National toll increase requires intensive probing and transparency

The Organisation Undoing Tax Abuse (OUTA) notes with interest, Gazette notices 178, 179 and 180 of Gazette 39696, published 15 February 2016, wherein SANRAL have provided the public with mandatory tariff increases along all 'conventional' tolling routes throughout South Africa.

16/02/2016 11:38:51

National toll increase requires intensive probing and transparency

"We are disgusted that SANRAL and the Department of Transport have this attitude and approach of continuously applying mandatory annual increases to all toll plazas in its growing toll network, whilst the use and income generated by the various tolling contracts have serious questions, about which OUTA is busy conducting intensive research and investigation," says Wayne Duvenage, Chairman of OUTA.

Some of the major concerns and issues that OUTA is looking into and will be raising at the highest levels are:

  1. Toll concessionaire contracts (such as those along the N3 and N4, and N1) can run for up to 30 years, yet the capital outlay for the initial construction of a toll road is a fixed capital cost. This means that the effective bond repayments on the tolled road decreases every year, due and the impact of inflation on the real value of money and the lowering outstanding amount on the bonds. However, in the case of SANRAL’s conventional toll tariff structure, the toll fees keep increasing every year for the entire 30 year period, regardless of whether the capital amount has already been repaid, and far beyond the cost necessary to maintain the road. Toll roads in South Africa have therefore become enormous tax-driven cash cows with guaranteed income for periods of up to 30 years for toll concessionaires and their connected companies.

  2. Certain construction companies own large stakes in the tolling concessionaires, and in effect act as decision-makers for construction and maintenance contracts awarded by the concessionaire on the tolled routes they manage. Our research shows that toll contractors are able to award maintenance and construction contracts to themselves and / or their affiliates at inflated prices, driving up the “costs”, which the concessionaire justifies it has to recoup through its toll charges to the public. OUTA's research on the exorbitant costs of road construction allowed by SANRAL, will shortly be revealed in a well-researched position paper on this highly dubious and questionable situation.

  3. Selected construction and other companies collect massive revenues from operating and administering the toll collection processes and yet there is a reluctance to discuss or divulge with absolute transparency, the income generated from the tolls. Furthermore, details about construction and maintenance contracts awarded are kept under wraps by these companies with the excuse they are “private companies who do not have to disclose that information to the public.”

  4. SANRAL have abolished the legislated requirement to maintain or provide alternate routes to tolled roads, thereby ensuring road users are held captive to the toll roads, while the alternate routes fall into gross disrepair. OUTA has received numerous complaints from affected communities along side tolled roads and will be assisting various communities in this regard. It is simply irrational and unjust for SANRAL to allow this abusive situation to continue.

  5. The legitimacy of the entire “user-pays” tolling mechanism in South Africa is in question, as some time back, SANRAL amended the legislation to ensure that tolling revenue generated along one route, need not be retained or contained for each specific tolled route. This enables revenues that are generated from one conventional tolled road, to be utilized on other projects or areas within SANRAL’s expense base.

The above factors and other issues discovered by us, have created a diabolical and unjust situation which has been allowed to continue unchallenged for too long. It is important to resupporter that the toll road concessionaires are in effect, providing a service to the public, on behalf of and through the state. In so doing, they are subject to stringent laws, which we will be applying in our quest to have all of the relevant information laid bare for scrutiny and questioning by the public.

It remains very clear to us that there is a cosy relationship between SANRAL and some construction companies, concessionaires and consultants, which is driving unjust and massive profits to these parties, at the expense of the public.

We require answers to a number of serious questions, and it would be in the interest of all parties concerned to not force OUTA to seek the required information through a drawn out Public Access to Information Act (PAIA) processes. If forced to do so, this will merely increase the ire and resolve of civil society, and raise further questions regarding the integrity of the parties involved.

We are moved by the growing provision of information from brave supporters of the public - especially from within pertinent organisations - which helps us unpack and deal with the questionable conduct within these entities. We furthermore encourage the public to provide us with more information, by making protected disclosures as whistle-blowers, to OUTA. This can be done by contacting us through our website.

OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.