Press release TWO –  issued 14-03-2012

SAVRALA CONTESTS CLAIMED TOLL BENEFITS AND CALLS FOR INDEPENDENT ECONOMIC STUDY

SAVRALA (Southern African Vehicle Rental and Leasing Association) representing approximately 450,000 vehicles continues to be very surprised by the ongoing e-Toll benefit motivations presented by SANRAL, its principal, the Department of Transport and more recently Transport Economist Dr Roelof Botha.

These parties often refer to a Gauteng Freeway Improvement Project (GFIP) 8.4 benefit cost ratio. Simply put, this hypothesis claims that for every R1 spent on the tolls, motorist will receive  a benefit of R8.40. This claimed benefit is sourced from the Economic Analysis of the Gauteng Freeway Improvement Scheme prepared in August 2010 by the Graduate School of Business (University of Cape Town) for both the South African National Roads Agency (Pty) Ltd and the Provincial Government of Gauteng. This claimed benefit cost ratio was also presented in last year’s GFIP Steering Committee Report.

As this claimed benefit is one of the key motivations for the e-Tolling project, SAVRALA would encourage these parties to take note of the Minister of Transport’s reply, tabled on 31 October 2011, to a Democratic Alliance question on the claimed GFIP benefits raised at the National Assembly (Question no 2598);

“As can be seen, the key assumption of the 2007 feasibility study was that the GFIP Project would reduce congestion. In my considered view, and in retrospect, the original feasibility study did not sufficiently weigh up international evidence suggesting that freeway expansion often does not in the medium term resolve congestion challenges, and often induces greater demand.

It also failed to consider alternative solutions to congestion – improved public transport provision, moving more freight onto rail and a curb on urban sprawl. The project benefits to road users may, therefore, unfortunately not be forthcoming. This is the subject of further assessments and consultations by the Department of Transport and a Cabinet Task Team”.

The claimed GFIP benefits of time savings, reduced vehicle expenses and lower accidents are again based on questionable assumptions derived in many instances from information unchallenged by SANRAL itself. It is also important to note that the Economic Analysis of the Gauteng Freeway Improvement Scheme did not request any input from any of the affected stakeholders like SAVRALA.

Surely it is time for a proper public and independent economic analysis to be conducted?

It is also essential to separate the actual construction of the roads from their funding model.  SAVRALA agrees with SANRAL on the need for the GFIP and that it will provide some benefit, but how much and at what cost is now a moving target. In reality, the viability and efficiency of the proposed e-Tolling model is now well beyond any economic argument.

After the Minister of Finance last month contributed almost R6billion from Treasury to fund SANRAL’s outstanding GFIP debt, the balance now due is approximately R14bn (excluding interest payments). Unfortunately, SANRAL have not made the actual impact of the contribution from the Minister of Finance to the total GFIP debt public. This means one has to determine the relative economic efficiencies of the e-Toll model at a rather crude level – however, the message is clear. Economically, it is irrational to continue with a revenue collection scheme that will very conservatively cost the GFIP users just over R6billion (although it has been estimate to be as much as R11billion), to collect the outstanding R14billion, resulting in an e-Toll administration cost to revenue ratio of 43%!

This is an unacceptable percentage for administration costs and contradicts the Minister of Finance’s earlier call this year for all parties to be wise with scarce resources.

SAVRALA, and many other business and civil associations, have never disputed the need to pay for the costs of GFIP, however, jointly they continue to oppose the unacceptable levels of cost for a wieldy administration imposed by the e-Tolling funding mechanism. SAVRALA therefore calls on the Government to seriously consider other less costly funding models like, the revenue raised from the Fuel Levy, as one of several other funding mechanisms.

Further, SAVRALA remains perplexed as to why the Government remains obstinate in the extreme about the drive to implement such an inefficient and costly system, given the extensive and growing resistance to e-Tolling across South African society, including some elements of Government itself.

It is also of great concern that our Government agencies and their various spokespersons are reverting to verbal bullying and threats against its citizens should they wish to exercise their rights and not register for an e-Tag but rather pay the non-discounted rate given the concerns about individual/account information protection etc.

What is needed, is greater transparency regarding the terms and conditions of the ETC (Electronic Toll Collection) tender document and the extent of the potential financial penalties, should the e-Toll project not proceed.

The current stance only corroborates Government’s stubbornness to proceed despite all logical and economic reasons to rethink the project.

It has however become painfully obvious, that this is the biggest public uprising against a decision taken by government since the birth of our new democracy 18 years ago.

Notes to editor:

1)      DA Question 2598, reply by Minister of Transport can be found at   https://www.pmg.org.za/node/29123

2)      GFIP Economic Analysis available at https://www.nra.co.za/live/index.php

As a national body representing almost 450 000 vehicles on South African roads, SAVRALA (The Southern African Vehicle Rental and Leasing Association), as well as the Southern Africa Tourism Services Association (SATSA), the Coach Owners Association South Africa (COASA) and the Federated Hospitality Association of Southern Africa (FEDHASA) who all fall under the umbrella association of the Tourism Business Council South Africa (TBCSA), remain concerned and are unconvinced about the billing procedures of ORT (Open Road Tolling) and its implications despite the recent launch of SANRAL’s etag campaign.

While SAVRALA has as yet been unsuccessful in scheduling follow-up meetings with SANRAL (South African National Road Agency Limited) this month to review their many outstanding issues, SAVRALA are encouraging both individuals and companies to carefully consider the following before registering for an e-tag:

1)      The final schedule of toll tariff’s and discounts from both SANRAL and the Department of Transport have yet to be published in the Government Gazette despite various communications on the Cabinet’s tariff decisions.

2)      Despite ongoing requests for clarity and more detail, it remains unknown how SANRAL intends to prosecute road users who do not pay toll fees. It seems impractical and would most likely overburden the already strained judicial system if each individual who did not pay their fees, were to be prosecuted.

3)      Currently no documented processes or systems are in place to resolve incorrect toll transactions caused by false (cloned) vehicle license plates. This puts the responsibility and the added cost onto Individuals and companies to ensure they have the necessary resources available to reconcile their SANRAL toll bills against their own vehicle/fleet movements.

4)      The current e-tag Terms and Conditions available on the SANRAL website could be considered onerous and clearly place the responsibility of ensuring accounts have sufficient funds available on the registered e-tag user, as clause 22 requires a registered e-tag user to pay all fees and charges, irrespective of any dispute they may have over charges. This means the clause must be interpreted in the context of the risk of illegally cloned license plates as GFIP (Gauteng Freeway Improvement Plan) road users (as per clause 5) will be liable for all toll transactions recorded according to the user’s VLN (Motor Vehicle License Plate Number) or its e-tag.

5)      No details have been made available yet to explain the criteria for exemption of commuter buses and mini-bus taxis. Depending on the definition of the criteria, many tourism related transport services may also be exempt. To date no explanation exists on how SANRAL will accurately maintain and enforce the validity of the various permits and routes etc.

The decision by SANRAL (who take their instructions from the Department of Transport) to launch their e-tag campaign now, whilst several further consultative processes are underway and which are largely led by the Department, only serves to cause further confusion amongst the general public.

SAVRALA looks forward to actively participating in the (yet to be confirmed) Road Funding Summit and will continue to propose that the burden of funding both the GFIP and other national road infrastructural priorities should come from an additional amount added to the national fuel levy as this is the most cost efficient and effective method to raise the required funds.

The need to build a viable and safe public transport infrastructure, as a real alternative to travelling on the roads, must also be considered. The Road Funding Summit should seriously consider how best to use the infrastructure already purchased, if other funding models like the fuel levy are to be implemented.

Editorial contacts:
Paul Pauwen
Email: manager@savrala.co.za

Release date: 27-10-11

At the Southern African Rental and Leasing Association’s (SAVRALA) AGM held today in Johannesburg, its members, representing over 450,000 vehicles, agreed not to register their vehicles for e-tags until their tolling concerns have been addressed. The lack of clarity regarding the enforcement of tolling, the burden of additional administrative costs on Gauteng road users and the risk posed to road users by cloned registration plates are only some of the outstanding concerns which present yet undetermined consequences to both its members and all Gauteng road users.

SAVRALA welcomes the recent instruction by the Minister of Transport to ‘halt all processes related to the tolling of national roads’. The Minister’s view that the ‘consultative processes should be allowed to take place to offer concerned parties an opportunity to share their views on the toll road program’ is warmly supported and long overdue. The intent, however, to implement tolling in Gauteng, should also be halted.

In addition, the firm statement given this week by the Finance Minister Pravin Gordhan to his Government to ‘use the resources we have far more effectively’, strongly resonates with SAVRALA’s concerns about the planned implementation of urban tolling in Gauteng. The expected administrative costs, conservatively running into billions, could be replaced almost overnight by an additional fuel levy without any wasteful administrative costs. Funds raised by the fuel levy could be allocated to key national infrastructural projects, such as the Gauteng Freeway Improvement Project (GFIP).

SAVRALA remains ready at all times to engage with SANRAL and the Department of Transport to address the current road infrastructure funding challenges. The lack of an effective consultation structure between the various transport related stakeholders and Government remains an important opportunity to be fulfilled.

Given the dynamic and fluid nature of the current tolling national debate, SAVRALA’s members will again review their position on the implementation of planned urban tolling in Gauteng within the next month.

Editorial contacts:
Paul Pauwen
Email: manager@savrala.co.za

SAVRALA has often applauded the Gauteng Freeway Improvement Project (GFIP) upgrades and is not unwilling to pay its respective share, but is yet to be convinced that the current urban toll model is the most efficient and cost effective.

An independent transport regulator should have been in place at the beginning of this process to ensure that there is reasonable oversight and due administrative process.  In its absence, the fact that, in Gauteng we will be expected to pay R6,2bn to collect approximately R20bn, a collection cost of 30% over five years without any real transparency of the real costs involved is reason alone for grave concern.

Today’s announcement also does little to convince Gauteng road users that Government has displayed a genuine willingness to engage constructively and transparently with key stakeholders and the public at large. During the ORT Steering Committee process, established earlier this year to address the concerns of various broad based stakeholders, the Department of Transport held a press conference an hour before the final consultation meeting took place to announce their recommendations. One wonders what the point of the consultation was.  Last month we also noted the formal request, by Business Unity South Africa directly to the Minister of Transport and the SANRAL CEO, for access to key information, which to date remains outstanding.

The GFIP tolling debate created the perfect opportunity to discuss, as broad based social partners, various funding options to tackle the road infrastructure backlog in the context of developing a reliable, safe and cost effective public transport system.  The Governments desperate bid to steamroll the GFIP urban toll process has demonstrated an ability to decree a ‘user-pay’ methodology for all one day but, conveniently, when faced with threats of non-compliance from the taxi industry, decides to exempt ‘qualifying commuter taxis and buses’. Today’s announcement is notably thin on the rationale for the exclusion which in effect implies that potential toll users must, in addition to normal taxes and levies, now also subsidise public transport.

While Government may view today’s announcement as a further step towards the planned ORT implementation, we remain hopeful that there still remains opportunity for broad based stakeholders to engage with Government to identify a more holistic road maintenance strategy with a fresh but robust discussion on the use of the fuel levy funding mechanism leading to a better funding model with national support from all concerned and affected.

ENDS

PRESS RELEASE ISSUED ON BEHALF OF SAVRALA BY ADZOO. CONTACT LILI REES ON lili@adzoo.co.za or 011 462 0976.