Audit shows resistance to e-tolls threatens Sanral’s viability
Auditor-general Kimi Makwetu says the e-tolls debacle presents a material uncertainty about Sanral’s ability to continue as a going concern
Debt related to noncompliance with Gauteng’s electronic tolling (e-tolling) system has risen to R3.61bn and continues to weigh on the finances of the South African National Roads Agency (Sanral), which also failed to comply with expenditure guidelines, according to auditor-general Kimi Makwetu.
The roads agency’s 2016-17 annual report tabled in Parliament shows that pressure is mounting on Sanral to make good on collections of the tolls owed by Gauteng's more than 3-million motorists.
To get this done, Sanral has been flooding defaulting motorists with SMS requests, asking them to settle their e-toll debt, the annual report shows.
Makwetu said the e-tolls debacle presented a material uncertainty about Sanral’s ability to continue as a going concern.
The entity’s cash requirements for the next 12 months relied on toll operations and it also raised funding through bond auctions, but there had been waning demand because of the e-toll uncertainties.
"Irregular expenditure of R424.9m was incurred due to noncompliance with prescribed procurement processes. Fruitless and wasteful expenditure to the amount of R15m was incurred, due to additional costs incurred on a project that was cancelled as the approval process for the project had not been followed," said Makwetu.
"As disclosed in the financial statements, material impairment of R3.75bn were recognised as a result of a decrease in estimated future cash flows related to trade and other receivables. A total R3.61bn of this impairment relates to the impairment of e-toll debtors."
CEO Skhumbuzo Macozoma said Sanral had been downgraded by credit ratings agency Moody’s Investors Service from Baa3 to Ba1 as a result of SA’s overall sovereign credit risks as well as continued opposition to open road tolling.
"In September … the minister of transport, with the concurrence of the minister of finance, approved an amended guarantee for the borrowings of Sanral in respect of its domestic medium-term note programme and other financial instruments, clarifying that the limit of the R31.91bn guarantee is measured at nominal amounts and confirming that [the] government is liable for all amounts payable for debt instruments issued under this guarantee," he said.
To tackle uncertainty created by civil-society groups’ opposition to e-tolling, Macozoma said in his director’s report that Sanral had reached agreement to undergo a test case with the Organisation Undoing Tax Abuse (Outa) to assess the enforceability of the tolls.
"This would have entailed bringing a single nonpayer to court to argue the legal merits of opposition to Sanral’s authority to levy and collect the toll.
"However, Outa repeatedly delayed progress on the case and Sanral abandoned the process in order to fast-track civil claims against the individuals, entities and persons owing the debt," said Macozoma.
However, Outa has previously presented a different version of the events that caused the test case to founder.
Sanral’s CEO conceded that high debt levels and a weak liquidity position stemming from opposition to e-tolls had had a negative effect on the agency, which was reflected in its 2016-17 audit outcomes.