E-toll fuel levy would add R1.00 per litre to pump price: Sanral

Decisions to fund the maintenance needs of the national road infrastructure through a country-wide fuel levy will add an additional R1.00 per litre to the pump price, Sanral, CEO, Nazir Alli, told the Gauteng e-toll Review Panel on Thursday (6 November).

Alli said the Minister of Transport, Dipuo Peters, was quoted out of context that the fuel price will have to be increased by R3.65 per litre to pay for the Gauteng Freeway Improvement Project.

“The point she made was that money raised by the fuel levy cannot only be used for the 200km of highway network that serves and benefits the province of Gauteng. It will need to be spread on an equitable basis across all nine provinces and the entire national road network,” Alli said.

He noted that the National Treasury already reallocates more than the current fuel levy to transport requirements.

To only address the network sustaining maintenance needs of R65.8 billion per annum will require an additional R1.00 per litre of fuel. This will increase the fuel levy to R3.17 per litre, the chief executive said.

Alli said to address the remainder of the strengthening – 5 years – and re-graveling – 10 years – not allocated to the sustaining maintenance as well as the gravel road surfacing backlog will require a further R0.48 per litre of fuel – raising the average fuel levy to R3.65 per litre.

Counter claims

Trade union, Solidarity, said that the average fuel levy is currently R2.17 per litre, which means an increase of R1.48 is needed to arrive at R3.65.

“An additional levy of R1.48 per litre will be able to cover the cost of Gauteng’s toll roads within less than a year, while infrastructure is typically paid off over a much longer period,” it argued.

Paul Joubert, senior economic researcher at the Solidarity Research Institute (SRI), said the tax statistics which were recently released by the South African Revenue Service show that, at the moment, tax is levied on approximately 22 billion litres of fuel annually.

“This means that an additional levy of R1,48 per litre of fuel will bring in at least R32 billion in additional tax income annually.”

“Since the minister has estimated the cost of the overall backlog in road maintenance work in South Africa to be R197 billion, such a levy would not only cover the cost of Gauteng’s roads, but also settle the entire country’s backlog within just six years in cash,” he said.

E-tolls economically efficient

The e-toll panel also heard how studies by independent economists have shown that the Gauteng Freeway Improvement Project (GFIP) is economically efficient.

Sanral commissioned an economic impact study by the Graduate School of Business of the University of Cape Town and ARUP in 2008, and again in 2010.

“The study showed that the project is economically viable and provides very high benefits to not only Gauteng, but also South Africa,” said Barry Standish, director of Stratecon and one of the economists who conducted the study.

Even when excluding all road user benefits such as security and lighting, the average impact of the system on consumer goods is only 0.09%, the study reportedly found.

The study noted that some consumer goods are moved on rail or secondary roads and assumed that all toll tariffs after VAT and company tax are passed on to the final consumer, with no time-of-day discounts and caps, amongst others.

This means that R100 will become R100.09 for the movement of dry goods into Gauteng and delivered to the final destination, the study said.

With an e-tag, this is reduced to an average of 0.05% , i.e. R100 becomes R100.05 for Class B and C vehicles, it said.

“The reality is that GFIP gives out-of-pocket savings and is at its core economically efficient,” Sanral said in a statement.

“Although the socio-economic benefits of the system is the core driver when the decision was made to implement, policy considerations also played a role,” the road agency said.

“If there is a choice of funding methods which is the one that will shift the road user to choose public transport,“ said Andrew Marsay, transport economist, “this is the funding model which must be chosen. Tolling does that.”

Gauteng premier David Makhura in July appointed the panel to review the tolling system.

It was set up to examine the economic and social impact of the Gauteng Freeway Improvement Project and the e-tolling system set up to fund it.

The panel was to present its findings to Makhura at the end of the month.

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E-toll fuel levy would add R1.00 per litre to pump price: Sanral