Supreme Court forces Disclosure of eToll Scam by SANRAL in Cape Town

The Supreme Court of Appeal (SCA) in Bloemfontein on Monday ruled in favour of the City of Cape Town by setting aside an order made by the Western Cape High Court on August 28 2014 concerning the secrecy application of the SA National Roads Agency (SANRAL).

Mayoral committee member for transport Brett Herron said in a statement the City can now, for the first time since it launched its review application on March 28 2012, fully disclose how SANRAL’s awarding of the tender for the N1 and N2 Toll Highway Project to the Protea Parkways Consortium (PPC) will affect residents of the Western Cape and visitors to this region. Herron said the SCA ruling is a victory for transparency and accountability, as well as the constitutionally enshrined right of access to information held by the state and its entities in all spheres of government.

h3. SANRAL Secret

As such, “the City can disclose the following information that forms part of its supplementary founding affidavit and which SANRAL wanted to keep from the public and the media”:

* Should the tolling of the N1 and N2 freeways go ahead, residents from the Western Cape and visitors to this region will pay toll tariffs nearly three times those of the e-toll tariffs being charged by the new Gauteng Freeway Improvement Project (GFIP);
* PPC’s anticipated toll revenue over the concession period (2010 values, excluding VAT) is in the region of ZAR 48bn;
* The decision to declare the Winelands toll roads was taken by SANRAL CEO Nazir Alli and not by the SANRAL board, as required by the SANRAL Act;
* SANRAL failed to disclose the grave consequences of the reimbursement clause in its concession contract with PPC to the SANRAL board and the transport minister. The contract addresses the risk that the minister may determine lower toll tariffs than the concessionaire is entitled to charge under the concession contract, or may refuse or delay approving a change in the toll tariffs.

“Therefore, should the national minister of transport determine lower toll tariffs than PPC is entitled to charge under the concession contract, Sanral must reimburse the concessionaire by an amount that will place the concessionaire (PPC) in the same economic position that the concessionaire would have been, had the failure, refusal or delay on the part of the transport minister not occurred,” said Herron. In terms of this clause SANRAL would have to divert public funds meant for the construction and maintenance of national roads to fund PPC’s profit expectation of ZAR 48bn.

The reimbursement clause also contradicts SANRAL’s presentation to the transport minister that the proposed Winelands Tolling Project would require “no financial contribution from the state”, said Herron.

“Furthermore, should Sanral undertake a public participation process about the proposed tariffs, this would be a sham as they have already contractually committed to the tariffs proposed by PPC in its bid. The transport minister will also be in an untenable situation because if she fails to sanction PPC’s base toll tariff, Sanral will incur the reimbursement obligation,” he said.

“Importantly, the Gauteng Freeway Improvement Project charges a toll tariff of 30c/km for light vehicles (VAT included). PPC’s proposed base toll tariff for light vehicles is 84.59c/km (VAT included, 2013 values). PPC’s rate, therefore, would require a 65% reduction in order to be equivalent to the GFIP rates.” The GFIP toll tariffs for light vehicles are capped at R450 per month. PPC’s discount scheme does not make provision for any cap. “PPC, unlike the GFIP, does not make provision for specific time-of-day discounts,” said Herron. “The GFIP effectively allows for a 100% reduction for public transport while PPC only allows for a 50% reduction for public transport.”

h3. Further Omissions

Furthermore, in terms of the documents Sanral was ordered to provide to the City, it is clear according to Herron that the board did not consider the following important issues:

* The impact that the tolling of the N1 and N2 would have on road users;
* The need for tolling;
* The scope of the project;
* Alternative funding mechanisms; and
* Implementation of the project, as the Sanral board did not consider the project again after 2004.

As far as the City is concerned the project will not benefit road users, because the toll revenue will exceed road user benefits. It is furthermore clear in Herron’s view that no consideration was given as to whether low-income groups would be able to afford to use the N1 and N2 freeways, should they become toll roads.

“The negative macro-economic impact on the region has not been considered – the effect it would have on the transport costs of agricultural products, to name but one,” said Herron. “We will file our replying papers to Sanral’s answering affidavit by April 25 2015. In these papers the City will fully disclose the calculations that are being investigated by nine experts, among these how much of every rand collected in toll fees will be spent on the toll project infrastructure and operations as opposed to road improvements, maintenance and operational work.”

The City’s review application will be heard in the Western Cape High Court on August 11 2015.

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