‘Start paying e-tolls now, and in 5 years we’ll write off your existing debt’

The Electronic Tolling Company (ETC) has proposed a way to pay off South Africa’s mounting e-toll debt, while also getting Gauteng road users to comply with the failing system.

The suggested method would be to work out an annual historic debt write-off for drivers, in return for their compliance with the existing scheme.

“This would essentially mean that for every year of compliance, Sanral would write off 20% of historical debt – meaning that after five years, a newly compliant road user would be debt free,” the group said.

The proposal also considers providing existing and compliant road users with a reduction in future rates, rewarding these users for their historic and ongoing support of the system.

“This would leave room for Sanral to restructure its balance sheet and a way for road users to become compliant without fear of legal summons.”

The debt write-off scheme would have to be coupled with strict enforcement to work.

Scrap or don’t scrap

The proposal from ETC comes as the e-toll debate again makes headlines, with a public disagreement between Gauteng premier David Makhura and finance minister Tito Mboweni highlighting the divisions between national and provincial government on how to move forward with the system.

Makhura has made it clear that the ANC in Gauteng wants the system to be scrapped and alternatives sought to finance the debt and fund the roads. Mboweni, meanwhile, has maintained that the user-pays principle used by e-tolling is the only fair system, is already in place, and needs to be enforced.

President Cyril Ramaphosa has stepped into the debate and directed Transport Minister Fikile Mbalula to find a solution to the impasse.

ETC – wholly owned by Austrian group Kapsch Trafficom, which built the e-tolling network in South Africa – says that the user-pays principle is the fairest way to handle the financing of roads, and rejects claims that a fuel levy is a viable solution to paying off the debt.

“The reality is that scrapping e-tolls won’t change the fact that Sanral has a legitimate debt to be paid for the costs incurred during the first phase of the Gauteng Freeway Improvement Project (GFIP),” it said.

“While GFIP comprised an initial investment of R25-billion, this has subsequently ballooned to R47 billion in lieu of the low compliance rate of Gauteng road users to pay their e-tolls.

“Scrapping the e-tolling system would immediately require the settling of this enlarged bill. While yet another government bailout is being contemplated, which effectively means that the public’s tax money will still be used to repay the loan for Gauteng roads and funding taken away from other pressing social needs of the country.”

This echoes statements made by Mbalula, who said that scrapping the system isn’t an easy process because of the debt obligations involved.

Get rid of ETC

Vocal e-tolling opponent, Outa, has stated that ETC is part of the problem, claiming that the group is siphoning R60 million a month from motorists to handle the administration of a system that has failed.

The group said that ETC constantly fails to mention that it was contracted at R9.9 billion to administer the e-toll scheme over five years, before any funds flowed to offset excessive freeway bonds.

This equates to an administrative fee of around 61% of the finance costs, which is extremely excessive and would have seen the Austrian-based company being unduly enriched at the expense of the South Africa road user.

The group has previously stated that a fuel levy isn’t being proposed as the single solution to e-toll, but part of a mix of solutions.

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.

Outa chair Wayne Duvenage said that, had government implemented its suggestions at the time e-tolls launched, the debt burden would not have grown to the levels it’s at now, and the system would have been paid off.

“Had Outa’s suggestion of a 10 cents addition to the fuel levy been applied from the start, the existing freeway bond would already have been financed and this small addition to the levy could have been used to finance the rest of the upgrades now overdue,” he said.

“Contrast this potential situation with the failed scheme that has only enriched an Austrian company with no provisions made toward the freeway bonds, and you have the reason for scrapping the e-toll schemes as soon as possible.”

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

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‘Start paying e-tolls now, and in 5 years we’ll write off your existing debt’