City may disclose SANRAL's tolling secrets to the public
This morning the Supreme Court of Appeal in Bloemfontein ruled in favour of the City of Cape Town when the judges set aside the order made by Judge Ashley Binns-Ward of the Western Cape High Court on 28 August 2014 concerning SANRAL's secrecy application. Read more below:
The City can now, for the first time since we launched our review application on 28 March 2012, fully disclose how SANRAL's awarding of the tender for the N1 and N2 Toll Highway Project to the Protea Parkways Consortium (PPC) will affect residents of the Western Cape and visitors to this region.
The SCA ruling is a victory for transparency and accountability and the constitutionally enshrined right of access to information that is held by the State and its entities in all spheres of government.
As such, the City can disclose the following information that forms part of our supplementary founding affidavit and which SANRAL wanted to keep from the public and the media:
Should the tolling of the N1 and N2 freeways go ahead, residents from the Western Cape and visitors to this region will pay toll tariffs that are nearly three times that of the e-toll tariffs that are being charged by the new Gauteng Freeway Improvement Project.
PPC's anticipated toll revenue over the concession period (2010 values, excl. VAT) is in the region of R48 billion.
The decision to declare the Winelands toll roads was taken by Mr Nazir Alli, Chief Executive Officer of SANRAL, and not by the SANRAL Board, as is required by the SANRAL Act.
SANRAL failed to disclose the grave consequences of the reimbursement clause in its Concession Contract with PPC to the SANRAL Board and the Transport Minister. The contract addresses the risk that the Minister may determine lower toll tariffs than the Concessionaire is entitled to charge under the Concession Contract, or may refuse or delay approving a change in the toll tariffs.
Therefore, should the National Minister of Transport determine lower toll tariffs than PPC is entitled to charge under the concession contract, SANRAL must reimburse the Concessionaire by an amount that will place the Concessionaire (PPC) in the same economic position that the Concessionaire would have been, had the failure, refusal or delay on the part of the Transport Minister not occurred.
In terms of this clause SANRAL would have to divert public funds meant for the construction and maintenance of national roads to fund PPC's profit expectation of R48 billion.
The reimbursement clause also contradicts SANRAL's presentation to the Transport Minister that the proposed Winelands Tolling Project would require ‘no financial contribution from the State'.
Furthermore, should SANRAL undertake a public participation process about the proposed tariffs, this would be a sham as they have already contractually committed to the tariffs proposed by PPC in its bid. The Transport Minister will also be in an untenable situation because if she fails to sanction PPC's Base Toll Tariff, SANRAL will incur the reimbursement obligation.
Importantly, the Gauteng Freeway Improvement Project (GFIP) charges a toll tariff of 30c/km for light vehicles (VAT included). PPC's proposed base toll tariff for light vehicles is 84,59c/km (VAT included, 2013 values). PPC's rate, therefore, would require a 65% reduction in order to be equivalent to the GFIP rates.
The GFIP toll tariffs for light vehicles are capped at R450 per month; PPC's discount scheme does not make provision for any cap.
PPC, unlike the GFIP, does not make provision for specific time-of-day discounts.
The GFIP effectively allows for a 100% reduction for public transport while PPC only allows for a 50% reduction for public transport.
Furthermore, in terms of the documents that SANRAL was ordered to provide to the City, it is clear that the Board did not consider the following important issues:
The impact that the tolling of the N1 and N2 would have on road users
The need for the tolling
The scope of the project
Alternative funding mechanisms
Implementation of the project - the SANRAL Board did not consider the project again after 2004
As stated above, PPC anticipates toll revenue in the region of R48 billion over the concession period (2010 values, excluding VAT). As far as the City is concerned the project will not benefit road users because the toll revenue will exceed the road user benefits.
It is furthermore clear that no consideration was given whether or not low-income groups would be able to afford to use the N1 and N2 freeways should they become toll roads. The negative macro-economic impact on the region has not been considered - the effect it would have on the transport costs of agricultural products, to name but one.
We will file our replying papers to SANRAL's answering affidavit by 25 April 2015. In these papers the City will fully disclose the calculations that are being investigated by nine experts, among these how much of every Rand collected in toll fees will be spent on the toll project infrastructure and operations as opposed to road improvements, maintenance and operational work.
We are looking forward to meeting SANRAL in the Western Cape High Court on 11 August 2015 when our review application will be heard.
Statement issued by Councillor Brett Herron, Mayoral Committee Member: Transport for Cape Town, City of Cape Town, March 30 2015
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