The South African National Roads Agency SOC Limited (SANRAL) has sought to explain the funding model of the Gauteng Freeway Improvement Project (GFIP), known as e-tolls.

This follows claims by the Organisation Undoing Tax Abuse (OUTA) on SANRAL’s lack of financial transparency on the funding model.

In April, government officially switched off the e- toll gantries, which meant that road users were no longer charged for using the GFIP network.

“While the Gauteng Freeway Improvement Project (GFIP) funding model is complex, it is useful to explain the model so that the public understands how the debt increased over time. We trust that the following explanation will assist both members of the public and OUTA to understand the detail,” SANRAL spokesman Vusi Mona said on Monday.

In 2008, SANRAL started borrowing money to fund the construction of GFIP and the roads were completed in time for the 2010 World Cup.

“The cost of GFIP was estimated at R21 billion for the construction of the roads and the related toll systems. However, from the operational inception of GFIP the revenue collected was inadequate to cover operational costs and interest on debt, resulting in growing debt as SANRAL had to borrow to service interest on debt or refinance maturing debt.

In addition, the National Treasury made allocations from time to time to cover operational shortfalls and interest payments.

“It is also important to note that funding for the GFIP was raised as part of the toll portfolio as a whole,” SANRAL said.

When the memorandum of agreement (MOA ) to end e-tolls was signed in April between national government – National Treasury and the Department of Transport – and the Gauteng Provincial Government, the total GFIP-related nominal debt amount was R29.031 billion.

The estimated interest on this debt until the last bond as redeemed in 2036 is R20.011 billion, assuming that there will be no acceleration or early settlement of debt, and that debt will be repaid as it matures – this figure fluctuates due to Consumer Price Index (CPI) for CPI-linked bonds.

“Before the announcement by the Minister of Finance to end e-tolls in October 2022, all treasury grants given to the toll portfolio were used to pay operational shortfalls and interest on debt. No grants were used to repay or settle any maturing debt.

“The only time that National Treasury mentioned providing funds specific for maturing debt settlement was in October 2022 where R23.756 billion was provided. Of that, R20.557 billion was used for the settlement of bonds and interest payments,” SANRAL said.

At the time the three parties signed the MOA, the estimated interest was R21.011 billion while the nominal debt value stood at R29. 031 billion.

The R5.1 billion allocated by National Treasury in October 2024 was aimed at 2024/25 settlement of maturing bonds and backlog road maintenance in line with the MOA between National Treasury, Gauteng Provincial Government and the National Department of Transport.

SANRAL will use the funds to settle a maturing bond in December 2024 and interest payments until 31 March 2025.

The funds relating to backlog road maintenance (R546 million) will be used to maintain GFIP roads identified in the MOA. The R5.1 billion is inclusive of the amount paid by the Gauteng Provincial Government to the National Revenue Fund in terms of the MOA.

“Any funding for infrastructure projects, whether for GFIP or any other major road infrastructure project across the country, is governed and managed by a rigorous oversight framework.

“Whether we are talking about the massive construction sites to upgrade the notoriously dangerous Moloto Road, or the N2-N3 corridors in KwaZulu-Natal, or the proposed upgrade of the Huguenot Tunnel in the Western Cape, or the N2 Wild Coast Road in the Eastern Cape, every rand is carefully managed and accounted for.

“SANRAL’s audited reports are publicly accessible at www.sanral.co.za and it is important for the public to know that these documents provide comprehensive insights into our financial management and expenditure since inception,” Mona said

SANRAL has reaffirmed that it remains committed to maintaining the highest standards of financial stewardship and public accountability in service of the people of South Africa.

Mona also explained the importance of SANRAL’s Marketing and Communications Unit in response to OUTA’s questions.

“The budget allocated to marketing and communications is a strategic investment to improve engagement with South Africans, build trust and foster public participation. Effective outreach minimises misunderstandings and ensures smoother project implementation,” Mona said.

As the road network expands under SANRAL, stakeholder engagements, communication and consultation with communities, public awareness campaigns and other related communications operations have exponentially impacted on the marketing and communications budget.

“Stakeholder engagements via every platform, including today’s all important digital and social media platforms, are a significant portion of work which goes toward fostering collaboration and engagement with stakeholders, from communities affected by projects to government entities, contractors and international partners. The absence or minimum disruption on SANRAL projects testifies to SANRAL’s stakeholder engagement and communication endeavours.

“SANRAL’s communication goes beyond just informing road users but ensuring that its projects are not disrupted – even by the so-called construction mafia. And in this regard SANRAL is seeing the return on the investment it is making in its communication and stakeholder engagement efforts,” said Mona.

Originally posted on SAnews.gov.za