura pledged to scrap e-tolls in his state of the province address, however, Mboweni has voiced his support for the tolls and believes they should continue to operate under the ‘user-pays’ model.

“The president has noted and finds extremely unfortunate and deeply regrettable recent public exchanges between finance minister Tito Mboweni and the Gauteng Provincial Government on this matter,” the presidency said.

“Such exchanges on social media are unbecoming of their high offices and fail to provide the leadership required in this instance.”

Ramaphosa said that the cabinet proposal should be tabled by the end of August 2019.

“While the user-pay principle remains a policy of government, the electronic tolling system as part of the Gauteng Freeway Improvement Plan (GFIP) presents challenges in its current form.”

E-toll solutions

OUTA said on Monday (8 July) that it suggested that the bonds for the Gauteng Freeway Improvement Project (GFIP) should be funded in the same way that Sanral funds over 18,000 kilometres of its non-tolled network, through allocations from Treasury and if needed, via a ring-fenced fuel levy increase of 10 cents per litre at the time of launch.

“Had this been done at that time, the capital value of the the project would have already been raised. However, Government’s determination to legitimise a grossly ineffective and irrational scheme has resulted in billions of rand in debt for Sanral,” it said.

OUTA proposes the following solutions to settle the debt:

  1. Renegotiate the debt with the PIC.
  2. End the collections contract with Electronic Toll Collections (ETC), as this is a massive and unnecessary cost.
  3. Reassess the Budget to include allocations by National Treasury towards the debt, including a possible allocation from the fuel levy.
  4. OUTA believes that Sanral may be owed more revenue from the profits made by the three main toll concessionaires on long-distance tolled routes. OUTA urges Treasury to investigate these contracts and reclaim funds owed to Sanral.

“Government needs to engage with civil society if it wants to do what is in the best interest of its citizens. By contradicting each other publicly, they are embarrassing themselves and are doing little to restore the public’s confidence in their ability to lead,” said OUTA chief executive officer, Wayne Duvenage.

“The main reason this scheme has failed is due to the lack of trust citizens have in our government on the e-toll decision. The public are fully aware that this infrastructure must ultimately be paid for by society, but we are not willing to pay for grossly inefficient systems that have extremely high administrative costs and which are being used to fund collusion that led to excessive road construction costs.”

OUTA outlined several reasons it believes caused the scheme’s failure:

  • Sanral’s poor research and an appalling approach to the scheme’s launch gave rise to a substantial loss in public support and trust, without which the scheme stands no chance of relative success or revival.
  • The e-toll scheme’s success relies on an accurate and efficient national vehicle registry system. Thus far the eNatis system has proved to be inaccurate. OUTA routinely receives calls relating to these inaccuracies regarding cloned number plates and incorrect registration details.
  • The scheme offers no explanation for the high costs of administration that were contracted to ETC. The repayment of a R21.5 billion bond for the GFIP bonds over 20 years would have equated to about R2.6 billion a year. And yet the five-year contract awarded to the Austrian-owned Electronic Toll Collections company amounted to R8.2 billion (or an average of R1.6 billion a year), for the administration portion of the scheme. That’s an extra 61% fee on top of the financing costs of the project.

Scrapping e-tolls

Delivering his state of the province address at the University of Johannesburg in Soweto on Monday (1 July 2019), Makhura said that his intention remains to scrap the failed tolling system, almost six years after it was first implemented.

“One of the issues that remains on my radar screen is the final resolution of the e-toll matter. Our position has not changed. We remain determined to ensure that e-tolls are not part of the future of our province.

“We anxiously await the finalisation of details by national government on the mechanics of settling the debt. We are even prepared to contribute something as the provincial government to ensure the e-tolls are scrapped. There is no turning back,” Makhura said.

In June, transport minister, Fikile Mbalula, suggested that e-tolls could be done away with, in an interview with the SABC.

“The solution could be that the e-tolls go but if they go, how are we going to address the issues that we are faced with in terms of the debt? The strategic goal is to ensure that South Africans are part of the solution in the long term.”

“It is not an easy issue that we say scrap and that is it. The fact of the matter is that people are not paying and the debt is ever-growing,” Mbalula said.

However, Mboweni has been vocal in his support for the system, saying in December 2018 that Gauteng motorists must pay up, as nothing comes for free.

He said that the over R40 billion of debt of the roads must be paid, and the user-pays principle is the method in which to do it.

When Sanral announced that it would be freezing its pursuit of court cases against motorists who were not paying, Mboweni criticised the roads agency, saying that the move would put the country’s credit rating at risk.

Read: Makhura says position on e-tolls has not changed

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E-tolls cannot be resurrected: here’s what needs to happen next