City’s review application may save SANRAL from another tolling disaster

12 August 2015

The City of Cape Town has, on the second day of our application to the Western Cape High Court for reviewing and setting aside SANRAL’s proposed tolling of portions of the N1 and N2 freeways, argued that the National Minister of Transport and the SANRAL Board failed to consider key issues about the proposed Winelands Toll Project.

These considerations are at the heart of the proposed project and should have been assessed for a proper decision to be made:

- The potential reimbursement for which SANRAL would be liable: the concession contract addresses the risk that the National Minister of Transport may determine lower values than the concessionaire is entitled to charge under the concession contract. It provides that if this occurs SANRAL must reimburse the concessionaire by an amount that will place the concessionaire in the same economic position that the concessionaire would have been in had the failure, refusal or delay on the part of the Minister not happened. The potential reimbursement is calculated to be R32,8 billion (2010 real values excl. VAT)

- The financial viability of the project: the fact that the public will, over a 30 year concession period, pay between R44,9 billion and R48,4 billion in toll fees (2010 values excluding VAT)

- The affordability of the toll tariffs: the base toll tariff in the draft concession contract is equivalent to 74 c/km (2013 values, excl. VAT). This is almost three times the tariff of 26 c/km (excl. VAT) of the Gauteng Freeway Improvement Project

- The fact that tolling is a financially inefficient means of upgrading and maintaining a road. If SANRAL undertook the upgrades and operated and maintained the highways on a non-toll basis, the cost would be R22,5 billion (2010 values, excluding VAT) as opposed to nearly R50 billion.

- The macro-economic impact of tolls on the Western Cape

- The impact of traffic diversions: motorists will avoid the toll roads and the City will thus face an additonal burden to maintain secondary roads. Furthermore, the residents in the vicinity of the secondary roads will be adversely affected by the increase in traffic on these roads

- The social impact of toll

- The fact that toll would result in unfair discrimination as the residents who are living along the N1 and N2 freeways are predominantly poor and black, given the fact that poverty is still racially distributed

The City has contended that the evidence shows there has been no financial viability study or a social impact study about the proposal to toll portions of the N1 and N2 freeways. Furthermore, the SANRAL Board never considered the comments and objections from the public, neither were the representations from interested parties assessed.

The City, therefore, argued that the premise of the process from 1998 onwards was that there will be an upgrade to the N1 and N2 freeways and that it would be funded by private money. This premise was never challenged and the outcome was thus pre-determined from the outset without any due consideration of the abovementioned factors.

The irony of this review application is that should it be granted, the City may have saved SANRAL from another tolling disaster.

Statement issued by Councilor Brett Herron, Mayoral Committee Member: Transport for Cape Town, City of Cape Town, August 12 2015