Sanral turns to development banks to get projects going
The cash-strapped roads agency has had to shelve several projects due to a lack of funds, partly due to meagre e-toll collections in Gauteng
The SA National Roads Agency (Sanral) is seeking funding from development finance institutions to finally get major toll-route projects off the ground.
The cash-strapped agency has had to shelve several projects due to a lack of available funds. Stalled projects include the addition of new lanes on the N1 between Bela-Bela and Polokwane, and the long-delayed addition of a second route at the Huguenot tunnel in the Western Cape. The tunnel is meant to reduce the distance between Paarl and Worcester.
“We are pursuing development finance institutional funding for these projects,” Sanral spokesperson Vusi Mona said on Wednesday.
Sanral’s lack of funding, partly the result of meagre e-toll collections in Gauteng, is adding to the pressure on the construction sector, where industry stalwarts Group Five, Basil Read and Esor are currently in business rescue.
Raubex said earlier in April that the asphalt unit within its road surfacing and rehabilitation division “experienced a significant decrease in earnings” in the year ended February due to a decline in road maintenance projects by Sanral. It said at the time it was reducing capacity through “right-sizing initiatives”.
Sanral, whose debt is rated at below investment-grade by Moody’s Investors Service, raised R1.2bn in January to replace maturing debt. “This was done for refinancing purposes and not to fund capital projects ... All toll capital projects have been postponed due to the unavailability of funds,” Mona said.
Moody’s said on Tuesday it had completed a review of Sanral’s credit ratings, which it left at Ba2 — a level sometimes referred to as “junk” status. It said Sanral’s rating reflects its status as a public entity with explicit government support through debt guarantees, as well as its “credit challenges”, including high levels of debt and a weak liquidity profile.
In late March, finance minister Tito Mboweni called on Sanral to reverse an earlier decision not to pursue e-toll debt. Mboweni said the decision “is not helpful in the bond market, and it is undermining what we have said in the budget that we support the user-must-pay principle.
“It has implications for the bond market; it has implications for the fiscus; it has implications for their own credit rating, and the credit rating of the country.”
This was after Sanral resolved to suspend the process of pursuing e-toll debt with immediate effect, including historic debt and summonses applied for from 2015.
In October 2018, the roads agency said it wanted to raise about R600m in capital markets to fund projects. That plan never materialised. Mona said at the time that Sanral was aiming to “commence with our funding programme, probably in the first quarter of 2019. The agency has not decided yet whether it will do an auction or private placement. We plan to issue about R600m in this financial year.”