A new e-toll contract risks wasteful spend

SANRAL has received bids of up to R11.4 billion to run a new e-toll collection contract it advertised on 8 August 2019.

“Entering into any contract while the country awaits Cabinet’s decision on the future of the e-tolls makes no sense. However, that is not SANRAL’s only problem, because there is still a court case pending on the lawful objection to non-payment. Should the public be found not liable for payment of e-tolls, the already defunct scheme will be dead in the water, and the country may be legally bound to a contract for up to six years,” says Wayne Duvenage, OUTA’s CEO.

“This may very well become a matter of fruitless and wasteful expenditure for which civil society or even the Auditor-General could hold an individual to account. We can’t for one minute understand why Cabinet is taking as long as it is to make an easy decision to scrap this defunct scheme, especially after six years of empirical evidence of failure.”

Government has for months promised a decision on the future of the scheme, yet continues to dither and remain indecisive on the matter.

The existing e-toll collection contract, run by Electronic Toll Collections (ETC) since December 2013, expires on 2 December. It was a five-year contract to December 2018, which was extended for another year, and has been a massive failure throughout the six years of operation. ETC won it with a bid of R6.2 billion for the five years, only for the public to discover that the contract was signed at R9.9 billion.

Today it was reported that SANRAL has confirmed that it is evaluating bids for the continued management of the e-tolls after the ETC contract expires.

Documents on SANRAL’s website indicate the bids submitted on the e-toll collection tender; it does not appear to have been awarded yet.

Tender NRA X.002-135-2019/1 is for the “Operations and maintenance of an open road tolling system in the Gauteng province, South Africa, and a national transaction clearing house and violations processing centre”. This is for six years with an option for SANRAL to extend it for another two years. This tender was advertised on 8 August 2019, with bid documents available from 12 August and a closing date of 23 September.

There were three bidders: 

• Phambili JV, with a bid of R11.399 billion;

• Kusa Kokutsha, with a bid of R7.548 billion; and

• SAeTO, with no bid amount listed.

OUTA found that Kusa Kokutsha was registered as a business only on 26 August 2019, thus appears to have been set up specifically to bid for this contract. This indicates it has no track record as a business. Through its directors, Kusa Kokutsha is linked to outgoing contractor ETC: thus this appears to be ETC in a new guise.

Business registrations for the Phambili joint venture and SAeTO could not immediately be traced, as there is insufficient information on the SANRAL document to identify them.

SANRAL’s annual report for 2019 shows that the revenue from the Gauteng e-toll scheme in the 2019 financial year generated a total collection of R688 million in 2018/19, which is an average of R57 million a month. Yet the cheapest bid submitted works out at an average cost of almost double that collection rate, before any money is allocated to the SANRAL bonds. Such collection contracts make no financial sense.