ANC’s loss of key Gauteng metros spells doom for e-tolls
- Author: Andile Ntingi
- Published: Wednesday, 28 September 2016 08:54
Nearly two months before the August 3 municipal elections, the South African National Roads Agency (Sanral) issued a media statement celebrating its successful outing in the bond market, where it had comfortably raised R600 million for two of its highway projects.
Somewhat jovial in its tone, the statement was a message to investors and credit rating agencies to reassure them that the state-owned road infrastructure provider was making progress with collecting e-toll debt from non-compliant motorists in Gauteng, where it has been facing a public defiance campaign.
“It is clear that policy certainty around the user-pay principle and our commitment to collect on e-toll debt is bearing fruit,” Sanral chief financial officer Inge Mulder said in the statement.
“We will continue to make every effort to collect (in order) to continue to prove to our investors and ratings agencies that we will do what is necessary to realise the potential e-toll income stream.”
Since the release of this upbeat statement, there have been two major political developments that may threaten the future of e-tolls and probably also the ability of Sanral to raise funding in capital markets. These developments have again created a cloud of uncertainty around Sanral, which may unsettle the capital markets.
Investors have held back before from investing in Sanral bonds due to uncertainty over e-tolls, and may do so again. Firstly, there has been a change in the political guard in two of the three Gauteng metropolitan municipalities, where opposition political parties hostile to the e-tolls have assumed power through forming coalitions after the municipal elections to oust the ruling ANC, which supported the implementation of e-tolls in Gauteng.
Secondly, the power struggle between the National Treasury and state-owned enterprises (SOEs) that is currently playing itself out in the public domain is eroding investor confidence, and it should not come as a surprise that money managers such as Futuregrowth and Denmark’s Jyske Bank have decided to pull out of funding SOEs, including Sanral.
For the sake of our economy, I believe cool heads will eventually prevail and the stand-off will be resolved. However, the first political development presents a litmus test for Sanral and its urban e-tolling strategy. When the parastatal issued its statement on June 8, the ANC controlled all three metropolitan municipalities in Gauteng (Tshwane, Johannesburg, and Ekurhuleni), but the ruling party has since lost Tshwane and Johannesburg to coalitions led by the DA.
The ruling party retained Ekurhuleni by a whisker, but it will have to pull out all the stops to hold on to the metro in 2021 as the DA and the EFF will be breathing down its neck to oust it.
Nothing short of dismantling e-tolls will endear the ANC to Gauteng residents. Following its poor performance on August 3 across the country, the party now knows it could lose state power in 2019 if it does not radically change tact.
Gauteng residents used the ballot to punish the ruling party for presiding over the imposition of e-tolls, which is widely considered by the province’s motorists as an unjust, unfair and unaffordable way of collecting fees to repay the debt that was incurred by Sanral in order to upgrade Gauteng’s freeways for R18.9 billion.
While e-tolls loomed large at the municipal elections, corruption and poor service delivery were some of the issues that led to the ANC losing key metros in Gauteng, a loss that has meant that the ruling party has lost political grip in the most urban and wealthiest of all nine South African provinces.
With the general elections a mere three years away and the ANC under pressure to reverse the electoral decline it suffered in the municipal elections, the party is now also being pressured to lobby for the scrapping of e-tolls to win back the hearts of disgruntled Gauteng voters.
The DA, which has been frustrating attempts by Sanral to introduce e-tolls in the City of Cape Town, has already started mounting a political campaign for the 2019 general elections. It is appealing to Gauteng voters to vote it into power if they want e-tolls to disappear for good.
The EFF, which helped the DA to take control of Tshwane and Johannesburg, is also campaigning for the e-tolls to be scrapped. Nothing short of dismantling e-tolls will endear the ANC to Gauteng residents. Following its poor performance on August 3 across the country, the party now knows it could lose state power in 2019 if it does not radically change tact.
Credit rating agencies and investors will be closely watching political developments around Sanral as the parastatal has battled to enforce the user-pay principle in Gauteng. More than 2.5 million motorists have never paid a single e-toll bill, resulting in outstanding e-toll debt climbing to more than R8 billion.
If e-tolls are scrapped because of the public defiance campaign, this means that any debt accumulated to fund e-tolls will have to be repaid directly from the fiscus. Any form of urban e-tolling in South Africa will be resisted and Sanral will have to persist with its current model of generating income from two sources to finance its non-toll roads and toll roads.
About 85% of national roads (non-toll roads) are funded through allocations from the National Treasury, while the rest (toll roads) are funded either through public-private partnerships or from borrowing in the capital markets.
- Andile Ntingi is CEO and co-founder of GetBiz, an e-procurement and tender notification service.