Gauteng can't pay its e-toll debt — turns to treasury, cap in hand
The fight might be over for motorists, but the debt remains. Picture: Jonathon Rees
The Gauteng provincial government is involved in discussions with National Treasury about the payment terms of its R15.9 billion e-toll debt.
However, Gauteng MEC of Finance and Economic Development Lebogang Maile stressed on Sunday that the province is committed to sticking to the current Memorandum of Agreement (MoA) arrangements to pay the province's 30% share of the e-toll debt amounting to R12.9 billion – plus interest of R3.3 billion – as it doesn't as yet have an agreement with Minister of Finance Enoch Godongwana about any changes to the terms of the MoA.
Maile said the government is having discussions with Treasury on the payment terms to alleviate financial pressure on the province – 'and to give us some additional resources that we can use immediately to deal with immediate social challenges'.
In terms of the MoA between the SA National Roads Agency (Sanral), the National Department of Transport, Treasury and the government announced by Godongwana during his 2022 Medium-Term Budget Policy Statement (MTBPS), Gauteng's e-toll debt contribution would be made in five equal annual instalments at government's five-year interest rate.
ALSO READ: Gauteng pays R5.44 billion e-toll debt amid budget constraints
Province to pay R5.47bn on Monday
In addition to the settlement of this debt, the government also made a commitment to contribute a total of R4.1 billion towards the backlog maintenance on the Gauteng Freeway Improvement Project (GFIP).
Maile said the province will on 30 June 2025 honour its obligation by paying the second instalment of its 30% portion of the e-toll historical debt.
He added that the government made the first instalment amounting to R3.8 billion on 30 September 2024, which comprised R3.2 billion of historical debt and the GFIP maintenance backlog portion of R546 million.
Maile said there is currently R3.559 billion outstanding from its commitment to pay Sanral R4.1 billion and that in addition to the e-toll debt payment, the government will on Monday also transfer an amount of R2.099 billion as part of the contribution towards the backlog of rehabilitation to restore the GFIP freeways to an acceptable condition before Sanral resumes its obligations for all future maintenance funded by the national fiscus.
The total amount the provincial government will be transferring to Treasury on Monday is R5.47 billion.
ALSO READ: Sanral claim for e-tolls doomed
Repayments affect service delivery
A pothole on a road in Atholl, Johannesburg. Image: Leon Sadiki/Bloomberg
Maile said the province could have used that money to build additional schools, hospitals and roads and added if the province was not paying this R5.4 billion, it could for example be announcing that it is 'giving R2 billion to deal with all the potholes, R1 billion to deal with the robots'.
'In the budget, we only announced R300 million to deal with potholes on all provincial roads. It's not going to be enough,' he said.
'The repayment does have an impact on service delivery because it means we have limited resources. For instance, we need about 200 new schools in Gauteng. The money we have is for 18 schools. On average to build a school, is R200 million.
'If this R4.5 billion, or R20 billion over a period of time, was available it would mean we could increase the number of schools we can build … the number of clinics we can build, it means we can improve the quality of services.'
ALSO READ: Right step to sort out e-toll debt mess
Treasury paying 70% of e-toll debt
Maile said there are some financial difficulties that put a strain on the province, which is why it is asking Treasury to help.
'National Treasury is committed to help, which is why it is paying 70% of the historical e-toll debt and the Gauteng provincial government is paying 30%,' he said.
He added that the provincial government will over the next few years have to allocate a substantial amount of funds each year to service the repayment obligations for e-tolls – and that this will be happening in a constrained fiscal environment, details of which the province expressed in the initial Budget Speech and reiterated when it retabled its budget for the 2025/26 financial year.
'The reality of the situation is that the funding envelope is stretched by existing allocations, particularly in terms of keeping critical social programmes in health and education funded.'
'Nevertheless, we reaffirm our commitment to the residents of Gauteng that the servicing of the e-toll debt will not compromise our priorities, particularly in relation to social services such as health and education,' he said.
ALSO READ: No refunds for those who paid for e-tolls, says Gauteng finance MEC Maile
'Measures and reforms'
Maile said the provincial government is implementing various measures and reforms to ensure the sustainability of its fiscal environment.
These include active debt management strategies, spending restraint, improving compliance with rules and regulations in supply chain management, as well as revenue enhancement. Maile said the province's revenue enhancement strategy has already been actualised, with provincial departments implementing various strategies to enhance revenue collection.
He said this strategy is underpinned by five principles:
Accelerating the completion of interventions that have already started;
Optimising the existing revenue sources;
Enhancing revenue collection processes and systems to increase efficiency, cost-effectiveness, and eliminate leakages;
Identifying potential new revenue sources that have not been explored; and
The use of alternative funding and implementation models to achieve more value.
ALSO READ: E-tolls scrapped, but gantries will remain operational – Chikunga
Maintenance, upgrades and capacity expansions projects
In terms of the MoA, Maile said Sanral cannot use the funds it receives from the province for any other purpose than the nine projects that are financed by the province.
He said the R4.1 billion will be used for the following maintenance, upgrades and capacity expansions projects on 185 kilometres on the N1, N3, N12, N14 and R21:
14th Avenue to Buccleuch
Golden Highway to 14th Avenue
Buccleuch to Brakfontein
Brakfontein to Scientia
Heidelberg Road to Geldenhuys
Geldenhuys to Buccleuch
Uncle Charlie's to Elands
Gillooly's to Tom Jones, and
Olifantsfontein to Hans Strydom.
ALSO READ: E-tolls: Gauteng government to make first debt payment in September – Maile
GFIP projects will be complete in four years
These freeways are vital for facilitating efficient transportation and supporting economic activity by providing high-speed, controlled-access routes for vehicles in the broader Gauteng city region, Maile said.
Gauteng deputy director-general for sustainable fiscal resources management Mncedisi Vilakazi noted that the estimated time to complete the nine projects is four years and that the amounts the province pays and contributes each year fluctuates in line with the readiness of these projects, which are at different stages.
'It will take four years to completely exhaust the nine projects, which will amount to about R4.1 billion,' said Vilakazi.
Gauteng's freeways need an update. Image: Moneyweb
This article was republished from Moneyweb. Read the original here.
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