The South African National Roads Agency (Sanral) plans to issue a new tender for the Open Road Tolling (ORT) system on the Gauteng Freeway Improvement Project (GFIP) – despite the fact that a final decision on the future of e-tolls on GFIP is set to be announced by October.
Sanral acting CEO Lehlohonolo Memeza also confirmed to Moneyweb last week that there was an average 17.7% e-toll payment compliance rate on GFIP in the first six months of 2022.
Memeza said the highest compliance rate achieved in this period was 17.88% in February and the lowest 17.52% in April.
Memeza said the ORT tender will be subject to the oversight of the Development Bank of Southern Africa (DBSA).
This follows Sanral announcing on 30 June that it had appointed the DBSA to act as the agency’s infrastructure procurement and delivery management support on the five strategic projects whose tenders, collectively valued at R17.47 billion, were cancelled in May.
Sanral’s stated aim is to get these five tenders advertised, evaluated and adjudicated for recommendation to its board and to award these tenders within four months.
Memeza also confirmed that the Electronic Toll Collections (ETC) contract for the ORT system has been extended again, this time until 15 September 2022.
According to Sanral, the cancelled ORT and Transaction Clearing House (TCH) tender accounted for R6.872 billion of the total R17.47 billion value of the cancelled tenders.
ETC’s original contract has already been extended several times over the past few years.
The Organisation Undoing Tax Abuse (Outa) has questioned how ETC’s contract can be continually extended.
Outa previously said the ORT contract was awarded to ETC in 2013 and was supposed to end on 2 December 2018.
Breaking every rule, says Outa
Memeza said last week the latest extension to ETC’s contract has “been done in accordance with the appropriate delegations”.
“It should be noted that the extensions still fall within the original tendered amount,” she said.
However, Sanral confirmed in December 2020 in an official response to a Moneyweb query that the extension of ETC’s contract for another year from 2 December 2020 would bring the contract to the maximum eight-year period.
Sanral said at that time: “The ETC contract has been extended from 2 December 2020 for another year. This will bring the contract to the maximum eight-year period, as was allowed for in the original contract, or shorter if the new contractor is appointed before the end of the maximum period allowed.”
Outa CEO Wayne Duvenage on Friday described the continual extension of ETC’s contract as “just a farce”.
“If you look at the PFMA [Public Finance Management Act] and the rules and laws, they are breaking every rule under the sun.
“But the reality is that I don’t know who is going to tender for a scheme that is going to be cancelled,” he said.
Final decision on e-tolls …
This follows Transport Minister Fikile Mbalula confirming on 30 June that a final decision on the future of e-tolls will be announced when Finance Minister Enoch Godongwana delivers the Medium-Term Budget Policy Statement in October this year, or before then.
Mbalula added that the government has scrapped a plan to use the fuel levy instead of e-tolls to pay for the GFIP, because of the recent sharp increase in fuel prices.
Smoke and mirrors
Duvenage said Outa believes the GFIP compliance rate is 15% but a few percent difference between Sanral’s figures and Outa’s estimate “is neither here nor there because it’s a failed scheme”.
He said the biggest worry is the cost of the GFIP e-toll scheme because at a compliance rate of 17%, it is raising between R50 million to R60 million a month.
Duvenage said ETC does not mail e-toll accounts to motorists unless they are paying their e-toll bills and believes ETC has significantly reduced its operating and administration costs through this and natural attrition by not replacing staff who have left the company.
“I wonder how much profit they are making out of the R50 million to R60 million a month. One doesn’t see any of those books.
“But is R10 million a month going to Sanral or is it nothing? Is it all going to ETC? Is ETC profitable at that amount? It’s difficult to tell because there is so much smoke and mirrors and no transparency,” he said.
Duvenage said Outa wants the decision to scrap e-tolls to be announced “sooner than later”.
The other cancelled adjudicated Sanral tenders that will be overseen by the DBSA are:
The Mtentu River Bridge tender valued R3.428 billion, which is one of the country’s presidential priority projects.
The EB Cloete Interchange Improvements tender valued at R4.302 billion.
The N3 Ashburton Interchange tender valued at R1.814 billion.
The R56 Matatiele rehabilitation tender valued at R1.057 billion.
The material irregularity that led to the Sanral board’s decision to cancel the five tenders was the failure of Sanral officials to comply with a board resolution.
Memeza said this related to Sanral’s board noting that it was industry practice that the consultants who designed the project, and assisted in drawing up the specifications for the tender, also assisted in the evaluation of the tender by providing the technical analysis.
She said the board saw a conflict of interest in that practice and decided that going forward no consultant should be involved in the design and specifications, and then also participate in the technical evaluation of the bid.