Presentation is loading. Please wait.

Presentation is loading. Please wait.


Similar presentations

Presentation on theme: "ACTING DIRECTOR-GENERAL"— Presentation transcript:


2 CONTENTS PART A – Policy, Transport issues in general
PART B – Gauteng Freeway Improvement Project (GFIP)

3 INTRODUCTION Our presentation today is a courtesy call to you, to provide you with the bigger picture. To do so we will provide all the facts on: Policy Challenges Public Transport realities Road Funding

4 POINT OF DEPARTURE To implement transport solutions, funding will be required Economic infrastructure requires funding, ultimately all is paid directly or indirectly by citizens of the country Funding policy for road infrastructure cannot be reduced to finding a solution to a single project.  When considering the current funding model of the GFIP as well as alternatives, we should consider the holistic transport funding policy and requirements of all road infrastructure in the country.  We must ask questions about equitability, how fair is the policy to all South Africans? Therefore, the presentation to follow does not only discuss funding policy principles of this and future phases of the GFIP, but the overall funding policy and requirements for the country.

Transportation consists of various modes and infrastructure components: Road: Private vehicles, Public Transport, Freight, etc Non-motorised Pedestrians Animal drawn Rail: Metro, long distance passenger and freight Aviation: Passengers, freight, airports Maritime Harbours, freight, passengers Cross border trade Law enforcement operations

The transport sector and the mobility it confers are linked to a level of economic output, employment and income within any national economy, It impacts directly on the development and the welfare of the population. Poor infrastructure is an obstacle to economic growth. South Africa faces, inter alia, twin challenges w.r.t infrastructure Maintain what is has (the national asset) Provide for the non-serviced and under-serviced communities Road infrastructure helps solve both long term and short term economic problems. In short term investment in road infrastructure helps provide jobs for low skilled workers. In long term it has a wide range of benefits e.g. multiplier effect (creates direct, indirect and induced jobs), reduce congestion and carbon emission, benefits business by reducing costs of transport.

The importance of road transport in the South African economy is obvious when considering that: In 2013 Road Freight accounted for 88 % of the total freight tonnage transported in South Africa, 94 % of the 35 million daily motorised person trips recorded in South Africa, are road based, Vehicle ownership doubled since 1994 (5 million to more than 10 million)

The DOT needs to ensure a sustainable transport sector that is efficient and provides economic and social opportunities and benefits that result in positive multiplier effects such as: accessibility, employment, Accidents, and additional investments. The best road to progress is freedom's road. John F. Kennedy

Mobility is fundamental to and an important characteristic of economic activity as it satisfies the basic need of moving from one location to the other, a need shared by passengers and freight. Apart from the direct cost of congestion on the economy (hours lost, productivity and vehicle operating costs), the social impact of congestion on society is a major concern: Commuters spend hours to get to and from work, many leaving in the early hours of the morning and returning late at night. The social impact of congestion cannot be calculated in monetary value only, but manifests in the social health of families, the ability of parents to assist their children with homework, ensuring that they attend school, family time, etc. In addition to the social impact of congestion above, it also has a negative environmental load, which cannot be neglected. Anti-green economy Carbon emission.

Transport funding policy is imbedded in various policy and legislative documents including: White Paper on National Transport, 1996 Moving South Africa, 1998 White Paper on the Commercial Ports Policy, 2002 The National Land Transport Act of 2009 (also governing how to procure transport infrastructure) National Development Plan, 2012. When transport systems are deficient in terms of quality, capacity or reliability, they have an economic cost such as reduced or missed opportunities. In 1995, the ANC government under President Mandela introduced the Masakhane Campaign to inculcate the principle of users taking responsibility for infrastructure development and payment of services as part of the implementation of the RDP. President Mandela said: and I quote: “pay for what we use or else the investment will dry up and the projects come to an end. We must ensure that we can, as a nation, provide for the millions still without the basic services.’

11 White Paper on National Transport Policy, 1996
ROAD FUNDING POLICY White Paper on National Transport Policy, 1996 The user pay principle was accepted to ensure ongoing investment in road infrastructure and hence remove constraints to economic growth whilst allowing for social imperatives to be prioritised, in line with policy priorities: The development and maintenance of transport infrastructure in accordance with sustainable economic and development principles, within the context of a sound financial base. Encourage more efficient land use, correcting past imbalances and reducing travel distance and time. It further calls for the prioritisation of public transport over private transport 11

Hardly any significant new highway road construction projects have been launched since 1986 except for those that were constructed as part of toll projects South Africa has been spending considerably less than half of the international benchmark for road construction and maintenance over the past decades Between 1980 and 2004, the public sector share in gross domestic fixed capital formation in the South African economy declined dramatically The estimated maintenance backlog (2014) for national and provincial roads is estimated to be R197 billion 12

ROAD FUNDING POLICY (2) THE NATIONAL LAND TRANSPORT ACT, 2009 Requires that transport infrastructure must be procured in a manner that prioritises public transport, especially in metropolitan areas. Roads that are free at the point of use discourage investments in public transport. Government emphasis on public transport - over the past 5 years, expenditure on public transport infrastructure has increased on average with 19,9% annually.

“The commission's view is that in the long term, users must pay the bulk of the costs, with due protection for poor households. The role of government and the fiscus is to provide the requisite guarantees so that the costs can be amortised over time. The state must also put in place appropriate regulatory and governance frameworks so that the infrastructure is operated efficiently. For infrastructure that generates financial returns, debt raised to build facilities should be on the balance sheets of state-owned enterprises or private firms that do the work. Guarantees should be used selectively to lower the cost of capital and to secure long-term finance. Subsidies to poor households should be as direct and as transparent as possible. Infrastructure that does not generate financial returns - such as schools or hospitals - should be financed from the budget.” 14

15 ROAD FUNDING POLICY (4) The bulk of funding for road transport infrastructure is still provided through the fiscus However, the funding policies mentioned, support the principle of direct user charges to recover capital and operations/maintenance costs directly from those that benefit from the use of that infrastructure The funding policy does not only focus on cost recovery, but also on achieving other objectives, i.e.: Change in travel behaviour – distance / time when Promote the use of public transport Environmental – use of cleaner/cost effective fuels Urban development – reduce urban sprawl, promote densification Provide infrastructure much quicker

The ‘users pays principle’ is sometimes understood as Government is renouncing its funding responsibilities. ALL money, whether tax or user charges, comes from the public. ALL infrastructure is therefore funded by the public in one form or another. Fiscal constraints Competing needs. The different funding methods are a way of prioritising and expediting the delivery of road infrastructure. It is also a tool to influence driver behaviour and travel patterns. The ‘user pays’ approach to infrastructure provision is a way of spreading the cost of provision more fairly.

But the White Paper ‘users pays’ principle’ is just that: a principle; it does not distinguish priorities for transport. It is a question of means and ends. ‘User pays’ is one means of funding to meet the needs. The 2009 National Land Transport Act is what sets the priorities for all transport spending – including roads. NLTA says infrastructure must be procured in a way that prioritises public transport. Tolling achieves this.

18 ROAD FUNDING POLICY (7) In conclusion, road funding policy
Is determined by Government – not SANRAL Has wider objectives than purely the funding of infrastructure, i.e. altering travel behaviour Is biased towards the provision of public transport. For the km National Road Network, SANRAL is the implementing agency of Government’s road funding policy. SANRAL does not make policy. SANRAL implements government’s policy.

According to COTO Document regarding road network condition and funding requirements: Budget required per year to sustain overall road network: R65,8 billion (no expansion, strengthening, improvements etc.) Budget required per year to address maintenance backlog for the overall road network: R14,5 billion *Note : the table below does not provide for any expansions to road networks and excludes the SANRAL toll portfolio

National Treasury already reallocates more than the current fuel levy to transport requirements. Accordancing to COTO Document : To only address the network sustaining maintenance needs of R65,8 billion per annum will require an additional R1.00 per litre of fuel - in other words average fuel levy of R3.17 per litre To address the remainder of the strengthening (5 years) and regravel (10 years) not addressed as part of the sustain allocation above, and gravel road surfacing backlog will require further R0.48 per litre of fuel - in other words average fuel levy of R3.65 per litre

Government is in full support of the promotion of public transport. Reflected in: Policy Expenditure. Approximately 60 % of transportation is already done via other modes than private vehicles (National Household Travel Survey 2013). 58% of workers leave home before 07H00 for urban areas (National Household Travel Survey 2013) Many commuters start travelling before 04H00 in the morning to be at work by 07H00.

The Department of Transport: Acknowledges that Public Transport is not yet at the level of a fully accessible and integrated public transport system, due to a historic lack of investment and which is being rectified. Presented that various public transport alternatives are currently in place, and have been improving over the past 5 years, for both daily commuters and private car users. A culture of private car usage renders the existing alternatives ineffective with insufficient demand warranting improvements and expansion of these services on typical road user routes. However, millions of commuters are dependent daily on train, bus and taxi services currently operated in Gauteng Province. Issue is to improve standard of public transport services.

Various Government investment allocations, plans and projects are being rolled out as a firm commitment to the improvement, development and expansion of the current public transport network over the next 5 years The modernisation of rail commuter services (R53 bn) Approximately R13 bn earmarked for Bus Rapid Transport expansions in Gauteng. The establishment of a single Transport Authority in Gauteng is far advanced to co-ordinate, promote and plan improved integrated public transport networks within and between the respective Metros and travel demand corridors in Gauteng.

Various other historic and current initiatives between DOT with metros and provinces to improve public transport services & affordability are: Taxi recapitalisation Gautrain: passenger trip per day on average, of those are on the airport line. Total passengers per day is between and Metrorail (PRASA) improvements Public transport subsidies: total Public Transport Operational Grant (PTOG) allocation is R1. 819, out of R4. 832, (total for country).

South Africa has widespread city regions as a result of past policies and lifestyle preferences. Effective public transport requires dense city regions. 87% of public transport is road based (National Household Travel survey ) Model split: comparison 2003 to 2013 Gauteng Province only Train: vs Bus: vs Taxi: vs Both capital and operational costs for public transport are largely subsidised by Government – since full user cost recovery is too high and will negatively impact on especially the poor. As a result, the provision & operations of public transport infrastructure is expensive.

Service Trips/day Users/day Capital cost by Government Annual operations subsidy Operations subsidy per user per trip BRT JHB 60 000 R3,1 Billion (Phase 1A and 1B) R522 million R11.76 – R15.12 Gautrain 28 000 R28 billion R1.0 billion (in terms of ridership guarantee) R60.03 average* Cost of public transport *Will reduce as ridership increases Service Trips/day Users/day Capital cost by Government Annual operations subsidy Operations subsidy per user GFIP More than 2 million More than million R5,7 billion once off National Treasury contribution (once off to reduce tariff)* R0 GFIP *Capital funding obtained through the issuing of guaranteed and non-guaranteed bonds

Argument is raised by some that toll roads and the user pay principle can only be implemented if sufficient public transport services are implemented Approximately users (making trips) per day on Gautrain & users (making trips) per day on JHB BRT Daily users on GFIP network – more than 1 million users doing more than 2 million trips Annual growth on road network – conservatively 3% - therefore at least additional travellers per year

Therefore to accommodate a conservative user growth scenario experienced on the GFIP freeways only, and then accommodate that growth on public transport, Government needs to provide the equivalent of an additional “Gautrain” every year, or replicate the JHB BRT network every 2 years Still no reduction achieved in the number of current users on freeway – just to maintain the status quo

However, although expenditure on public transport increased dramatically over the past 10 years (R190 bn) there has not been a reduction in private vehicle usage. The National Travel Survey showed in actual fact a growth in the use of private vehicle usage. It is therefore unlikely that, despite the capital and operational investments made in public transport, there will be reduction in private vehicle usage in Gauteng – given the continuous growth of the province. As stated in the ITMP 25 document from the Gauteng Province the reality is: That the population in Gauteng is predicted to increase from 12,2 million people to 18,7 million people in the next 25 years That the number of peak hour trips in the province may increase from 2,2 million in 2013 to 3,89 million in 2037 It is for this reason that the ITMP 25 is proposing not a single, but a number of integrated transport initiatives to accommodate this growth: Land Use Development (densification) Public Transport Network Freight Transport (Freight hubs) Road Transport (Continued, sustainable province-wide road network mobility).

30 TRANSPORT PRICING A debate is required about how transport is priced - different modes of transport are priced Public transport should be more attractive than private transport, both in terms of convenience (trip time) and pricing We should change concept that public transport is only for the poor, but rather an option for all.

Travel Demand Management: Working from home Flexi work hours (peak spreading) Ride sharing – more persons per vehicle achieved through benefit provided to high occupancy vehicle (HOV lanes, road pricing) Intelligent Transport Systems (ITS): Utilising electronic equipment (CCTV, traffic counters, etc) to monitor traffic flow and communicate to road users in time about potential problems (Electronic signs, web, twitter, radio, etc) Incident management: reduce incident duration by means of improved on-road services Promoting the use of public transport – more persons in taxis, buses and rail.

Densification of cities: Higher density development and filling up empty spaces in city regions Prevent urban sprawl: Determine an urban edge and discourage development outside the edge (Both the above will make public transport provision and services more effective) Non-motorised transport (walking and cycling): Provide safe and adequate infrastructure to encourage walking and cycling

Most of these options requires some form of incentive or associated direct cost (toll or congestion pricing) that will make people think differently about transportation and the way they go about making trips.

34 LEGISLATION SANRAL is operating and managing the km national road network in terms of the South African National Roads Agency Limited and National Roads Act, 1998 National network expansion from 6 800km in 1998 to km as from July 2014 In terms of the Act, SANRAL is a State Owned Entity (SOE) SANRAL is a classified as a Category 3A SOE: not allowed to make a profit not a business enterprise (therefore talk of SANRAL "profits" is misplaced) The Minister of Transport is the sole shareholder of SANRAL representing government 34

35 LEGISLATION (1) The Act determines the sources of funding for SANRAL, and the way in which SANRAL must report on expenditure. SANRAL has the following options available for funding the maintenance and expansion of the National Road Network: Budget allocation received via the Department of Transport from the fiscus Borrow on the capital markets : issue bonds and other financial instruments. This debt is serviced by means of toll payable by users benefitting from these roads (toll roads). Two options for the implementation of toll roads are available: State (SANRAL) funded toll roads Concessions (PPPs) 35

36 LEGISLATION (2) The South African National Roads Agency Limited and National Roads Act, 1998, Section 27 provides for the Minister of Transport to approve any specified national road to be a toll road and may levy and collect a toll. The Minister will not give approval unless the Agency: has given an indication of the approximate position of the toll plaza contemplated for the proposed toll road; has invited interested persons to comment and make representations on the proposed declaration and the position of the toll plaza has requested the Premier in whose province the road proposed as a toll road is situated, to comment on the proposed declaration and any other matter with regard to the toll road has given every municipality in whose area of jurisdiction that road is situated the same opportunity to comment. 36

The following options to fund the identified SANRAL expansion projects are available, if tolling is not available: Reprioritise existing non-toll allocations over 10 year period - delaying maintenance on the old road network. Maintain – not expand - congested portions of network But will be disastrous for the remaining non toll road network With current baseline allocation for national roads, the national road network would deteriorate from 11% of poor and very poor roads in 2014 to 47% of the network in poor or very poor condition by 2024 This approach will be disastrous for road users throughout South Africa, and thus for the economy of South Africa.

National Road Condition scenarios with and without toll

Alternatively, road expansion projects not implemented at all Mobility as one of the fundamental and important characteristics of economic activity is compromised Direct cost of congestion will increase The social impact of congestion on society (economic and health) is compromised.

Where does toll revenue go?: For concessions, toll revenues are collected by the concessionaire to recover costs for debt servicing, capital expenditure, road maintenance, operational costs and a return on equity. For state toll roads, tolls collected are directly used (ring-fenced) for debt servicing and all other funding requirements for the toll road network. The SANRAL finances are audited annually by the Auditor General. No provision for “profit” is made in the SANRAL toll portfolio. All revenue received from toll is reinvested in toll roads. No cross-subsidisation (toll to non toll) is permitted.

EUROPE: Extracts from (EU Directive 2011/76/EU): “The promotion of sustainable transport is a key element of any transport policy. To this end, the contribution of the transport sector to climate change and its negative impacts should be reduced, in particular congestion, which impedes mobility, and air and noise pollution, which create health and environmental damage. In the road transport sector, tolls calculated as distance-based charges for the use of infrastructure constitute a fair and efficient economic instrument to achieve a sustainable transport policy, since they relate directly to the use of infrastructure, the environmental performance of vehicles and the place and time of use of vehicles and can therefore be set at a level which reflects the cost of pollution and congestion caused by the actual use of vehicles. Moreover, tolls do not create any distortion of competition within the internal market since they are payable by all operators. See annexure

The ability of direct user-pay charges to address congestion has internationally led to the use of road pricing in dense urban areas to reduce congestion in general and for specific times of day. Well-documented examples include: New York open road tolling, Singapore, the London congestion charge, Stockholm congestion charge, the “toll ring” around Oslo, Open road tolling projects in Melbourne, Sydney and Brisbane, major throughways in Santiago Chile, and Beijing’s expressways.

43 PART B: GFIP Transport Problem Statement GFIP History Consultation
Tariff history Court Cases

In 2005: Most freeways in Gauteng had reached their design capacity (pavement lifespan & traffic capacity). Peak hours were extending by 10 to 15 minutes each year. Resulted in congestion and uneconomical use of time with increased vehicle operating costs and carbon emissions. N1 – additional lanes and improve interchanges and upgrade / new bridges N3 - additional lanes and improve interchanges and upgrade / new bridges N17 - additional lanes and improve interchanges and upgrade / new bridges R21 – rebuild the PTA & OR Tambo Liknk + additional lanes and improve interchanges and upgrade / new bridges

The realities that are faced in Gauteng: The doubling of vehicle ownership since 1994. More than a third of South Africa’s vehicle population is concentrated in the country’s smallest province. Urban sprawl continues to expand the cities of Gauteng – it is expensive to provide public transport infrastructure for ever expanding urban areas. The bulk of public transport is road based (buses and taxis) - if the road network is becoming congested, it results in an ineffective public transport system. Infrastructure provision did not keep up with growth. Provision of this infrastructure is costly - without sustainable funding, any strategy will be ineffective.

The question is how must the authorities and users of transportation, decongest Gauteng? To achieve sustainable mobility for the future - collaborative effort between the authorities and transportation users will be required: Authorities should implement the correct strategies and related infrastructures Transport users should adjust travel habits in order to achieve success with any strategy implemented e.g. use public transport Objective is simple - less trips & smarter trip decisions. Key success factor - the ability to fund the implementation of these strategies and associated infrastructure.

Low population density in metropolitan areas, compared with international figures Distortion in land use development as a result of past political policy Urban edge keeps expanding Longer distances between home and work is travelled More expensive to provide efficient public transport Provision of road infrastructure did not keep up with growth in vehicle ownership and urban sprawl Average PT trip length in Tshwane: 3 x London (Jeremy Cronin – 2012 transport budget debate)

CSIR – 2001 Gauteng Province – 2004 AA SACCI

CSIR Report (August 2001): Imperatives for a Toll Freeway Network for Gauteng: Report drafted for the proposed unsolicited bid for freeway improvements in Gauteng Highlights importance of effective & efficient transport system for Gauteng Recommend tolling as value based alternative to fiscal transfers – on the back of social demands on fiscus Positive macro-economic impact – reduced overall transport costs Project should contribute R9b to GDP (2001 Rand) Create jobs (direct & indirect) 49

Gauteng Province Report regarding impact of congestion (2004): Potential loss in value added in Gauteng alone (business development) estimate R155 billion over the period 2004 to 2025, i.e. congestion would result in a loss of income of R155 billion to the province Every R1 billion spent results in nearly (9 184) direct employment opportunities. In addition it has a multiplying effect of 1,6, creating therefore nearly (23 878) job opportunities in total 50

AA conducted tests (August 2007) : 1600cc vehicle travelling between Pretoria and Johannesburg 122 Minutes additional driving per day (40 additional hours per month) due to congestion Engines operating for longer times – 1,5l/hr when idling Additional 705 litres wasted (469 hrs idling) per annum – Extra R4 935/annum (R7 per litre) people – R395 m per year wasted Excludes working time, frustration, accidents. 51

SACCI comments (Jan 2010): Express concern about impact on business due to congestion and insufficient maintenance Based on conservative assumptions, cost of congestion on Ben Schoeman amounts to R15m/hour Excludes costs associated with: Fuel and maintenance Late freight deliveries Lost business opportunities Accident costs. 52


54 BUILD-UP TO GFIP Since late 1990s, the Gauteng Province considered tolling as an option to fund the upgrading of the Gauteng Freeways due to funding constraints. They also drafted legislation in this regard, although it was not passed in the Gauteng Legislature. From 2000, SANRAL together with the Gauteng Province considered an unsolicited bid from the private sector to upgrade certain freeways and apply a toll to the upgraded sections. This bid was found not to be feasible and was not further explored. In 2005, SANRAL presented to the Minister of Transport a scheme to upgrade and expand the freeway network in Gauteng. The Minister of Transport required the proposal to be further evaluated and an inter-governmental (National, Provincial, Metropolitan and District Municipalities in Gauteng) workgroup was set up to determine and agree project principles. The Department of Transport was chairing this workgroup.

55 BUILD-UP TO GFIP (1) The proceedings of the inter-governmental workgroup resulted in a report titled: “Gauteng Network Integration Process: Proposal for a Gauteng Freeway Improvement Scheme”. This report was concluded in May 2006. The report concluded that the scheme should be further explored with an objective to; improve living conditions ensure sustainable economic growth in the Gauteng province, and To reduce traffic congestion and associated costs/delays to road users.

Funding Options Considered for GFIP by the intergovernmental committee (2006 report): Fuel Taxes - South Africa had a “dedicated fuel fund” in the past that ring-fenced funds for road projects. However, the levy was abolished in 1986. Vehicle registration/license fees and traffic fines - income generated and collected by provincial and local spheres of Government. It is not necessarily available to transport authorities. Development impact fees - Developer contributions towards infrastructure provision are taking place - not on a formalised, national basis. Assist local network improvements, not freeway development & expansion.

Shadow tolling - No tolls are levied from road users under this approach. Instead the shadow tolls are paid by Government to the operator, based on traffic counts on the road, an agreed rate per vehicle/vehicle type and an agreed set of performance criteria. The option does not create a new source of funds, or from making users internalise the external costs of their travel, but rather from Government commitment to continued financial support over several years. Shadow tolls is therefore simply a way to determine usage of a facility in order to compensate the operator/funder of the facility in accordance with an agreement. Tolling – A user based funding mechanism for road infrastructure development. It enables the mobilisation of substantial capital funds upfront, usually through debt equity, for the construction of infrastructure such as freeways. Since insufficient funds were available for the implementation of the GFIP, it was agreed that the user pay principle – "tolling” should be recommended to implement the GFIP.

58 BUILD-UP TO GFIP (4) The report concluded that the scheme must be based on the following principles: promotion of public transport and travel demand management, enhancing the concepts of intelligent transport systems (ITS) and road network management, ensuring sustainable maintenance, upgrading and expansion of the freeway network, the user pay principle as a financing tool for the scheme, and that it is implemented as a state toll scheme. Each member submitted the report to their respective principals.

59 BUILD-UP TO GFIP (5) SANRAL was tasked to further develop the GFIP with participation of officials of the province and councils. Following studies were conducted: Social impact study, Economic impact study, Specific road improvements, and Traffic modelling and Toll feasibility studies.

60 BUILD-UP TO GFIP (6) In concluding the rationale for implementing the GFIP, the following extract from the social impact study demonstrates why doing nothing was not an option. “With regard to the first scenario (do-nothing) a range of negative social impacts emerge at the socio-economic, personal, family and work levels. In this respect it is noted that the current state of the system has an overall negative impact with regard to the time spent by commuters travelling to and from work and pursuing their daily business. The safety and health of these commuters is at risk and the economic implication for both commuters caught in traffic on a daily basis and the country as a whole are unacceptable. It is clear that the current situation is untenable and needs drastic attention. Left to continue the way it is the situation will deteriorate to a point that the South African economy will eventually be choked. It is also clear that the situation is part of a wider problem that encompasses an aging and inappropriate transport infrastructure which for some time now has had a negative effect on both passenger and freight transportation throughout the country.”


INITIATIVE NO. 1:- GAUTENG TOLL ROAD STRATEGY (1997 / 1998) This initiative was embarked upon as a result of the inability to finance the freeway network in Gauteng in support of the economic development of the province. The very same reasons that motivated the current scheme existed in the past. The Gauteng Toll Road Strategy (1998) was based on an approach of a "network of toll roads". Development of a Toll Road Network (BB ) Proposed Gauteng Toll Road Strategy (BB5/1 – 1998) The above initiative was concluded by MEC Khabisi Mosunkutu and culminated in the publication of the GAUTENG TOLL ROADS BILL, 2003 (Notice 1880 of 2003 in the Provincial Gazette). Insert/view SRN map in pdf 62 62 62

GAUTENG TOLL ROAD STRATEGY (1998) cont. The Gauteng Toll Roads Bill, 2003 (GTRB) sets out the required legal provisions for the introduction of user charges on provincial toll roads. The Bill also made provision the province to enter into an agreement with SANRAL to act as the province’s agency to implement of the provincial toll road network. Provincial toll road strategy not implemented. Insert/view SRN map in pdf 63 63

INITIATIVE No. 2:- GAUTENG TRANSPORT NETWORK INTEGRATION PROCESS: PROPOSAL FOR A GAUTENG FREEWAY IMPROVEMENT SCHEME (2006) A draft proposal for improving the utilisation and sustainability of Gauteng’s freeways was developed. This was a joint initiative between Department of Transport, Gauteng Department of Roads and Transport, Municipalities in Gauteng and SANRAL The most suitable funding mechanism was identified to be a user payment-based toll scheme, with electronic fare collection as a basis to ensure free traffic flow. The proposed toll scheme comprised of a combination of existing road network capacity expansions and the development of new freeways. The scheme was designed to open up the corridor design of the Gauteng Freeway system in order to give more options to the road user and to provide multiple routes to any single destination as part of a network. Detailed work was conducted to determine the feasibility to implement dedicated HOV or public transport lanes on the GFIP network Insert/view SRN map in pdf 64 64 64

INITIATIVES No.3:- GAUTENG ROADS DEVELOPMENT PLAN (2006) -1 The Gauteng Roads Development Plan is one of a number of national and provincial strategies [e.g. Strategic Agenda for Transport (2005)], providing for the sequential development of a comprehensive transport system capable of meeting present and future needs. This Gauteng Roads Development Plan together with the Draft Gauteng Public Transport Strategy and the Draft Gauteng Freeway Improvement Strategy, jointly formed part of Gauteng Provincial Government’s response to the transport needs and challenges of the Province. Proposals on the Gauteng Freeway Improvement Scheme, is the GPG’s response for the implementation of the proposals as contained in the GAUTENG TRANSPORT NETWORK INTEGRATION PROCESS: PROPOSAL FOR A GAUTENG FREEWAY IMPROVEMENT SCHEME (June 2006) Note: (i) Private project finance are not loans. These are two very different concepts. (ii) Although Exco supported this option it recognized that it did not have the legislative powers nor the capacity to implement. Therefore, it supported the initiative to cooperate with SANRAL. This cooperation would come without any financial risk to Province. 65 65 65

INITIATIVES No. 3:- :- GAUTENG ROADS DEVELOPMENT PLAN (2006) -2 Gauteng Roads Development Plan (2006) identified the Top Twenty Class 1 (provincial freeways) as the bases for the freeway improvement programme. This document echoed the contents of the Inter Governmental Committee report of 2006. The Gauteng Roads Development Plan (2006) was accepted by EXCO under MEC Ignatius Jacobs in August 2006 indicating that a toll road scheme be the preferred funding option through Private Project Financing. 66 66 66

INITIATIVES No. 3:- GAUTENG ROADS DEVELOPMENT PLAN (2006) -3 On 21 November 2006, the Gauteng Provincial Government announced the following by way of then MEC for Finance and Economic Affairs, Paul Mashatile: 67 67 67

The Gauteng Province developed the Gauteng Integrated Transport Master Plan (ITMP 25), (November 2013) which is a 25 year plan to enable the Department of Roads and Transport to regulate, plan and develop an efficient and well integrated transport system. Several references to the GFIP and the importance of the user pay mechanism in financing the ITMP is made. Underneath are a few extracts from the ITMP (emphasis added): “All the roads listed in the further phases of the GFIP project have been highlighted in the various planning documents as priority routes and vital for the further development of the Gauteng Province The implications of the significant delay of the implementation of the further phases of the GFIP project has major implications for the Gauteng Province as both the GDRT and the Metropolitan, District and Local Councils relied on the GFIP network as the backbone mobility road network of the province.”  68 68 68

“The need for the implementation of the proposed further phases of the GFIP road is essential to reduce the logistics cost of the province and to provide the road infrastructure required for the optimal functioning and growing of the province. Irrespective of whether the freeway road network will be funded through Road User Charges or through the normal fiscus it is important that the detail planning and Environmental Impact Assessment of the following roads be undertaken to be able to start with construction when funding is available. It is thus recommended that between the Provincial Government and SANRAL the detailed design and EIA of the following road links be undertaken:” 69 69 69

“5.3.6 Widen the “User pay” principle Transportation infrastructure users are willing to pay as long as they receive a high quality service in return. It is, however, important that any future road pricing scheme must ensure that the revenues collected are channelled exclusively back into the transport sector The following additional transportation financing sources should be considered: Levying of tolls should be part of a holistic approach to road financing and has a role to play in a province such as Gauteng. Alternative funding instruments should be investigated and developed to finance public transport. It is preferable to introduce a mechanism that is based on Time, Distance and Place (TDP) of vehicle movements. The privacy concerns of road users should be addressed that limit the application of innovative new means of road user charging enabled by GPS Introducing a new transportation infrastructure fuel levy would be the easiest to introduce. A Fuel Levy is, unfortunately, not considered as an equitable solution as all South African citizens will have to pay for infrastructure in Gauteng, and fuel consumption does not represent the full structural, congestion and environmental impact of the cost responsibility of especially heavy vehicles.” 70 70

Wanted an SPV to be created consisting of: Gauteng Province Metros SANRAL Private sector Comment: Only SANRAL had legislation to implement toll roads Gauteng Province attempted to implement their own toll legislation since 1998 The creation of such an SPV required supporting legislation Deliberations resulted in using existing SANRAL legislation

Wanted toll revenues to be shared by SPV members (Province, Metros, SANRAL and Private sector) Comments: Revenue sharing, over and above the required toll tariffs to cover debt, capital cost, maintenance cost and operational cost would have resulted in higher toll tariffs Not aligned with the principle that toll revenue only applied to declared toll road – cannot be used to cross-subsidise other infrastructure

Wanted toll revenues to be used to improve public transport Comments: This principle was supported and was part of the initial recommendations of the Inter-Governmental Committee Such a contribution would have resulted in an increase in the toll tariff Would require legislation to allow for this In view of the increased capital expenditure towards public transport by the DOT and National Treasury, it was decided to exclude such a contribution (from toll revenue) to public transport It was further decided to promote the use of public transport through toll tariff structuring (discounts for public transport vehicles).

Wanted new freeways to be implemented from onset Comments: The scheme, as determined by the Inter-Governmental Committee always included the construction of approximately 150 km of new freeways Detailed financial modelling was conducted to determine if it was affordable from the onset of the project – it was demonstrated that it was not feasible from onset It was agreed to apply a phased approach to implement the road network. Preparatory work for entire road network would continue to design, obtain environmental approvals, finalise land acquisition, etc in order to be ready to implement once these routes are required It should be noted that the estimated lead time for the above activities is approximately 5 years before construction can commence A schedule of priorities/phases were agreed between the province and SANRAL.

The Gauteng Province did agree that the GFIP project be implemented in its current format On 2 April 2008, the Gauteng Province and SANRAL agreed as follows:

Inter-governmental (all spheres) workgroup agreed project principles (National, Provincial, Metropolitan and District). Resulted in report titled: “Gauteng Network Integration Process: Proposal for a Gauteng Freeway Improvement Scheme”. This report was concluded in May 2006. Participants presented the report to their respective political principals for acceptance.

Several other interactive sessions followed with metropolitan authorities and the Gauteng Province. The project was presented to the Gauteng Province at: The Gauteng Indaba (initiative of then MEC Jacobs) May 2006 Workshop with Gauteng Province in April 2007 Gauteng Legislature: Transport Portfolio Committee in August 2007.

Interaction with metropolitan councils: City of Johannesburg Tshwane Ekurhuleni Part of inter-governmental workgroup Several presentations to portfolio committees Participating in cluster meetings related to the traffic and toll studies.

Since 2006, the media reported actively w.r.t. the proposed GFIP Television, radio and printed media reported the proposed 50c/km (March 2007) Many media articles reflect the extent of the GFIP and expected toll tariff. 79

Project was presented several times to the Portfolio Committee of Transport in the National Assembly. Mid 2007, the Department of Transport submitted the project to the National Cabinet. Cabinet approved the implementation processes of the project. For the purposes of the cabinet submission, a toll tariff (2007 Rand) of 50c/km for light vehicles was indicated. Minister of Transport publicly announced the project on 8 October – toll tariffs above, after which the toll declaration process commenced. 80

Nedlac: In 2007, the then DG of Transport presented the project to Nedlac (Further presentations followed in 2011) In October 2007, the Notices of Intent advertisements were published in the Government Gazette. Also published in the following regional and national news papers: Star; 12 October 2007, Sunday Times; 14 October 2007, Sowetan; 12 October 2007, Pretoria News; 12 October 2007, Mail and Guardian; 13 October 2007, Beeld; 12 October 2007, The closing date for representations for the general public was 14 November and 14 December 2007 for public authorities. Similar processes were followed in April 2008 for the R21, after it was transferred by the Gauteng Province to SANRAL, for inclusion in the GFIP 81

Following these consultative processes, a final report with all comments received and mitigation proposed, was submitted to the Minister of Transport for his consideration. In March 2008, the Minister declared the GFIP roads as toll roads. Construction commenced thereafter. February 2011 set as the date for toll commencement. 82

Background: In 2007, the Minister of Transport indicated that the basis for determining the toll tariffs at each tolling point was 50c/km without discounts (March 2007 Rand).  In February 2011, SANRAL announced the proposed toll tariffs for the GFIP: The full tariff for light vehicles announced in February 2011 was based on 66c/km (equates to 50c/km in March 2007) The e-tag tariff for light vehicles amounted to 49,5c/km (25% discount). Other discounts were also introduced: Time of day discounts, reducing the toll tariff applied for defined time period outside peak travel hours; A special discount for qualifying commuter public transport vehicles; and A frequent user discount regime for light vehicle users.

National Steering Committee : In light of the public outcry to the proposed GFIP Toll Tariffs and following a meeting between the Minister of Transport and the Gauteng Premier, it was agreed that a consultative process be embarked upon with a view to addressing the affected stakeholder concerns. It was decided to determine if there are options to reduce the toll tariffs Insert/view SRN map in pdf 84 84 84

The Minister of Transport announced the Steering Committee on 7 March 2011:

Between 24 March and 6 April 2011, several engagements were held with stakeholders, to afford them the opportunity to make representations. Stakeholder included BUSA, Road Freight Association, Retail Motor Industry, SAT SA, Afriforum, JHB Business Chamber, SALGA, AA, SA Road Federation, DA, Solidarity, SACP and Freedom Front (FF), ANC Youth League, COSATU, National Taxi Alliance, Mamelodi Commuter Forum, SA Commuter Organisation and Ekurhuleni Metropolitan Municipality. The public was also invited to make submissions during this period. The steering committee investigated the proposals made, as well as all other options to revise the toll tariffs.

Following the Steering Committee proceedings revised tariffs were announced in August 2011 by Cabinet as follows: - the 66 c/km tariff (VLN ) for light vehicles was reduced to 58c/km, a 30% e-tag discount was offered, reducing the e-tag tariff to 40c/km. the ratios for determining heavy vehicle toll tariffs were reduced which resulted in much improved tariffs for these vehicles. It was changed from 1:3:6 to 1:2.5:5. In addition, and demonstrating the commitment to the promotion of public transport, Cabinet also announced a complete exemption from the payment of toll tariffs by qualifying commuter public transport vehicles. These tariff reductions and discounts were achieved as a result of an increased debt repayment period It should be noted that as SANRAL does not make a profit from tolling - there was no option to reduce toll tariffs by reducing any profit margin

In November 2011, the Gauteng legislature conducted public petition hearings into the tolling of freeways in Gauteng. Further engagements were held by the SANRAL Board with Stakeholders in January 2012. As part of the Steering Committee processes the Gauteng Province appointed auditors to review the financial model. The outcome of the review was that the SANRAL financial model is correct. National Treasury also explored further options to reduce toll tariffs. Following these engagements, the Minister of Finance, in his budget speech announced that Government is making an extra-ordinary allocation of R5,75 billion to further lower tariffs (increase discounts).

This resulted in: a further reduction in the e-tag tariff from 40c/km to 30c/km (48,3% discount to standard tariff), the monthly tariff for light vehicles was also capped at R550 for e‑tag users, and significant amendments were made to the time of day discounts for heavy vehicles.

In April 2012, an interim interdict was obtained by OUTA to prevent SANRAL from commencing with tolling Cabinet appointed an Inter Ministerial Committee to interact with stakeholders under chairmanship of the then Deputy President. Included Min of Transport, Finance, Environmental Affairs, Public Enterprises.

Numerous engagements took place, addressing some of the stakeholder issues. These engagements took place with Business, Labour and the community and included engagements with SAVRALA, OUTA, COSATU, Fedusa, Black Business Council, SA Council of Churches, National Interfaith Council of Religious Leaders, BUSA, Road Freight Association. Following the proceedings of the IMC, monthly toll caps were introduced for all classes of registered e-tag users. These toll caps are R250 for motor cycles, R450 for light vehicles (reduced from R550), R1 750 for medium heavy, and R3 500 for large heavy vehicles. From 2012 to 2013, the DOT, National Treasury and SANRAL engaged with the public at public meetings, as well as through the advertising of the toll tariffs and regulations for public comment. In September 2013 the SANRAL Amendment Act was signed into law. The final toll tariffs were published in the Government Gazette by the Department of Transport in November

1998 – Gauteng Province Toll Roads Programme – first concept of tolling Gauteng freeways 2002 – Platinum toll open. It includes urban tolling as well as electronic toll collection (Auto lanes) 2006 – Inter Governmental Committee – agreed GFIP and toll funding mechanism – various presentations to all participants (legislature, councils) – acceptance by decision makers 2007 – Cabinet acceptance of project October 2007 – Public announcement of GFIP, tolling and 50c/km toll tariff by Minister of Transport October 2007 to March 2008 – Toll declaration process in terms of SANRAL Act – GFIP routes declared as toll roads where after construction commenced.

February 2011 – Announcement of Toll Tariffs & discounts for GFIP; aligned with 2007 indicative tariff, however public/media outcry February 2011 – Steering Committee appointed by Minster of Transport and Gauteng Premier; Extensive stakeholder engagement; Report with revised tariffs & discounts (August 2011) August 2011 – Cabinet announced revised tariffs & discounts as well as exemption of commuter public transport February 2012 – Minister of Finance announced improved discounts (R5,75 billion special appropriation) June 2012 – Cabinet appointed Inter Ministerial Committee (IMC) under chairmanship of Deputy President. Direct stakeholder consultation – Further improvement of discounts and monthly toll caps for registered e-tag users

Monthly toll cost for light vehicles if registered with e-tag Category Actual % Less than R100 p/m 78.58% Between R101 and R200 12.38% Between R201 and R300 5.01% Between R301 and R400 2.33% Between R401 and R450 0.64% Verified by auditors

95 Urgent Application by OUTA to Gauteng High Court (March 2012)
COURT CASES Urgent Application by OUTA to Gauteng High Court (March 2012) On 23 March 2012 the Opposition to Urban Tolling Alliance ("OUTA") and others approached the Pretoria High Court on an urgent basis for an interim interdict restraining the South African National Roads Agency SOC Limited ("SANRAL") from levying and collecting tolls on the GFIP toll roads pending the final determination of their application to review and set aside the decisions of (a) SANRAL and the Transport Minister to declare the GFIP toll roads; and (b) the Director-General to grant certain environmental approvals related to the GFIP. Judge Prinsloo on 28 April 2012 issued an interim interdict prohibiting SANRAL from levying and collecting toll on the GFIP toll roads pending a review by the High Court of the aforementioned decisions.

96 Appeal Against Interim interdict to Constitutional Court (August 2012)
COURT CASES Appeal Against Interim interdict to Constitutional Court (August 2012) On 15 August 2012, National Treasury led an urgent appeal of the High Court decision to the Constitutional Court.  The Constitutional Court delivered its judgement in this matter on 20 September This judgment was delivered against the backdrop of the undisputed fact that –  "… Tolls are a revenue collection mechanism to fund the road upgrades. The National Executive Government has adopted the funding policy that revenue should be garnered from motorists who use the upgraded roads…." (See paragraph 56 of the Constitutional Court judgment)

97 Appeal against interim interdict to Constitutional Court (August 2012)
COURT CASES (1) Appeal against interim interdict to Constitutional Court (August 2012) The Constitutional Court sought, in its judgement, to address the question of separation of powers. In this regard the Constitutional Court held that –  "Thus, the duty of determining how public resources are to be drawn upon and re-ordered lies in the heartland of Executive Government function and domain. What is more, absent any proof of unlawfulness or fraud or corruption, the power and the prerogative to formulate and implement policy on how to finance public projects reside in the exclusive domain of the National Executive subject to budgetary appropriations by Parliament." (See paragraph 67 of the Constitutional Court judgement) The Constitutional Court further addressed the dire consequences of preventing SANRAL from performing its statutory duties. The Constitutional Court therefore proceeded to set aside the interim interdict granted by Prinsloo J on 28 April 2012.

98 Review of GFIP toll declaration – Gauteng High Court (November 2012)
COURT CASES (2) Review of GFIP toll declaration – Gauteng High Court (November 2012) In November 2013 Vorster AJ, proceeded to hear a review against the decisions taken to declare the GFIP toll roads and to grant certain environmental approvals related to the GFIP. The Court found that with regard to section 27(4)(a)(i) and (ii) and section 27(4)(b)(i) of the SANRAL Act it –  "… is clear that it is the physical aspects of the proposed toll road declaration and particularly the situation of the proposed toll plazas which are open for comments and representations by interested and affected parties including municipalities and the Premier of the relevant Province and no more." (See paragraph 9.2 of the Review Court's judgement)

99 COURT CASES (3) Review of GFIP toll declaration – Gauteng High Court (November 2012) With regard to OUTA's contention that there was a failure to give adequate notice to ensure proper public participation, the Court found that – "In the instant case SANRAL acted in terms of the provisions of Section 27(4)(a)(i) and (ii) of the SANRAL Act. That process was considered to be fair in the circumstances by SANRAL. With regard to OUTA's contention, that in terms of section 25 of the Constitution, tolling is an unlawful depravation of property, the Court found that – "There are two answers to this contention. Firstly, such depravation can only take place unlawfully if the toll road scheme is unlawful. Secondly, the payment of toll levies will take place in terms of an act of general application, being the SANRAL Act. I have already concluded that the GFIP scheme is lawful and that the toll road declarations in issue in this application have not been shown to be reviewable on lawful grounds." (See paragraph 11 of the Review Court's judgement) OUTA and the other applicants' case was dismissed with costs.

100 Appeal by OUTA against Gauteng High Court Judgement in September 2013.
COURT CASES (4) Appeal by OUTA against Gauteng High Court Judgement in September 2013. The Supreme Court of Appeal refused the appeal by OUTA and others. This was ostensibly on the basis that there had been an unacceptable delay in bringing the review application. Five years had elapsed since the impugned decisions were taken and during those “five years things have happened that cannot be undone”. (See paragraph 41 of the Supreme Court of Appeals Judgement). Subsequent to the Supreme Court of Appeal Judgement, SANRAL and the Minister of Transport published the e-Road Regulations, the exemption notices and the toll tariffs applicable to tolls on the GFIP toll roads. It was also indicated that tolling of the GFIP toll roads would commence on 3 December 2013. This resulted in two further legal challenges against tolling on the GFIP toll roads.

101 COURT CASES (4) Application by Tolhek Aksiegroep (Freedom Front) at the Gauteng High Court in December 2013 Subsequent to the announcement that tolling would commence on 3 December 2013 an urgent application to interdict the commencement of tolling based on the unlawfulness of the toll tariff Gazette and the Transport Laws and Related Matters Amendment Act, 3 of 2013 ("SANRAL Amendment Act") was launched. The application was struck off the roll by the High Court due to a lack of urgency and the applicant was ordered to pay the costs of SANRAL and the other respondents. The applicant has not sought to reinstitute these proceedings.

102 Application by the DA to Western Cape High Court (March 2014)
COURT CASES (5) Application by the DA to Western Cape High Court (March 2014) The DA launched an application in the Western Cape High Court, also challenging the constitutionality of the SANRAL Amendment Act.  It was contested that the SANRAL Amendment Act was incorrectly tagged as a section 75 instead of section 76.  The Court found that –  "The Amendment Act does not intrude upon the right of provinces to legislate in the future on any of the functional areas relied upon by the DA and does not constitute legislation on any of those matters." (See paragraph 97 of the Western Cape High Court's Judgement).  The Court went on further to hold that –  "National Roads are not listed in either Schedule 4 or Schedule 5 [of the Constitution]. They thus constitute a residual matter falling exclusively within the legislative competence of Parliament …" (See paragraph 98 of the Western Cape High Court's Judgement) The application was dismissed with cost.  An application to appeal the judgement in the Constitutional Court was also dismissed.  

103 COURT CASES: SUMMARY In conclusion, therefore, it is pertinent to record in relation to the legal challenges against the GFIP toll roads that – the declaration of the GFIP toll roads and ultimately the tolling thereof has been adjudicated upon by no fewer than six Courts and seventeen Judges; other than for Prinsloo J, (whose interim interdict pending a full review was overturned by the Constitutional Court) all other Courts and Judges have found in favour of the declarations and determinations by Cabinet, National Treasury, the Minister of Transport and SANRAL insofar as it relates to the GFIP toll roads; the Courts have considered thousands of pages of documents and have not found any wrong doing on SANRAL or the Department of Transport's part in declaring or tolling the GFIP toll roads; as part of their consideration of the matter the Constitutional Court, the Pretoria High Court (on the review) and the Supreme Court of Appeal considered the arguments of OUTA and the other parties opposing tolling, regarding the amount of toll collection and the cost of administering the system; and

104 COURT CASES: SUMMARY the Constitutional Court made it clear that "absent any proof of unlawfulness or fraud or corruption, the power and the prerogative to formulate and implement policy on how to finance public projects reside in the exclusive domain of the National Executive". No such unlawfulness, fraud or corruption has been found by any of the aforementioned Courts.

105 IN CONCLUSION In terms of Government Policy various projects were already implemented as part of an integrated transport system approach Gautrain, together with a bus feeder system Bus Rapid Transit (BRT) systems with planned expansion of the system in JHB, Tshwane and Ekhurhuleni Government commitment to upgrade the metro rail system The first phase of the Gauteng Freeway Improvement Project (GFIP): Improvement of 201 km of the core Gauteng freeway network Approximately 50% reduction in travel times

106 IN CONCLUSION (1) Open road toll system implemented with ability to:
Charge tolls without the requirement to stop Charge different toll tariffs for different vehicle classes Incentivise travelling outside peak hours by means of a time of day discount regime GFIP freeways are equipped with Intelligent Transport Systems (ITS) which is used to detect incidents and manage it effectively. GFIP introduced improved incident response capability: Incident management vehicles Dedicated light and heavy vehicle towing vehicles, and First line medical response.

107 IN CONCLUSION Much more still needs to be done to ensure sustainable economic growth and prosperity in the Gauteng Province Sufficient and sustainable funding for these programmes are required.



Similar presentations

Ads by Google