The South African National Roads Agency Ltd (Sanral) says that while non-payment of e-tolls has had a negative impact on its debt levels, it remains solvent.<\/p>\n
On Monday, Moody\u2019s Investors Service changed the outlook on Sanral’s issuer rating from stable, to negative, citing a decrease in its financial strength.<\/p>\n
Moody\u2019s also lowered Sanral\u2019s Baseline Credit Assessment (BCA) to b2 from ba3.<\/p>\n
“The non-toll portfolio, which covers 85% of the national road network, is healthy,” said Inge Mulder, chief financial officer of the national roads agency.<\/p>\n
Mulder said that Sanral is not surprised by Moody\u2019s downgrade.<\/p>\n
\u201cThe ratings agency had warned at the time of the previous two ratings (July and November 2014) that any failure by Sanral to generate e-toll revenue leading to deteriorating cash flows and growing borrowing needs would lead to a downgrade.”<\/p>\n
“We were ahead of forecast income at the time when the e-toll Advisory Panel was announced by the Gauteng Province,” the CFO said.<\/p>\n
“Since then income has dipped appreciably and Moody\u2019s itself makes a correlation between the increase in the non-payment of e-tolls and the decision by the Gauteng Province to establish a panel to assess the socio-economic impact of e-tolls \u2013 something that could have sparked speculation among the general public that the e-toll project may be abandoned.\u201d<\/p>\n
The agency said it will await the outcome of the process led by Deputy President Cyril Ramaphosa on e-tolling to provide policy clarity as well as the funding model for the Gauteng Freeway Improvement Project (GFIP).<\/p>\n
“With policy certainty, we can devise a plan to repay our debt which should improve our rating,” Mulder said.<\/p>\n
Sanral operates two portfolios – toll roads and non-toll roads.<\/p>\n
The group said that the non-toll portfolio consists of funds from the national fiscus, an amount of approximately R10 billion per annum.<\/p>\n
These funds are used by Sanral to manage its non-toll network which accounts for 85% of the total national road network of 21,403 km. “There are no funding challenges with the non-toll portfolio. It\u2019s business as usual,” Mulder said.<\/p>\n
\u201cThe second portfolio accounts for 15% of the total road network, and constitutes of agency tolls (1,832 km) and those run by concessionaires (1,288 km).<\/p>\n
The agency tolls are financed through the capital markets by issuing bonds and the ones operated by the concessionaires are financed through private sector capital on a Build, Operate and Transfer basis.<\/p>\n
\u201cImportantly, there is no cross-subsidisation of funds between the toll portfolio and the non-toll portfolio,\u201d Mulder said.<\/p>\n
Sanral on standby to implement e-toll changes<\/strong><\/a><\/p>\n