Gauteng government to borrow money to pay R12bn e-toll debt

Gauteng’s provincial government has approached a government institution to borrow the money it needs to cover its share of the new financing mechanism for the Gauteng freeway upgrade debt once the e-toll system is scrapped. 

By March 31 the process to switch off and delink would begin and e-tolls would be history in Gauteng, premier Panyaza Lesufi said during his state of the province address on Monday evening.

Providing further details on Tuesday, he said the provincial government had been in “tough” negotiations with the Treasury and the national department of transport on how much of the debt would fall to the province and from where the money could be sourced.

He said the provincial government chose to pay the e-toll debt over a long-term arrangement, instead of an immediate drawdown on its budget as this would impact on key services. 

“It was bargaining, it was intense, it was not easy,” Lesufi said. 

“In the debate, the issue was how do we pay back the debt. Initially the minister put forward 60%. We refused ... until we settled at 30% [of the debt to be paid by us]. The remainder would be paid by national government.

“We differed on how the 30%, which is R12bn, should be paid. Treasury said it would take 30% from our budget. We disagreed. If you take R12bn from our budget, health will suffer and other services. That level of debate took long and we could not start the process of removing the e-tolls. 

“In January this year, we met with the transport minister and Treasury to say this is how we want to pay the R12bn — don’t take it from our budget, we will go to financial institutions which will lend us funds. We then reached an agreement, on which basis we made the announcement in the state of the province address.

“We had an option — do we pay the R12bn immediately and end this drama? It means that there are some services that must go down. You will agree that you cannot do that now. But if you go to a financial institution and say instead of paying you, for example, R1bn a year, we will pay R750m a year for the next 25 years and they accepted that, that is the one we take. 

“There is a government institution that we have asked to lend us the money [to pay the debt],” Lesufi said. He did not reveal the name of the entity.

In the medium-term expenditure framework delivered in November, finance minister Enoch Godongwana announced that the National Treasury would finance 70% of the SA National Roads Agency’s outstanding debt and the remainder would come from the Gauteng government. 

The total debt that needs to be settled for the improvement of Gauteng highways is R47bn. 

Last year, Lesufi had said motorists would get a final decision on e-tolls by the end of 2023. 

The exact amount of money that the provincial government will pay annually is expected to be revealed in the Gauteng budget to be tabled by finance MEC Jacob Mamabolo soon. 

E-tolling was introduced on December 3 2013 as a system to collect money for the funds used for the Gauteng highway improvement project and to fund future projects. However, the system did not succeed when motorists simply refused to pay their e-tolls bills. The ANC in Gauteng rejected e-tolls, so did Cosatu and the SACP. 

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