Sanral CFO, Inge Mulder joined Alec Hogg on CNBC Africa’s Power Lunch to unpack Sanral’s failure to raise a targeted R600 million in a bond auction, missing the mark by R200 million.
Last time we were talking on e-tolls, you pretty much convinced me that I should be paying my e-tolls. I wonder if you can convince me that the fact that you haven’t been able to raise the R600m you were anticipating is actually, not that bad news.
It’s certainly not nice.  We have a program for the year. We have to raise R600m every month in order to have the sufficient cash flows to maintain our roads as well as to service the debt. Yesterday’s auction just means that it puts additional pressure on the other nine auctions that we have remaining, for the rest of the year. However, it does give you an indication of what investors are giving you feedback, to say ‘we need the certainty in order to fund you’, so they’re giving us a very direct message.
Well, the message is very clear. The message from South African citizens is very clear. They’re not paying the e-tolls. Are you making any progress in finding a solution – presumably, with Government?
As explained earlier, we are part of a task team that is headed by the Deputy President. We will determine if any changes are required. All the parties involved have made it pretty clear that the user-pay principle is still Government’s mandate and that means that certainly needs to stay. If there are any additional things that we need to address, such as public transport and pricing, that needs to happen and we need clarity on those things. That doesn’t help the road users to know what’s coming their way. They’re uncertain and that’s why they’re not certain whether they should pay us or not.
The politicians have also been sending us very mixed messages on this. One party says ‘don’t pay the tolls. We’ll defend you in court’. Another party says ‘well, we are putting it on hold for the moment’. This must make life pretty difficult from where you’re sitting.
It certainly does and the rundown aspects of it can even be seen on the roads. Yesterday, I had to travel to the auction from Sandton to Pretoria and suddenly, it takes me 40 minutes longer to travel. We’ve seen a huge increase on congestion on our roads and I think that’s mainly because people don’t believe they should be paying and therefore, are using the roads while they think it’s free. That has other impacts for Sanral in terms of the road itself (the maintenance) as well for other things, like Gautrain. If there’s no incentive to use the train, people will always make the easier choice for them, and I think people forget that tolling is not only a means of paying for a road. It’s actually, more a means of managing demand and congestion.
Unintended consequences. Another potential unintended consequence is that you have R42bn in debt, at Sanral. At some point in time, those who are lending you the money might be saying ‘can we have it all back, please’.
We obviously have different bonds with different maturities. Yesterday’s auction clearly indicates, from investors that (1) we’re unsure about your future. We may not invest. (2)  Because of that risk, we are giving you margins that are much wider than what it was.
Give us some good news please, if you would or maybe some finality. You are part of a task team that’s been going on for quite some time. Certainly, from where the public is sitting, there doesn’t appear to be any good news on the horizon in the immediate future. Perhaps you can help us there.
I can help with a couple of things. Both the Premier and our Minister have indicated, very clearly, that the tolling/user pay principle is here to stay, so it’s very clear. There may be a reduction in cap or something else. The bottom line is that you need to pay for the usage of the 300kms of road, especially if you want to think about further road development to the standard that we’ve given you on GSRP, which has been widely debated. There are 780,000kms of road in South Africa. An estimate shows that the maintenance backlog of those is R200bn. The 300kms we’re talking about here, I think, well priced if you look at the incentives and the rates you’re charged, if you’re registered and have an e-tag and we’ve given that incentive.
If we look at the numbers after a year, and we’ve collected so much data in the year; it still indicates that more than 87 percent of people would pay less than R200.00, if they register. There’s a bit of noise being made about paying too much, but if you are registered with the tag and the tag is free, you are not paying exorbitant amounts of money.
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