Aug 15, 2012
Constitutional Court asked to set aside Gauteng e-toll interdictBack
South African National Roads Agency Limited|South Africa|Constitutional Court|E-tolling|Energy|Transport|Bill Prinsloo
© Reuse this
Attorneys representing the parties reiterated that the interdict, brought against Sanral by the Opposition to Urban Tolling Alliance (Outa) and handed down by North Gauteng High Court Judge Bill Prinsloo in April, placed pressure on Sanral's ability to meet the debts incurred during the upgrading of Gauteng's highway and caused irreparable harm to the company.
Outa sought an interdict while challenging Sanral's funding model, in efforts to resolve issues surrounding the way in which the agency would collect the toll fees on the highways making up the Gauteng Freeway Improvement Project (GFIP) and the costs related to the collection, before the system went live.
The National Treasury and Sanral stated that it was unrealistic to halt what was ready to generate revenue pending reviews and that the judge should have run scenarios outlining the harm that could actually be done to the opposing parties should the tolling start, as well as the damage Sanral could face if the tolling was halted.
In its appeal documents to the court, the National Treasury requested the court to determine whether the High Court applied the correct test in granting the interdict, as it believed that it was inconsistent with the separation of powers. Sanral believed that the court should have placed all its energy into pushing the review and declined the interdict.
The agency also reported that the suspension of the tolling of the upgraded highways also resulted in a Moody's downgrading of the agency, reputational harm for South Africa and obliged the government to relocate resources and revise public finances, leading government to reduce expenditure in other areas to offset the revenue loss.
However, Outa believed that, while there were consequences such as lost revenue and the possibility of the National Treasury having to find the funds to maintain Sanral's debt, the interim interdict was not causing the agency irrepairable harm or even more harm than any other standard interdicts ordered in other cases.
Outa stated that the interim order was not the reason for Sanral's harm, but that it was a number of external factors, including a lack of readiness to implement tolling seamlessly and requirements for amendments of related legislation, besides others.
Responding to questions by deputy chief justice Dikgang Moseneke surrounding Sanral's delayed implementation on four previous occasions, its legal team argued that, despite costing about R2.7-billion, the bulk of the suspensions were to ensure sufficient public participation and once owing to technical difficulties.
But Sanral's representative stated that, while the system may hold some imperfections, it was ready to go and could be generating revenue in the interim, particularly as the legal matters were not expected to be concluded before the end of 2012 and into late 2013.
Further, defending its stance on the user-pay model, Sanral noted that the implementation of a fuel levy or other alternative means of tax was inefficient as the funds meant for the maintenance of roads would compete with government's other social and economic expenditure responsibilities.
The agency noted that the implementation if a higher fuel levy, for example, would burden the country's economy, would raise transport costs, result in shifts in consumption and production choices, penalise those with less efficient vehicles and affect those in other regions that would not benefit from the use of the upgraded highways.
It was also stated that 94% of the e-tolling revenue was expected to be sourced from the 'top quintile of Gauteng income earners' and that a month-long dry run in June found that 91% of the users would pay less than R200 a month. Less than 0.2% may reach the R550 limit.
Sanral predicted a compliance rate of 93% and a recovery rate of 40% from noncompliant users, adding that it was addressing the manner on which 'deviants' would be dealt with to avoid the clogging of courts through enforcement. However, Sanral was confident that, generally, ordinary citizens would abide by the law.
The toll collections were estimated to cost about 25% of the overall cost of the project over a period of 25 years.
In its appeal affidavits, Sanral outlined that the GFIP would cost R71.4-billion over a 24-year period. This cost encompassed R20.6-billion for the repayment of initial capital costs, R10.6-billion for road maintenance, R6.2-billion for violation processing centre capital and operating expenditure, R12.2-billion for toll-related capital and operating expenses, R1.7-billion for other operational expenses such as freeway lighting and R20-billion for interest during the 24 years.
However, there was no way to determine whether this was unreasonable when compared with general economic improvements and social benefits, including skills and jobs.
The agency stressed that the opposition should have challenged the e-tolling approach while the project was still in its infancy, as the funding mechanism was an integral part of a project and delays in implementation when the project was complete were costly.
A Constitutional Court decision would follow.
Edited by: Mariaan Webb© Reuse this Comment Guidelines
Other Transport & Logistics News
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...