Media Releases

Inside OUTA March/April 2016

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In this issue
Message from the Chairman
OUTA Sets sights on Eskom
OUTA Reaffirms its defense of supporters who default on e-Tolls
OUTA questions ETC’s game plan

The Chairman’s Letter- A Word from Wayne

The first quarter of 2016 has come and gone and my, what a tumultuous start to the year it has been. I for one can’t wait for what lies ahead, having heard the incredibly motivating judgment in the Constitutional Court on 31 March, which surely must pave the way for the recall of Jacob Zuma, however following last weeks response by the President and his cohorts, the ANC’s NEC appears to have slammed shut the most wide-open door they have had in this regard to date. It will, I believe, be an opportunity they will rue in the future.

But whatever the politics, OUTA will continue to challenge and champion for the rights of the public on matters that require our work. The recent court judgement to set aside our urgent application to interdict the Eskom tariff hike on 1 April has not deterred us. We sought this relief to allow us the legally required time to assess the NERSA reasons behind their decision. Be that as it may, we will move forward with our review of their decision. More on this matter in this publication.

The start of 2016 has seen SANRAL and their collection agents turn up the heat on the e-toll debt collection process. We expected nothing less. After all, there comes a time, after threatening to take action for two years, something must either happen or the scheme must be halted. SANRAL has indicated they wish to continue and will soon start prosecuting large operators who owe more than R400 000 in e-tolls by issuing summons (i.e. the minimum amount processed in the High Court).

The question asked by many though, is how will or can the public be defended against the e-toll scheme and its supposed laws. OUTA’s Rule of Law campaign has set the grounds for our defence, which will not only entail these high level arguments, but also specific matters pertinent to each and every case that is defended click here to view.

SANRAL’s propaganda machine will continue to spew out misleading information and try to convince the two-million or more defiant citizens that the scheme is cheap and that many are coming on board. The reality is that compliance today remains at below 20%. Furthermore, less than R100 million (i.e. under 2%) of the outstanding R5,9 billion debt has been collected since SANRAL launched their new 60% discount dispensation in November 2015. We expect their marketing drive to kick up a serious gear in April during their last month of the 60% discount dispensation. However, we believe this will not drive compliance much higher than 30% at best, which is still well below the 45% they achieved nearly two years ago. Bear in mind that they have always hoped to achieve a 93% compliance.

To all our supporters and donors and the two million plus motorists who have stood strong in defying this unjust scheme – we salute you.

Wayne Duvenage,
OUTA Chairman.

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OUTA sets sights on Eskom

ESKOM is a State Owned Entity (SOE) of the South African Government and as with so many of our state owned or parastatal organisations, we notice questionable practices, lack of transparency and poor accountability. 

We have decided to take a closer look at what is going on at Eskom and seek answers to the inefficiencies that keep driving our energy prices up.

From its once respected position at the turn of the century as a leading (top five) low cost energy generator on a global scale, Eskom has sunk to the bottom quartile of energy production utilities in the world, with electricity costs having escalated by over 500% over the last 10 years, combined with service delivery problems.

The economic impact of an inefficient energy producer is massive on our nation. The compound effect of every increase in electricity prices hits hard in every sector of society, whilst on service delivery front the country loses billions of rands when Eskom fails to provide electricity.

Currently, we have a major issue with National Energy Regulator of South Africa (Nersa)’s role and sought the detailed reasons for their granting of Eskom’s electricity tariff increase by 9.4%. We believe that Nersa is falling short of its mandate by granting Eskom mandatory increases over the multi year price determination period.

Eskom cannot be granted automatic increases and Nersa, as the regulator, should be able to apply their discretion.
Tariff hikes are only justifiable when Eskom operates as an efficient energy producer. The current dispensation however, offers Eskom an incentive to be inefficient, by having the ability to clawback their over-expenditure that it failed to foresee and control.

Nersa’s role as the regulator needs to be extensively questioned in this process – which is the reason we are challenging them at the moment. We are not impressed by the way in which the recent public participation process were conducted.  The information presented to the public, highlighted one of the largest issues in the Eskom saga – an endemic lack of transparency. Eskom refuses to disclose “confidential information” that relates to some of their biggest expenses such as coal, diesel and transport. For a state owned entity these should not be secrets and OUTA will be working hard to expose the details for all of these contracts in the coming years.

So why did we seek an urgent interdict to halt the tariff hike for a month?
The Organisation Undoing Tax Abuse (OUTA), approached the North Gauteng High Court for an interdict to prohibit Eskom from implementing the electricity tariff increase of 9.4% on the 1st of April 2016, purely on the grounds that no reasons had been provided for their decision, as was required for the National Energy Regulator (NERSA) to do.

On the 29th of March, after OUTA had already launched their application, NERSA then provided their written reasons for their decision. OUTA argued that insufficient time had been made available for the organization to meaningfully consider the reasons and facts provided by NERSA, before the tariffs come into effect. We sincerely believed that the harm to the public will be irreversible as it is not practical for Eskom and municipalities to repay or credit millions of consumers if their reasons are to be found wanting.

Naturally, we are disappointed that the ruling did not go our way, but we remain committed to ensuring that improved transparency and meaningful engagement with the public on matters of importance takes place. While urgent applications are inherently risky, that doesn’t mean that we should not seek to bring these to the courts when we believe it is necessary to do so. Our alternative was to do nothing and when weighing up the rule of law on this matter, we had to act.

Setting aside the urgency of our application does not in any way deter us from proceeding with a review of the reasons and to seek the necessary information for the granting of the tariff hike. The incessant electricity tariff hikes over the past few years has become outrageously unbearable and the public have a right to scrutinize and demand greater efficiency and prudent management from this inefficient state owned entity.

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OUTA will defend its supporters of E-toll default

While SANRAL continues to threaten road users who have  “persistently refused to settle their e-toll debt”  we are waiting for the first case to be brought to our attention.

The OUTA Board reiterates it’s message and stance that it will defend its contributing supporters in court, if they are summoned to appear on the basis of outstanding e-Toll debt – See OUTA’’ Rule of Law Campaign.

OUTA knows of many businesses and individuals who have cancelled their agreements with SANRAL and joined the other 80 to 90% of the road-users who are not paying. We estimate that between 60 and 70% of all Gauteng Road-users have never signed up or ever paid towards the scheme and another 15 to 20% who were previously compliant, have now de-tagged and are no longer paying.

SANRAL want the public to believe that everyone will be receiving an e-toll summons to appear in court, which is not the case and is virtually impossible for them or the courts to do.

We believe this latest action by SANRAL is being driven by two factors, the first being a need to demonstrate to the ratings agencies that they can and will take action, following two years of threatening to do so. The second it that they are unable to admit the error of their ways. We believe that SANRAL and the Department of Transport, have now lost sight of the wedge being driven between the state and its citizens by this grossly irrational decision. Such a serious step and action begs the question of what really lies behind the decision to forge ahead with such an unpopular and unsound scheme which has failed to garner the necessary support of society.”

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OUTA questions ETC’s game plan

OUTA recently questioned the involvement of Electronic Tolling Company (ETC) and ITC Business Administrators in a controversial deal that could see private firms pocketing millions of rands from e-toll debt collections.

ETC was contracted by South African National Road Agency (Sanral) in 2013 to collect money remitted by road users in Gauteng. The company has over the past few months become the defacto spokesperson for Sanral, sending SMS and threatening messages to motorists who defaulted on their e-toll payments.
An article published by Sunday Times (titled: Cushy debt deal for firm linked to e-toll executive), highlighted more conflicts of interest within the e-Toll scheme, whereby Mr Ridgway has private business dealings with ITC-BA and ETC, suggesting questionable relationships around the debt and outsourced collection agents who are now also able to dip into the trough and also make money out of the e-toll pot.

According to the report, Ridgway who has been flaunting his wealth on social media awarded a contract to recover e-toll debts worth R14.75 billion to a company he was previously a director of – ITC Business Administrators. The investigation undertaken by Sunday Times show that Ridgway worked for ITC for 13 years under the chairmanship of Larry Sive when it traded under the name  Transunion Receivables Management. During his stint with the firm, Ridgway also served on the board for six years.

The e-toll debt collection deal is shrouded in mystery,” reads the report. “The contract was awarded after a secretive bidding process run by an audit firm, which was never advertised.”

The article further asserts that Sanral, ETC and ITC-Business Administrators refused to disclose the amount the debt collection will generate from the cash recovered, the fees to be charged and the duration of the contract under the “confidential commercial information” guise.

In an action that further raises more dirt around this shadowy deal, ETC declined to explain to Sunday Times on why it opted for a closed tender, which is not made public. Ridgway said there’s no conflict of interest and sees no wrong in awarding the deal to a company he used to head. Furthermore, Ridgway has a company called Mark Eden Management and started up a separate company, Mark Eden Vehicle Data Services, while working for ETC. Something doesn’t smell right here.

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