OUTA: New e-toll contract makes no financial sense

The Organisation undoing tax abuse (OUTA) said in a statement released on Tuesday, 26 November 2019, that a new e-toll contract could risk wasteful expenditure. 

According to the statement, the Gauteng e-toll decision is still subject to a legal challenge so if The South African National Roads Agency SOC Ltd (SANRAL) signs a new multi-billion rand e-toll contract, this could be a wasteful expenditure. 

SANRAL has received bids of up to R11.4b to run a new e-toll collection contract that was advertised on 8 August 2019.

South Africa may be legally bound to a contract for six years 

OUTA’s CEO, Wayne Duvenage said that the country could be legally bound to a contract for six years. 

“Entering into any contract while the country awaits Cabinet’s decision on the future of e-tolls makes no sense. However, that is not SANRAL’s only problem because there is still a court case pending on the lawful objection to non-payment. 

Should the public be found not liable for payment of e-tolls, the already defunct scheme will be dead in the water, and the country may be legally bound to a contract for up to six years,” said Duvenage. 

“This may very well become a matter of fruitless and wasteful expenditure for which civil society or even the Auditor-General could hold an individual to account. We can’t for one minute, understand why Cabinet is taking as long as it is to make an easy decision to scrap this defunct scheme, especially after six years of empirical evidence of failure,” added Duvenage. 

Existing e-toll contract a massive failure

Duvenage said that the existing e-toll collection five-year contract, run by Electronic Toll Collections (ETC) since December 2013, expires on 2 December. 

“The contract was extended for another year and has been a massive failure throughout the six years of operation. ETC won it with a bid of R6.2b for the five years, only for the public to discover that the contract was signed at R9.9b,” said Duvenage.

It was confirmed on Tuesday that SANRAL is evaluating bids for the continued management of the e-tolls after the ETC contract expires.

Documents on SANRAL’s website indicate the bids submitted on the e-toll collection tender does not appear to have been awarded yet. 

New e-toll contract 

Tender NRA X.002-135-2019/1 is for the “operations and maintenance of an open road tolling system in the Gauteng province, South Africa, and a national transaction clearinghouse and violations processing center.” 

This is for six years with an option for SANRAL to extend it for another two years. This tender was advertised on 8 August 2019, with bid documents available from 12 August and a closing date of 23 September. 

Bidders for the e-toll contract 

There were three bidders:

• Phambili JV, with a bid of R11.399b
• Kusa Kokutsha, with a bid of R7.548b
• SAeTO, with a no-bid amount listed

OUTA found that Kusa Kokutsha was registered as a business on 26 August 2019, and appears to have been set up specifically to bid for the contract. Duvenage said it indicates that it has no track record as a business. 

“Through its directors, Kusa Kokutsha is linked to outgoing contractor ETC, thus this appears to be ETC in a new guise,” said Duvenage. 

“SANRAL’s annual report for 2019 shows that the revenue from the Gauteng e-toll scheme in the 2019 financial year generated a total collection of R688m in 2018/19, which is an average of R57m a month. 

Yet the cheapest bid submitted works out at an average cost of almost double that collection rate, before any money is allocated to the SANRAL bonds. Such collection contracts make no financial sense,” added Duvenage.