Sharenet Sites 
Sharenet Sites
Minister of Finance's concurrence to VRS borrowing limit for 2019/20 and 2020/21
Trans-Caledon Tunnel Authority (TCTA)
WSP3 (LHWP) ZAG000019993
WSP4 (LHWP) ZAG000020009
WSP5 (LHWP) ZAG000020017
As established by Notice No 2631 in Government Gazette No 10545 of 12 December 1986, and revised
by Notice No 277 in Government Gazette No 21017 of 24 March 2000 (the Notice of Establishment).
A Schedule 2 Public Finance Management Act no. 1 of 1999 entity.
VAAL RIVER SYSTEM WATER RESOURCES DEVELOPMENT PROJECTS – VRS
(Incorporating The Lesotho Highlands Water Project (LHWP) and Acid Mine Drainage (AMD))
MINISTER OF FINANCE’S CONCURRENCE TO VRS BORROWING LIMIT FOR 2019/20 AND 2020/21
Noteholders are notified of the following with regards to the Borrowing Limit of the VRS Projects:
TCTA’s SENS Announcements of 26 March 2019 (titled: Expiry Of The Current VRS Borrowing Limit and
Interim Arrangements until the Approval of the Next) and 10 April (titled: Further Disclosures and
Clarifications - Expiry Of The Current VRS Borrowing Limit and Interim Arrangements) on the VRS
Borrowing Limit have reference.
Background
In terms of Section 26 of the Notice of Establishment, TCTA may borrow money within a Borrowing Limit
approved by the Minister of Water and Sanitation (the Minister) acting with the concurrence of the
Minister of Finance.
The previous Borrowing Limit was approved by the Minister in October 2013 and concurred to by the
Minister of Finance on 22 April 2014, it expired on 31 March 2019:
Previous VRS Borrowing Limit (millions of rand)
Years ending 31 March 2015 2016 2017 2018 2019
Borrowing Limit (millions of Rand) 24 500 29 700 36 900 36 800 42 500
TCTA’s application for a new Borrowing Limit for the five years from 1 April 2019 was submitted to the
Department of Water and Sanitation (DWS) in May 2018, and was approved by the Minister and
forwarded to the Minister of Finance for concurrence in October 2018.
Concurrence of Minister of Finance to the VRS Borrowing Limit for 2019/20 and 2020/21
Following correspondence between the Minister of Finance, the Minister, DWS, National Treasury, the
Office of the Chief State Law Adviser and TCTA concerning whether there was a legal requirement for
the Minister of Finance’s concurrence; the Minister of Finance issued his concurrence to a borrowing limit
of R17.7 billion for the 2019/20 year and R20.6 billion for the 2020/21 year. This is significantly lower
than TCTA’s request.
VRS Medium Term Borrowing Limit (millions of Rand)
Years ending 31 March 2020 2021 2022 2023 2024
Requested Borrowing Limit 40 311 45 208 48 979 49 026 49 219
Approved Borrowing Limit 17 700 20 600 - - -
The Minister of Finance decided to concur to a shorter Borrowing Limit period than requested in order to
allow discussions and a conclusion around the funding of AMD LTS (the Long-Term Solution to Acid
Mine Drainage in the Witwatersrand).
In April 2014, the then Minister of Finance had concurred to the funding of AMD from the same funding
program as LHWP, and the Minister gave TCTA the directive to fund and implement AMD LTS in line
with this in May 2016. National Treasury now believes that these arrangements should be revisited.
Effect on TCTA’s ability to fund LHWP-2
At this stage, the reduced Borrowing Limit is not expected to have a negative impact on the funding of
LHWP-2 as tariff cash flows and existing cash resources are expected to be sufficient to fund CAPEX
and Operations over the current and next financial years.
VRS Medium Term Cash Flow Projections (millions of Rand)
Opening
2019/20 2020/21 2021/22
Balances
Tariff Revenue & AMD O&M Reimbursement (excl. VAT) - 5 445 6 487 6 966
CAPEX - -2 130 -3 461 -2 955
OPEX (LHWP Royalties, Admin, LHWP & AMD O&M) - -1 818 -2 049 -2 089
Net Interest - -1 056 -1 093 -1 366
Capital Repayments - -182 -297 -9 634
Projected Net Cash Flows - 259 -413 -9 078
Cash 1 358 1 617 1 204 -7 874
Total Debt 13 364 13 182 12 884 3 806
However, the lowered borrowing ceiling reduces TCTA’s ability to manage the combination of potential
LHWP-2 cost increases and the debt raising which will be required to refinance the WSP5 (9% May
2021) that matures in the 2021/22 financial year.
TCTA will engage DWS and National Treasury on these potential risks and will update Noteholders of
any further updates on the matter.
The Minister of Finance’s Letter of Concurrence can be found on TCTA’s website at www.tcta.co.za
under Media & News/Investor Relations/Sens Announcements.
For further information please contact
Nyiko Mageza, TCTA Sponsor +27 12 683 1334
23 May 2019
[Chairman] Mr GT Dumas; [Deputy Chairman] Ms MJ Ramataboe; Mr S Roopa, Mr SN Khondlo, Mr NT Baloyi, Ms LN Dlamini, Ms MM Maponya, Mr GNJ White
[Chief Executive Officer] Mr DKP Sechemane; [Company Secretary] Adv W De Witt
Page 2 of 2
Date: 23/05/2019 03:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
