Sanral extends existing e-tolls contract for another three months

The sun sets over an e-toll gantry on the N1 highway near Randburg, 16 September 2014. Picture: Michel Bega

Much confusion continues to prevail about the future of the controversial tolling system.

Both the SA National Roads Agency (Sanral) and its current e-tolls contractor, the Electronic Tolling Company (ETC), have reached an agreement on a three-month extension, Sanral said in a statement on Thursday afternoon.

This followed a resolution by the Sanral board last week to extend the operations and maintenance contract for the Gauteng Freeway Improvement Project (otherwise known e-tolls).

The contract expired on 2 December, but the board, at its special board meeting on 29 November, decided that all parties concerned needed more time to “consider the tender and make the right decision”, said Sanral spokesperson Vusi Mona.

“The board directed Sanral’s management to inform ETC about its decision and the latter agreed to the extension after consulting its shareholders,” added Mona.

“The extension is being done on the basis of a previously approved 12-month extension as was approved by National Treasury and the Sanral board in 2017.”

The tender for the e-tolls has already been shrouded in much controversy. It was reported last month that one of the three companies that submitted bids in response to the Sanral tender for the continued management of e-tolls was allegedly only registered as a business days after the tender was first advertised.

Organisation Undoing Tax Abuse (Outa) CEO Wayne Duvenage said that Kusa Kokutsha, which submitted a bid of R7.548 billion, appeared to have been set up specifically to bid for the Sanral contract.

Duvenage said Kusa Kokutsha was only registered as a business on August 26.

Sanral originally published the tender in the Government Tender Bulletin on August 8. It was republished on August 16, with a closing date of September 5. Prospective bidders had to attend a compulsory tenderer’s clarification meeting on August 19.

The tender for the continued management of e-tolls was issued by Sanral because its existing contract with ETC was last year extended by a year until December 2.

Sanral confirmed to Moneyweb that it was evaluating tenders it received for the continued management of e-tolls.

Sanral spokesperson Vusi Mona said that in accordance with the tender programme, a new contractor needed to be appointed to commence work by December 3.

Mona said the contract would be for a period of 72 months, with an option to extend for another 24 months.

“Provision has been made for a handover period in the tender programme, to ensure that there is no interruption of e-toll services,” he said.

Risk of wasteful expenditure

However, Outa warned that Sanral risked incurring wasteful expenditure by entering into a new contract, because the Gauteng e-toll decision is still subject to a legal challenge.

Duvenage said that for Sanral to enter into any contract while the country awaited Cabinet’s decision on the future of e-tolls made 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.

“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.

A decision on e-tolls would be made soon, probably before Christmas, Transport Minister Fikile Mbalula told the media on Monday in Johannesburg, where he was part of the launch of the festive season safety campaign.

Mbalula said the e-toll matter was before Cabinet, and a decision would not come before December 16.

“Once cabinet has finalised on its decision, we will brief you on the outcome.”

Since the medium-term budget policy statement, Mbalula has been fielding a plethora of questions regarding the e-toll system, especially after Finance Minister Tito Mboweni told parliament that not paying e-tolls was not an option.

In an effort to clarify any confusion, Mbalula said cabinet had not taken a decision on e-tolls and was still deliberating on the matter.

E-tolls were set up to fund the upgrading of Gauteng’s freeways, but has since experienced a financial decline as most drivers are not paying their bills, which has resulted in the system accumulating debt.

Among the options to be considered by Cabinet are the cancellation of the system, which will mean government will assume full responsibility for its debt. This would in turn mean the improvement of freeways would essentially come to a standstill.

Another option would be to introduce a public transport fund which would prioritise public transport on freeways, or, should all fail, a last resort would be to keep the system as is.

Evidence of failure spanning six years

“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,” Duvenage has said.

Ayanda Allie Paine, a spokesperson for Mbalula, told Moneyweb last month that everything would continue as normal until Cabinet’s final announcement on e-tolls, adding that this also meant Sanral would be remiss to not issue any tender or advertise anything in line with its processes.

(Compiled by Charles Cilliers. Background reporting, Moneyweb)

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