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Aug 15, 2012

Constitutional Court asked to set aside Gauteng e-toll interdict

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The National Treasury, along with the South African National Roads Agency Limited (Sanral) on Wednesday moved to have the temporary interdict, restraining the tolling of some of Gauteng's freeways, set aside in the Constitutional Court until the full review of the system in November.

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
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