THE SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LIMITED - Clarity on next steps on phase 1 of the Gauteng Freeway Improvement Programme

Clarity on next steps on phase 1 of the Gauteng Freeway Improvement Programme

The South African National Roads Agency SOC Limited
Incorporated in the Republic of South Africa
(Registration number 1998/009584/30)
Alpha code: BINRA
(“SANRAL” or the “Company”)

CLARITY ON NEXT STEPS ON PHASE 1 OF THE GAUTENG FREEWAY IMPROVEMENT PROGRAMME


Following the 26 October 2022 Medium-Term Budget Policy Statement (“2022 MTBPS”)
announcement by the Minister of Finance on phase 1 of the Gauteng Freeway Improvement Project
(“GFIP”), further clarification was provided by National Treasury how government will take over the
existing debt and associated obligations of SANRAL.

These obligations will be shared between national and provincial government. SANRAL’s total debt
as at 31 March 2022 was R45.936 billion. GFIP phase 1 was funded as part of the Toll Portfolio and
not as a ringfenced project, the value of debt attributed to GFIP Phase 1 is R43.031 billion.

The Gauteng Provincial Government’s (commitments will be as follows:

    • 30 per cent of the debt and interest obligations of GFIP phase 1; and
    • Paying for the maintenance costs of the GFIP phase 1 network.

The amount announced by the Minister of Finance represents a majority of the national government
obligation, and will ensure that SANRAL remains a going concern in the medium-term. National
government will make arrangements for the rest of the funds related to its share of the debt
obligation at the appropriate time, in line with the conditions and obligations related to the process,
and in a manner that does not negatively affect the overall fiscal trajectory as outlined in the 2022
MTBPS.

The implementation modalities of the province’s commitments will be set out in an agreement
between national government and the provincial government, and the provincial obligations will be
to the National Revenue Fund. The agreement is also expected to set out how the province will pay
for these commitments. One of the conditions of the R23.7 billion proposed in the Special
Appropriation Bill is that these modalities must be concluded by 31 December 2022. Decisions
expected by the province will also include the treatment of legacy matters such as revenue collected
from road users who have been paying their toll fees and/or those who have not paid.

Gauteng Provincial Government must finalise a long-term revenue solution that makes funding
available for the maintenance of the road network, with SANRAL continuing to execute the
maintenance thereof.

The option to utilise the existing toll mechanism remains open and would result in the toll network
proclamation remaining in place. If the province’s provision for maintenance of the network is
financed through other revenue streams within its area of responsibility, the processes on
undeclaring the toll network, in terms of section 27 (1) of the South African National Roads Agency
Limited and National Roads Act (Act 7 of 1998) will need to be undertaken. This notwithstanding, all
necessary statutory and regulatory processes that must take place to give effect to the Minister of
Finance’s announcement are underway including consultation with relevant stakeholders. Until a
notice in the Government Gazette is issued, SANRAL has a statutory obligation to collect any toll fees
due to them.
The functional assignment of roads, in terms of the Road Infrastructure Strategic Framework for
South Africa remains in place. As a result, the 201 kilometres of the national roads on the GFIP
network will remain as national roads and can only be reassigned to other spheres of government by
notice in a Government Gazette, with the concurrence of SANRAL debt holders.

National government affirms that direct road user charges are the most effective, equitable and
efficient way to finance road infrastructure. It is also a mechanism to manage transport demand,
impacting on modal choice and spatial inequality.

Debt Sponsor
Nedbank Corporate and Investment Banking, a division of Nedbank Limited

08 November 2022

Date: 08-11-2022 10:30:00
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