E-TOLL DEBT OVER R2BILLION @KASIBC_AFRICA

E-TOLL DEBT OVER R2BILLION @KASIBC_AFRICA

ONLINE EDITOR @KASIBC_AFRICA

MEC MAILE ANNOUNCES GAUTENG PROVINCIAL GOVERNMENT’S SECOND PAYMENT TOWARDS E-TOLL DEBT AND OVER R2 BILLION TOWARDS SANRAL’S GAUTENG FREEWAY IMPROVEMENT PROJECTS 

Background 

On the 11th of April 2024, gantries of the Gauteng Freeway Improvement Project, popularly known as e-toll, were officially disconnected from the e-toll system across the province. Following the initial announcement by Finance Minister Enoch Godongwana during his 2022 Mid-Term Budget Policy Statement (MTBPS) that e-tolls would be scrapped, the South African National Roads Agency SOC Limited (SANRAL), the National Department of Transport, the National Treasury and the Gauteng Provincial Government finalised a Memorandum of Agreement, according to which the Gauteng Provincial Government would contribute 30 percent to settling SANRAL’s debt and interest obligations, while the national government would cover 70 percent. 

This 30 percent share of the debt amounted to R12.9 billion, with interest of R3.3 billion, bringing the total payable amount to R15.9 billion. This contribution would be made in five equal annual instalments at government 5-year interest rate. In addition to the settlement of this debt, the Gauteng Provincial Government also made a commitment to contribute towards the rehabilitation of nine projects that SANRAL is undertaking. 

These projects, part of the Gauteng Freeway Improvement Project I (GFIP I) are aimed at the amelioration of the Gauteng freeway network, and will cost the provincial government a total of R4.1 billion. Congruent with this, in the Budget Speech in March of 2024, the Gauteng Provincial Government announced that as part of the province’s arrangement to service the debt, a provision for honouring this commitment would be pencilled into the 2024 Fiscal Framework. Since making this announcement in the said Budget Speech, we have maintained the necessary fiscal discipline to ensure adherence to this commitment. Payments of the first and second instalments of e-toll debt On the 30th of September 2024, the Gauteng Provincial Government made the first instalment amounting to R3.8 billion. 

This instalment consisted of R3.2 billion historical debt and the maintenance portion of R546 million. Today, we wish to announce that tomorrow, the 30th of June 2025, the Gauteng Provincial Government will honour the province’s obligation by paying the second instalment towards the e-tolls debt as disclosed in the 2025 Medium Term Expenditure Framework (MTEF). The amount due on the 30th of June 2025, based on the Memorandum of Agreement, is R3.377 billion in terms historical debt. This is the amount that we will be paying to the National Treasury tomorrow as a second instalment as part of our 30 percent contribution. Payment towards the improvement of the Gauteng Freeway Improvement Project I With regards to the financing of SANRAL’s Gauteng freeway projects, the current outstanding amount is R3.559 billion. 

In addition to the e-toll payment, tomorrow, the Gauteng Provincial Government will also transfer an amount of R2.099 billion as part of the contribution towards the backlog of rehabilitation to restore the GFIP 1 freeways to an acceptable condition before SANRAL resumes its obligations for all future maintenance funded by the national fiscus. We must emphasise that in terms of the agreement, SANRAL cannot use these funds for any other purpose than the nine projects that are financed by the province. 

SANRAL is also required to report to the Gauteng Provincial Government on progress being made with the implementation of these projects. This will include providing credible information on developmental objectives such as how these projects contribute to economic growth in the province, the number of jobs being created through these projects and related social and economic benefits. 

In line with our commitment to transparency, below is the list of the projects that SANRAL is implementing with the contribution of R4.1 Billion from the Gauteng Provincial Government: 

1. 14th Avenue to Buccleuch 

2. Golden Highway to 14 th Avenue 

3. Buccleuch to Brakfontein 

4. Brakfontein to Scientia 

5. Heidelberg Rd to Geldenhuys 

6. Geldenhuys to Buccleuch 

7. Uncle Charlies to Elands 

8. Gillooly’s to Tom Jones 

9. Olifantsfontein to Hans Strydom The scope of these projects relates to maintenance, upgrades and capacity expansions on 185 kilometres on the N1, N3, N12, N14 and R21. 

These freeways are vital for facilitating efficient transportation and supporting economic activity by providing high-speed, controlledaccess routes for vehicles in the broader Gauteng City Region. Commitment to Gauteng Revenue Enhancement Strategy The implications of the e-toll debt and contributions to SANRAL’s Gauteng Freeway Improvement Project I requires the Gauteng Provincial Government to manage finances in a prudent manner whilst carefully balancing the service delivery needs of the citizens. 

The Gauteng Provincial Treasury has a five-year budget approach that will facilitate provincial delivery based on the Medium-Term Development Plan for the 7th administration. The five year budget approach will focus on introducing and implementing immediate, short-term, and medium-term budget reforms over the 2025 MTEF. This includes maintaining fiscal discipline and credibility, and impactful service delivery. Over the next few years, the Gauteng Provincial Government will have to allocate a substantial amount of funds each year to service the repayment obligations for e-tolls. 

This will be happening in a constrained fiscal environment, details of which we expressed in the initial Budget Speech and reiterated when we re-tabled the Budget for the 2025/2026 financial year. The reality of the situation is that the funding envelope is stretched by existing allocations, particularly in terms of keeping critical social programmes in health and education funded. 

Nevertheless, we reaffirm our commitment to the residents of Gauteng that the servicing of the e-toll debt will not compromise our priorities, particularly in relation to social services such as health and education. As the Gauteng Provincial Government, we are implementing various measures and reforms to ensure the sustainability of our fiscal environment. 

These include active debt management strategies, spending restraint, improving compliance with rules and regulations in supply chain management, as well as revenue enhancement. Our Revenue Enhancement Strategy is already been actualised. Provincial departments are implementing various strategies to enhance revenue collection, anchored on this strategy that is underpinned by the following five principles: 

1. Accelerating the completion of interventions that has already started. 

2. Optimising the existing revenue sources. 

3. Enhancing revenue collection processes and systems to increase efficiency, cost effectiveness, and eliminate leakages. 

4. Identifying potential new revenue sources that have not been explored. 

5. The use of alternative funding and implementation models to achieve more value. 

We are confident that, alongside other interventions such as the implementation of advanced technologies and digitisation of our Supply Chain Management, we will be able to realise the objectives that we have set before ourselves with the provincial Revenue Enhancement Strategy. Conclusion To re-state, the Gauteng Provincial Government will, tomorrow, make a transfer totalling R5.476 billion towards the e-toll debt and the contribution towards the SANRAL Gauteng Freeway Improvement Project I. 

Much more work needs to be done to unpack the financing model of GFIP 2 and 3 from a policy perspective and financial impact as well as practical impenetrability. In terms of GFIP 2 and 3, the majority of the studies undertaken to date have been commissioned by SANRAL. 

Thus, there is substantial institutional knowledge in terms of the new routes in Phase 2 and upgrades on existing routes in terms of Phase 3. 

The Gauteng Provincial Government will, in time, be able to communicate developments pertaining to these phases of the Gauteng Freeway Improvement Project whose value to the economy of our province and its residents is incalculable. 

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