Could e-tolls be funding corruption?

Transport Minister kicks the e-tolls decision down the road again

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29/09/2021 09:27:28

Could e-tolls be funding corruption?

Transport Minister Fikile Mbalula responded to questions in Parliament on Wednesday about the future of the defunct e-toll scheme, saying that a date for the decision was still undetermined and that a funding solution must be found.

“We believe the continued operation of the Gauteng e-tolls, which only around 15% of motorists are contributing toward, has little to do with the search for a new funding mechanism, but more to do with where some of the current R50 million or so each month is actually going,” says Wayne Duvenage, OUTA’s CEO.

As far as OUTA is concerned, there are very few options to consider. The only alternative to e-tolls is for the Gauteng Freeway Improvement Plan (GFIP) bonds to be financed via National Treasury. To date (between 2016 and 2020), Treasury has already allocated SANRAL R10.8 billion for GFIP (ie around 51% of the freeway bonds for the overpriced upgrade), which is on top of another annual grant of R70bn (an annual average of R14 bn per annum) for the same period for non-tolled roads. This has been the solution being practiced for the past number of years and should continue to remain, as the entire country benefits from Gauteng’s freeway upgrade.

Furthermore, it is important to note that SANRAL itself has written off R23.6bn of the unpaid e-toll bills, of which R17.3bn was revenue not recognised and R6.3bn (of the R10.4bn that was reflected in the books) was impaired as uncollectable. Thus the failure to collect e-tolls in lieu of payment for the GFIP bonds is a fait accompli.

The questions one must ask is why then does SANRAL continue to operate the defunct scheme, when only a handful (mainly a few businesses who profit out of e-toll charges to the clients) continue to pay? This has never been an efficient or enforceable user-pays scheme, which is the mantra that people in government cling to when responding to the failed scheme.

We believe that corruption, or the allocation of funds to areas where these should not be going, probably has something to do with the state’s reluctance to pull the plug on the scheme, based on our following observations:

  • The five-year e-toll collection contract ended three years ago and was followed by extensions until December 2021, and no further extensions are possible. Thus there is no contractual obligation or penalties to keep the contract alive.

  • Approximately R50m to R55m is collected by the Electronic Toll Collection company (ETC) each month, and the questions one must ask are: how much of this is actually being allocated to cover the costs of the collection process and who are the companies that are supplying “services” to ETC?

  • We have unanswered questions from SANRAL and ETC regarding the allocation of R10m to a so-called “BEE Facilitation service provider - PRO-ASH”. We believe this was a corrupt transaction, the cost of which was passed on to the motorists.

  • Allegations over Austrian-based Kapsch TrafficCom (the owners of the local ETC operation), which was implicated in a dubious and possibly corrupt transaction in Zambia, to the value of US$5.5m, which was channelled through Kapsch’s South African accounts.  Individuals were prosecuted in Zambia regarding this issue.

  • The GFIP project at R17.9bn cost well over twice the price it should have been, providing a clear indication that SANRAL either deliberately sanctioned the overpayments or allowed gross maladministration and undue profiteering from the project by local contractor companies.

With too many questions and a lack of transparency over the e-toll debacle, along with the state’s reluctance to introduce a commission of inquiry or a thorough independent investigation into the scheme, OUTA believes there is no rational explanation for the continued collection of e-tolls and, as such, there must be another sinister or possible corrupt motivating force behind its continued operation.

More information

A soundclip with comment from OUTA CEO Wayne Duvenage is here.

Minister Mbalula’s reply to Parliament is here.

For a history of Cabinet’s failed promise to make a decision on the future of e-tolls, see here (the section “The future of e-tolls: Government's decision promised in July 2019 still awaited”).

Picture: Flickr/Paul Saad