SANRAL Records R640m Revenue Shortfall as A Result of Lockdown
7TH OCTOBER 2020
BY: MARLENY ARNOLDI
CREAMER MEDIA ONLINE WRITER
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The South African National Roads Agency Limited (Sanral) has recorded a revenue loss of R640-million to date for its 2020/21 financial year as a result of reduced traffic on toll roads during the lockdown.
The State-owned roads agency also reported on October 7 that it was underspending by about R670-million a month as a result of project standstills.
A notable project, the R1.65-billion, 1.1-km-long Mtentu Bridge construction on the N2 near the Wild Coast in the Eastern Cape, was undergoing a re-tendering process up to December, after the previous contractor decided to terminate its construction contract.
Meanwhile, Sanral’s Gauteng Freeway Improvement Project’s (GFIP’s) Phases 2 and 3 continue to be stalled, owing to a pending decision by Cabinet on the continued implementation of the province’s e-toll system and its appropriate funding mechanism.
The country has been awaiting clarity from Cabinet on the future of controversial e-tolling since July 2019, when it mandated a team to find a solution to what many consider to be a failed system.
The Organisation Undoing Tax Abuse (Outa) in September cited Sanral confirming that Gauteng’s e-toll compliance rate before Covid-19 was at 20%, collecting only R60-million a month.
Executive engineer Louw Kannemeyer explained that the uncertain e-toll future was resulting in low payment compliance for Sanral, with the agency expecting a credit loss of R10-billion in the current financial year, which negatively impacts on the agency’s ability to finance its toll portfolio in the short term.
About R150-billion worth of viable toll projects had been identified for rollout by the agency, but this came to a grinding halt owing to increasing uncertainty about the future of e-tolling.
Kannemayer reported that Sanral had a R2.3-billion shortfall on its toll portfolio for the GFIP.
Meanwhile, the toll portfolio’s short-term funding shortfall is being addressed through transfers from non-toll projects to service debt, which has reduced the agency’s budget for new projects to R5.7-billion in 2018/19 and to R2.5-billion in 2019/20 and 2020/21.
Sanral’s non-toll allocation had been reduced by R1.1-billion.
Outa says the Gauteng e-toll scheme would have generated almost 25% of Sanral’s revenue from 1% of its road network, had the province’s road users paid their e-tolls.
It stated, however, that this would have been a grossly unfair “user-overpays” scheme through which Gauteng residents would have been milked to fund other projects that its users were not using.
During its briefing with the Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure on October 7, Sanral confirmed that it had scenario-led operational plans during the lockdown and up to March next year, when its 2020/21 financial year ends.
The agency’s construction sites were at 100% capacity from August, while the agency expects 100% staff capacity from offices from February next year, compared with the current rate of 50% of staff working from home.
Sanral acting business operations executive Adolph Thomas said Covid-19 had disrupted the agency’s operations in that its financial year-end and audit processes were disrupted, as were its supply chain, with longer lead times.
The biggest impact of the pandemic was evident in Sanral’s slow budget expenditure, owing to the suspension of construction activities and project delays, and its revenue loss as a result of reduced traffic on toll roads predominantly during the second quarter of the year.
CFO Inge Mulder said Sanral has 1 209 projects in its “approved” pipeline, with 982 of them being nontoll projects and 227 toll projects, the latter for which the capital expenditure funding remains uncertain.
For the 2019/20 financial year, Sanral had total assets of R462-billion, compared with total assets of R412-billion in the 2018/19 financial year, with liabilities worth R130-billion in the year under review.
The agency reported a profit of R1.2-billion for the year under review, compared with a profit of R2.4-billion in the prior year, while having cash on hand of R16-billion, owing to underspending on projects.
Kannemeyer briefed the committee on the progress of its Horizon 2030 Strategy, which was based on four pillars – roads, road safety, stakeholder engagement and mobility.
In terms of roads, Sanral’s 2020 Roads Plan had been submitted to the board for approval and would be released for wider consultation during the current financial year, while the agency had also updated its Public Transport Infrastructure Guidelines.
The agency confirmed that its Msikaba Bridge project, also on the N2 near the Wild Coast in the Eastern Cape, was under way, while it had issued tenders for consulting engineering design services on the N1/N2 and R300 roads in Cape Town.
Sanral was focusing on establishing a central toll division, with approval processes pending on the matter. The agency was also investigating the possibility of establishing a toll subsidiary over the medium term.
The agency in the financial year under review appointed 16 research panels to look into various identified research priorities, which catered to all the pillars in its Horizon 2030 Strategy.
Sanral continued to use a 14-point plan as a basis for project-level stakeholder relations management, as part of its stakeholder pillar and appointed a strategic partner for its stakeholder engagement and social facilitation.
The agency also wanted to appoint a social media partner, with tendering for this under way.
During the year under review, Sanral successfully completed a pilot project around integrated ticketing and public transport user information in Gauteng, the implementation of which would progress with key stakeholders with which the agency had signed memoranda of understanding.
Currently, Sanral’s network comprises 22 253 km of paved roads, carrying 35% of the yearly vehicle kilometres driven in South Africa. More than 70% of all long-distance road freight in South Africa is transported on the Sanral road network.
The agency says about 1 420 km, or 6%, of its road network is in poor to very poor surface condition, which is within the international norm of 10% poor road conditions in what is considered a well-maintained network