South Africa is listed as Kapsch Trafficom’s biggest risk, with its controversial e-tolling project in Gauteng accounting for almost half of the company’s total potential liabilities.
In its interim results published in December, Kapsch reported that its contingent liabilities and commitments for the South African tolling project were sitting at EUR80.5 million (R1.1 billion).
Contingent liability is a term used to describe the potential liability (or in this case, loss) which may incurred by a company, often in an environment of high uncertainty.
In Kapsch’s case, South Africa currently sits at the top of its books, with a R1.1 billion axe hanging over its head – with the local environment looking less than positive for the e-tolling system.
The liability is noted for the first 6 months of Kapsch’s 2014/15 financial year to September 2014, and accounts for 44% of Kapsch’s total contingent liabilities of EUR182.5 million (R2.5 billion).
North American operation account for the second-biggest chunk (42%), with all of Kapsch’s other operations in Austria, Poland, Australia, Portugal and Czech republic covering the remaining 14%.
Revenue prospects look bleak
It was previously reported by Kapsch that the outlook in South Africa remains negative, despite the e-tolling operation reaching ‘break-even’ point within the first half of its (Kapsch’s) financial year.
Reporting on the state of e-tolls in the country in its interim results, Kapsch noted that the payment rate remains very low, and “the project in its entirety is still negative for Kapsch TrafficCom”.
“We will continue to work hard on improving the profit situation in South Africa,” group CEO Georg Kapsch said.
However, improvements may be a long way away.
Sanral has stated in the past that it needs over R260 million a month to cover the costs of operating the system in South Africa.
However, in the first year of operation to September 2014, the agency managed to collect only R1 billion.
Revenue collected peaked at R120 million in June 2014, but had decreased to R86 million by September.
Reporting to the e-toll review panel in November, Sanral noted that its total income from e-tolls between July and October was R365 million – well short of the group’s projected income of R545 million for the period.
User prospects look bleak, too
According to Fin24, Transport Minister Dipuo Peters recently responded to a parliamentary question on the number of registered toll users by noting that only half of all Gauteng road users were currently registered with the system.
Peters noted that about 1.25 million out of a total 2.5 million motorists had registered with Sanral – and 93,292 road users had de-registered from the system by September 2014.
Freedom Front Plus MP Anton Alberts, who asked in a parliamentary question, said that this was evidence that the e-tolling system is “systematically collapsing”.
(1 EUR = 13.85 ZAR)