Report questions fuel levy as e-tolling alternative

In a recently published

report – which has proved

controversial in SA – the

World Bank (WB) has come

out in favour of e-tolls and

against the fuel levy as

the best means of paying

for the Gauteng Freeway

Improvement Project

(GFIP).

Its study on the subject

suggested that a fuel levy

was a possible alternative

but added that it was at best,

a “proxy for road use and

would need to be adapted

over time to take account of

vehicle technology change”.

The controversy that the

GFIP generated led to a

complete public rejection

of e-tolling. So big was the

objection that, in the first

two-and-a-half years of

e-tolling, compliance had

only been at an average

of around 25% to 30%,

according to figures released

to FTW by the Organisation

Undoing Tax Abuse (Outa).

This, said the WB

report, had reduced the

creditworthiness of the SA

National Roads Agency

Limited (Sanral) as a going

concern, and this opposition

had to be dealt with before

Sanral could pursue other

road infrastructure projects.

Wayne Duvenage,

chairman of Outa, disagreed

with the WB’s view. “The

problem with Sanral’s e-toll

scheme for Gauteng was the

excessive collection cost,” he

told FTW, “which consumes

almost 30% of the revenues

before one rand is used to

service the capital bonds.”

He added that

unfortunately for Sanral, the

low compliance experienced

had ensured that around

90% of the e-toll revenues

generated had been used

to service the collection

process. “Virtually nothing

has gone into the tarmac,”

Duvenage said.

He also stressed

that the fact that e-toll

compliance had remained

low throughout the first

two-and-a-half years was

a strong indication of why

the scheme was not fit for

its purpose in SA.

“In the context of an

environment where weak

regulatory administration,

combined with poor

enforcement and a high

propensity for poor public

co-operation on such matters,

the scheme was always going

to suffer low payment levels,”

added Duvenage.

He pointed out that,

on the other hand, the

fuel levy had a zero

administration cost,

as it was an existing

government policy and

enabled treasury to pass

on a portion of the levies

collected to Sanral for road

construction.

An Outa calculation

showed that a R0.09c

increase in the fuel levy

back in 2008 – when

the Gauteng freeway

upgrade began – would

have already settled in

full the R18 billion road

construction capital cost.

“Against this backdrop,”

said Duvenage, “it is a

no-brainer to compare

the two options. The

fuel levy option would

have delivered a paid-up

solution for the upgrade

within nine years. The

e-toll option, on the other

hand, has delivered a waste

of money on collection

costs with no contribution

toward the capital bonds

since the road construction

started in 2008.”