This article first appeared in Moneyweb.
Coenie Vermaak, CEO of e-tolls collections company Electronic Toll Collection (ETC), was an e-tolls boycotter in his previous life as an engineer working on the Medupi Power Station and SA National Roads Agency (Sanral) roads.
Like 70% of Gauteng motorists, he believed the decision to impose electronic tolling was ill-conceived and done without proper public engagement. That changed when he was hired two years ago as CEO of ETC, owned 100% by Austrian company Kapsch.
“I was an e-tolls boycotter because I didn’t like being charged another tax for something that I had no decision over,” says Vermaak. “But I was also ignorant. I had not applied my mind to the matter. When I joined here, I didn’t even want my in-laws to know I worked at the toll collections company.”
ETC’s contract expires in December 2019, and will be put out to tender in the new year by Sanral.
E-tolls have become a political rod with which to beat the ANC government, and Vermaak concedes it is a tough ask convincing non-payers to follow his lead and abandon the boycott. With an election looming in 2019, e-tolls will become a key election issue in Gauteng, and opposition parties will feast on the entrails of this failed project. To underline the point, the Congress of South African Trade Unions (Cosatu), Organisation Undoing Tax Abuse (Outa) and the ANC in Gauteng staged a march against e-tolls last weekend in Pretoria.
In his medium-term budget policy speech last month, newly installed finance minister Tito Mboweni gave no sign of the government abandoning its fealty to e-tolls or the user-pays principle. He said e-tolls had to be paid if the road network was to function. The project originally cost R22.5 billion, funded through the issue of bonds, but that cost has now escalated to more than R40 billion. Sanral’s 2018 annual report shows a finance cost of R4.4 billion at an average cost of capital of 9.43% a year. If Mboweni sticks to his guns, it appears government will have little choice but to find an extra R500 million to R1 billion a year to pay the interest on these borrowings. Scrapping e-tolls could impact SA’s sovereign status and increase the cost of all government-backed borrowings.
Just as the decision to build the loss-making King Shaka International Airport in Durban was a political decision, so government pushed Sanral to upgrade Gauteng’s roads ahead of the 2010 World Cup. It is now clear that government never anticipated the level of protest that would accompany the launch of e-tolls in 2013.