Will Covid-19 also be fatal to e-tolls?

OUTA believes reduced lockdown traffic means State bailout will be required to  finance defunct e-toll scheme’s operational costs.

30/04/2020 12:57:18

                                                                                                                                                                                                                      Will Covid-19 also be fatal to e-tolls? 


                                                                                                                                                                                                                      The Organisation Undoing Tax Abuse (OUTA) says the reduction in traffic on Gauteng roads due to the Covid-19 lockdown could very well mean that ETC, the e-toll collection operator, will receive funds from Sanral (ultimately taxpayers) to pay for salaries and other running costs of the unsustainable e-toll collection system. 

                                                                                                                                                                                                                      Over the past few years the e-toll system, and its collection operator Electronic Tolling Company (ETC), has collected less than half the revenue they were contracted to. This is the result of the successful citizen defiance campaign against the unpopular and irrational e-toll system. Gauteng’s e-toll system generated approximately R55m per month before the Covid-19 lockdown – just enough to cover ETC’s operating expenses, which meant that virtually nothing was left to offset SANRAL’s bond repayments.

                                                                                                                                                                                                                      “OUTA estimates that e-toll collections have probably dropped to between R10m and R15m at most for the month of April, which means that Sanral’s income from the Gauteng e-toll scheme will be well below the amount that ETC’s requires to manage the scheme,” says Wayne Duvenage, OUTA’s CEO. “This means that for the first time since the scheme has been operating, ETC will either have to dig into reserves to pay their salaries and other costs, or Sanral will have to pump money into the defunct e-toll scheme to bail it out. In effect that means that taxpayers will have to pay to keep e-tolls alive.”  

                                                                                                                                                                                                                      OUTA believes the decision to finally pull the plug on the failed e-toll scheme is now long overdue, and hopefully, with toll collections now below the ETC operations costs, the final decision to scrap the scheme is imminent. Sunk costs and political unwillingness have hampered the rational choice to do away with this system for far too long, and this unprecedented situation awakens us from the deep sleep of unconditional payment for services that are supposed to be funded by existing taxes.

                                                                                                                                                                                                                      “What Government now needs to do, is introduce a plan to restructure the GFIP Bonds of R21bn. This couldn't have come at a worse time for the state, but is minimal in the greater scheme of challenges we face today. To continue to run the ETC toll collections scheme after all these years of failure, is merely throwing good money after bad,” says Duvenage.

                                                                                                                                                                                                                      The macroeconomic impact of Covid19 and consecutive sovereign credit downgrades means that we can no longer spend money on programmes and systems that simply don’t work. We foresee a serious decline in the purchasing power of ordinary people in the country’s economic hub, and the debt incurred by the Gauteng Freeway Improvement Project will not be funded by empty pockets.

                                                                                                                                                                                                                      We trust the Minister of Finance will soon pronounce the fateful and final blow to the e-toll scheme, bringing much needed financial relief to the handful of businesses and people who continue to make up the 20% of road-users who pay their e-tolls.

                                                                                                                                                                                                                      OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.