Name and Location
Gauteng Freeway Improvement Project (GFIP), South Africa.

Client
The project is managed by State-owned company South African National Roads Agency Limited (Sanral).

Project Description
The GFIP is a long-term freeway upgrade and expansion project, which entails the upgrade and construction of about 561 km of freeways in Gauteng.

Value
The Department of Transport (DoT), through Sanral, has invested more than R21-billion in the first phase of the project.

Duration
The project is substantially complete.

Latest Developments
Sanral has approached various commercial banks to help close its near-term funding shortfalls related to the toll-road portion of its 19 700 km national roads portfolio.

The State-owned utility has not disclosed the identities of the institutions it has approached, but indicates that the R1.473-billion nonguaranteed, five-year NRA 13 bond, issued in 2008, matures on October 31, 2013. In addition, CFO Inge Mulder notes it has to pay for the normal operations and maintenance of its toll portfolio, while servicing all other listed bonds.

The toll portfolio comprises only 16%, or 3 120 km, of the overall road network falling under the agency, with just 1 832 km under Sanral's direct aegis and the balance operated by concessionaires.

Sanral is currently unable to approach the debt capital markets directly, owing to the constraints its faces in not being able implement an e-tolling system across the 185 km of roads comprising the first phase of the GFIP.

Implementation has been delayed, partly as a result of legal challenges and public consultations, owing to widespread opposition to e-tolling. However, implementation is awaiting finalisation of the Transport Laws and Related Matters Amendment Bill, which is still awaiting the signature of President Jacob Zuma.

Newly appointed Transport Minister Dipuo Peters has described the implementation of e-tolling as “urgent”.

The Supreme Court of Appeal will also in September hear the Opposition to Urban Tolling Alliance’s appeal against the North Gauteng High Court’s dismissal of an application for a review of the tolling system. In September last year, the Constitutional Court also ruled in Sanral’s favour with regards to a temporary interdict that had been imposed against e-tolling.

Sanral spokesperson Vusi Mona stresses that, while Sanral’s finances are healthy in the main, it is facing some funding challenges regarding parts of the toll network falling under its direct control.

These roads include the motorway between Bela-Bela and Musina, in Limpopo, the toll roads connecting Johannesburg and Bloemfontein, the tolled link from Johannesburg to the Swaziland border, through Ermelo, and the tolled portions of national roads in KwaZulu-Natal, the Eastern Cape and the Western Cape.

GFIP project manager Alex van Niekerk confirms that the shortfall is linked to the delay in the implementation of the e-tolling system, as the GFIP can neither pay for its own maintenance nor can it contribute to the servicing of Sanral debt because no revenue is being generated. The organisation’s bonds are no longer trading, its credit rating has been downgraded and can no longer issue bonds.

However, Sanral is in ongoing discussions with the Department of Transport and the National Treasury over its funding difficulties.

National Treasury figures show that Sanral borrowed R20-billion to build the roads, which, together with interest payments and maintenance over the 24-year repayment period, will result in a total cost of about R58-billion.

Van Niekerk insists that Sanral is ready and has the capacity to implement the e-toll system, despite serious public opposition and misgivings over its ability to deal with nonpayment. Once the outstanding Bill is signed and the necessary regulations published, Van Niekerk says that e-tolling will begin.

Meanwhile, the system, which has been delivered by Electronic Toll Collection (ETC), a joint venture led by the South African subsidiary of Kapsch TrafficCom, is operating under so-called “soft tolling” conditions, at an average cost of R25-million a month. That cost is calculated based on the contract Sanral has with ETC, which stipulates that costs, such as site rentals, maintenance and operations, are covered.

Van Niekerk says it is premature to estimate what the monthly costs will be once the system becomes fully active, explaining that the operational costs will depend on the level of e-tag uptake. The higher the uptake, the lower the operational costs, as expenses relating to postal invoicing and legal enforcement decline. The figure will also be related to the final toll fee structure, which still has to be confirmed.

Sanral modelling exercises have indicated monthly costs of between R55-million and R60-million, based on a ‘balanced’ mix of registered and nonregistered vehicles.

“The contract has been structured [so that Sanral pays] for the actual items used every month,” Van Niekerk explains, stressing that the costs will fall as compliance rises.

Currently, Sanral claims that an estimated 600 000 e-tags have been bought by private vehicle owners and what it calls key accounts, comprising government, rental and corporate fleets.

Key Contracts and Suppliers
Basil Read Interchange [I/C] (improvements on the N1 section); Siyavaya joint venture (JV), comprising Group 5, Power Construction, Liviero, Umso Construction and Bophelong Construction (work package A and E); GFI Contractors JV, comprising Wilson Bayly Holmes-Ovcon (WBHO), Sanyati Construction, Rainbow Construction, Glash Construction, Munasi Civil Contractors and Esorfranki Civils, formerly Patula Construction (work package B); GLMB JV, comprising Grinaker-LTA, a member of the Aveng group, Moseme Road Construction and Boitshoko Road Surfacing (work package C and F); Basil Read JV, comprising Roadcrete, Chavani Construction and Dipcivil, or BRCD (work package D); CMC JV, comprising CMC di Ravenna South Africa and G4 Civils (work package G); Raubex Construction (upgrade of the R21); Power Group (upgrade of the R21 section 1 and 2); Tosas (subcontractor – bituminous binders); ETC JV (multilane free-flow tolling system); Jet Demolition (demolition of Allandale I/C bridge); ARQ Consulting Engineers (design of the Lynnwood Glen pedestrian and pipe bridge); Cadcon, subcontractor of BRCD JV (manufacture of the Lynnwood Glen pedestrian and pipe bridge); Beka (luminaires); Esorfranki Civils (work package J); Goba SSI JV (Gillooly's flyover); Much Asphalt, a Murray & Roberts company (asphalt supplier) and ETC JV, comprising Traffic Management Technologies and Kapsch TrafficCom (design and operate the open-road tolling system).

On Budget and on Time?
E-tolling was suspended on April 28, 2012, pending a full review; however, the Constitutional Court has set aside the interdict preventing Sanral from tolling some of Gauteng’s highways, while the proposed e-tolling system is undergoing judicial review in the North Gauteng High Court, in Pretoria.

Contact Details for Project Information
Sanral northern region manager of toll and traffic and project manager Alex van Niekerk, tel +27 11 426 6200; or corporate communications manager Priya Pillay, tel +27 12 844 8000, fax +27 12 844 8200 or email pressoffice@nra.co.za; or project manager: communications Wanda Cloete, tel +27 12 844 8000, fax +27 12 844 8200 or email wcloete@nra.co.za.