“You Got It Wrong Outa”

The South African National Roads Agency SOC Limited (SANRAL) says there is no truth to a series of claims about transparency in relation to its finances, made by the Organisation Undoing Tax Abuse (OUTA). The national roads agency has dismissed OUTA’s claims as being baseless, demonstrating a complete disregard for information which is readily available in the public domain, as well as established oversight mechanisms.

SANRAL spokesman Vusi Mona said: “Once again, OUTA is making unfounded allegations which defy logic and point to a disturbing trend of throwing mud in the hope that something will stick. We want to state categorically that SANRAL maintains an impeccable record of financial accountability and transparency in public sector management. Since its establishment in 1998, SANRAL’s financial statements have undergone rigorous annual audits, initially through independent auditors and in recent years by the Auditor-General of South Africa (AGSA). SANRAL has consistently received unqualified audit opinions, confirming that its financial statements fairly represent our accounts and financial position.”

Mona said SANRAL’s commitment to transparency was demonstrated by its comprehensive reporting to multiple oversight bodies, including:

• Regular appearances before Parliament;
• Detailed submissions to the Standing Committee on Public Accounts (SCOPA); and
• Consistent reporting to the relevant committees of the National Assembly and the National Council of Provinces.

“While the Gauteng Freeway Improvement Project (GFIP) funding model is complex, it is useful to explain the model so that the public understands how the debt increased over time,” said Mona. “We trust that the following explanation will assist both members of the public and OUTA to understand the detail.”

What was the original GFIP debt?

SANRAL started borrowing in 2008 to fund the construction of GFIP and the roads were completed in time for the 2010 World Cup. The cost of GFIP was estimated at R21 billion for the construction of the roads and the related toll systems. However, from the operational inception of GFIP the revenue collected was inadequate to cover operational costs and interest on debt, resulting in growing debt as SANRAL had to borrow to service interest on debt or refinance maturing debt. In addition, the National Treasury made allocations from time to time to cover operational shortfalls and interest payments as explained below. It is also important to note that funding for the GFIP was raised as part of the toll portfolio as a whole.

What was the interest of that debt?

On 11 April 2024, when the memorandum of agreement (MOA ) to end e-tolls was signed between National Government (National Treasury and the Department of Transport) and the Gauteng Provincial Government, the total GFIP-related nominal debt amount was R29,031 billion, and the estimated interest on this debt until the last bond is redeemed in 2036 is R20,011 billion (assuming that there will be no acceleration or early settlement of debt and that debt will be repaid as it matures) – this figure fluctuates due to Consumer Price Index (CPI) for CPI-linked bonds.

Before the announcement by the Minister of Finance to end e-tolls in October 2022, all treasury grants given to the toll portfolio were used to pay operational shortfalls and interest on debt. No grants were used to repay or settle any maturing debt. The only time that National Treasury (NT) mentioned providing funds specific for maturing debt settlement was in October 2022 where R23,756 billion was provided. Of that, R20,557 billion was used for the settlement of bonds and interest payments.

At the time the three parties signed the MOA, the estimated interest was R21,011 billion while the nominal debt value stood at R29, 031 billion.

The R5,1billion allocated by NT in October 2024 is aimed at 2024/25 settlement of maturing bonds and backlog road maintenance in line with the MOA between NT, Gauteng Provincial Government (GPG) and the National Department of Transport (NDoT). SANRAL will use the funds to settle a maturing bond in December 2024 and interest payments until 31 March 2025. The funds relating to backlog road maintenance (R546 million) will be used to maintain GFIP roads identified in the MOA. The R5,1 billion is inclusive of the amount paid by GPG to the National Revenue Fund in terms of the MOA.

“Any funding for infrastructure projects, whether for GFIP or any other major road infrastructure project across the country, is governed and managed by a rigorous oversight framework. Whether we are talking about the massive construction sites to upgrade the notoriously dangerous Moloto Road, or the N2-N3 corridors in KwaZulu-Natal, or the proposed upgrade of the Huguenot Tunnel in the Western Cape, or the N2 Wild Coast Road in the Eastern Cape, every rand is carefully managed and accounted for,” said Mona.

“SANRAL’s audited reports are publicly accessible at www.sanral.co.za and it is important for the public to know that these documents provide comprehensive insights into our financial management and expenditure since inception”.

SANRAL remains committed to maintaining the highest standards of financial stewardship and public accountability in service of the people of South Africa.

In response to OUTA’s questions, Mona also explained the importance of SANRAL’s Marketing and Communications Unit.

“The budget allocated to marketing and communications is a strategic investment to improve engagement with South Africans, build trust and foster public participation. Effective outreach minimises misunderstandings and ensures smoother project implementation,” Mona said.

As the road network expands under SANRAL, stakeholder engagements, communication and consultation with communities, public awareness campaigns and other related communications operations have exponentially impacted on the marketing and communications budget.

Stakeholder engagements via every platform, including today’s all important digital and social media platforms, are a significant portion of work which goes toward fostering collaboration and engagement with stakeholders, from communities affected by projects to government entities, contractors and international partners. The absence or minimum disruption on SANRAL projects testifies to SANRAL’s stakeholder engagement and communication endeavours.

SANRAL’s communication goes beyond just informing road users but ensuring that its projects are not disrupted – even by the so-called construction mafia. And in this regard SANRAL is seeing the return on the investment it is making in its communication and stakeholder engagement efforts, said Mona.