South African National Road Agency Limited (SANRAL) on its 2015/16 Strategic and Annual Performance Plans

Meeting report

Briefing by South African National Roads Agency Limited (SANRAL)

Mr Nazir Alli, Chief Executive Officer (CEO) of SANRAL, said that according to Act no. 7 of 1998 SANRAL, was responsible for both the tolled and non-tolled proclaimed road network. SANRAL also maintained, upgraded, operated, rehabilitated and funded national roads, and levied tolls so as to service toll roads. SANRAL advised the Minister on road-related matters and the issues to be given priority. South Africa had the tenth largest total road network in the world, and the eighteenth longest paved road network. Roads represented one of the largest public infrastructure investments in most countries. The total South African road network was estimated to be 750 000 km. SANRAL was concerned about the number of unproclaimed roads, which were estimated to be approaching a total of 131 919 km. The road replacement cost was predicted to be around R2 trillion.

The vision of SANRAL was to be recognised as a world leader in the provision of a superior road network in Southern Africa. Its mission was to act a custodian of the public good, committed to the advancement of the Southern African community through a highly motivated and professional team that used state-of-the-art technology. It aimed to be a proficient service provider, and also promoted the “user pays” principle.

Mr Alli said SANRAL was cognisant of the goals of National Development Plan (NDP), citing the following examples:

• Elimination of income poverty -- SANRAL was contributing to community development programmes and also supporting small, medium and micro enterprises (SMMEs).
• Reduction of inequality by developing human capital in universities and high schools.
• SANRAL planned to contribute to achieving the target of increasing South African employment from 13 million in 2010, to 25 million in 2050. SANRAL also planned to establish a competitive base infrastructure, human resource and regulatory framework.
• Public infrastructure investment was currently at 10% of gross domestic product (GDP). This was planned to be increased to a total of 30% of GDP by 2030, financed through various means -- like tariffs, public-private partnerships (PPPs), taxes and loans -- and focused on transport, energy and water and toll roads.
• The transport upgrades on the Durban-Gauteng freight corridor, and building the N2 through Eastern Cape.
• Expanding the capacity of the coal, iron ore and manganese lines.
• Improved public transport infrastructure and systems, including the renewal of the commuter rail fleet, supported by enhanced links with road-based services.

SANRAL was focused on six outcomes identified by the Department of Transport (DoT). These were an effective and integrated infrastructure network that served as a catalyst for social and economic development, a transport sector that was safe and secure, improved rural access, infrastructure and mobility, improved public transport systems, increased contribution of transport to job creation, and an increased contribution of transport to environmental protection

SANRAL’s strategic outcomes-oriented goals (Impact) and these were to provide effective strategic road infrastructure that would facilitate development, commerce, international trade, facilitate mobility of people and freight and access to community and tourism; job creation through the implementation of projects that would provide sustainable jobs; and transformation and empowerment through Broad-Based Black Economic Empowerment (BBBEE) community upliftment, skills development and educational support.

SANRAL’s strategic objectives, supported by the annual performance plan (APP), included managing the national roads network effectively, providing safe roads, carrying out Government’s targeted programmes, specifically transformation, establishing co-operative working relationships with relevant departments, provinces, local authorities and Southern African Development Community (SADC) member countries, good governance practices, financial sustainability, pursuing research, innovation and best practice, and safeguarding SANRAL’s reputation, specifically stakeholder communication  

Mr Alli said that SANRAL was focused on road maintenance, with priority given to repairing potholes within 72 hours of cases being reported. The replacement of guardrails, putting up sign posts, grass cutting, patching, fencing and clearing up after accidents -- all these were important for the convenience of the road users. The periodic maintenance was every seven to eight years, which was then followed by special maintenance.

SANRAL was proud of the role it had played in transformation, as this had been seen with the overall empowering rating of level 2 in 2009/10. There was also a board-approved employment equity plan in October 2014, with a new three-year Economic Empowerment (EE) plan was to be developed in 2014/15. SANRAL also paid special attention to skills development in the form of scholarships, bursaries, internships, and funding to universities to produce local engineers that could improve the economy of South Africa. 

SANRAL also played a major role in community outreach programmes, focusing mainly on education, and this was evident in SANRAL’s presence at national career expos and exhibitions. There was also a huge focus on road shows at secondary schools, including presentations by community development specialists to schools. It was also important to target universities in order to spread awareness about drunk driving and speeding, and how to be a responsible road user. SANRAL supported numerous universities that focused on engineering, transport or town planning, such as the universities of Cape Town, Stellenbosch, Witwatersrand and Free State. SANRAL offered scholarships to 177 learners from grades 10 to12 across 40 schools, and 106 bursaries for engineering degrees, including post graduate degrees, at seven universities. There were also 196 interns training with 57 contractors across the country.

Mr Alli identified numerous challenges that were facing SANRAL:

• The going-concern status of SANRAL, due to uncertainty over the Gauteng Freeway Improvement Project (GFIP), with a need for a firmly communicated message on toll road funding;
• Delays in project-related approvals from entities such as Water Affairs, Environmental Affairs and provinces;
• Inadequate law enforcement of traffic rules, overloading by hauliers and enforcement in relation to electronic or open road tolling;
• Driver behaviour, which had been identified as the main cause of road fatalities;
• Insufficient funding for timely upgrades and maintenance of the non-toll network;
• Poor progress on Strategic Infrastructure Project 4 (SIP-4) projects;
• Insufficient high-level planning and co-ordination between inter-modal transport and the three spheres of government;
• Private sector investment in the future funding of road infrastructure/toll road projects was still envisioned;  

Discussion

Mr M de Freitas (DA) asked whether there was an alternative plan to deal with the toll debt, as it was evident that there was a strong unwillingness to pay the e-tolls. It was concerning that SANRAL had wanted to keep confidentiality on some information pertaining to the N1-N2 Winelands toll road, considering it had been reported that people in Cape Town were to pay higher tariffs than those in Gauteng.

Mr G Radebe (ANC) wanted to know if there was a strategy in place to improve capital expenditure in order to address most of the challenges identified, especially road network pavement. What was the long-term plan to achieve the NDP goals, as this was not explicit in the situational analysis?

Ms S Boshielo (ANC) said it was clear that hard choices had to be made in order to improve the road infrastructure, but she was happy that SANRAL had mentioned the importance of public transport in the country. The improvement of the public transport network had the potential to deal with multifaceted challenges, including traffic congestion, lack of mobility and accessibility. She advised that SANRAL needed to prioritise public transport on those roads that carried heavy loads, as this would significantly reduce the number of vehicles and the need for constant maintenance. It was crucially important for government and state entities to work together in an integrated manner so as to pool their resources and set their priorities. It was the responsibility of SANRAL to improve its relationship with the relevant government departments

Ms Boshielo said that the public must be aware that SANRAL had been doing wonderful job, and this should not be reduced to the problem of e-tolls. It was commendable that SANRAL seemed to focus on improving service delivery and an integrated public transport infrastructure. She hoped that this was seen as means of removing cars from the roads in favour of public transport.

Mr T Mulaudzi (EFF) sought clarity on the current situation and the way forward on e-tolls. What was the specific reason for the omission of the Moloto Rail Corridor in the key priorities for 2015/16? He wanted to receive an update on the N1 ring road to Musina and Limpopo that had not been fenced, as it was dangerous to road users.  

The Acting Chairperson asked about the challenges and the limiting factors at the higher level that had been making it difficult for the state to have integrated and co-ordinated planning. He commended SANRAL’s tender prescription to include SMMEs in the building and maintenance of roads, and asked it to provide the Committee with concrete figures regarding the SMMEs that had been supported and the kind of sustainability of those projects. The Committee would need to have a discussion with SANRAL on the possible funding models for the sustainable maintenance of roads in the country.

Mr Alli responded that the e-tolls advisory panel report showed that the current system of e-tolling placed the least burden on low income earners. It showed that in the section dealing with scenarios and options for a hybrid model, the percentage of the total financing burden falling on low income groups was 0.4%, but increased as funding sources were introduced. The report also revealed that 34% of those that had been surveyed were saying the e-toll tariffs were reasonable, 27% were neutral and 38% believed that the tariffs were unreasonable. This showed that there was only a 4% difference between those who believed that e-toll tariffs were reasonable, and those who believed the opposite.

Mr Alli said that it was disappointing that no one had been making proposals on the possible funding model, but he hoped for a positive result to come out in the deliberations which were currently taking place under the leadership of the Deputy President, Mr Cyril Ramaphosa. He said that the City of Cape Town had been extremely frugal with the truth, and it was not the intention of SANRAL to enter into a contest with the City regarding the N1-N2Winelands toll roads. It was incorrect to claim that the tariffs to be paid by the City of Cape Town were more than those in Gauteng, as they would be within the same range, and this failed to take into account the discount prices. There was no tender that had been offered to any contractors as yet for the N1-N2 Winelands toll roads, and the financing for the specific project had not been concluded. The tariffs had been recommended by SANRAL to the Minister to make a final decision on whether to approve or disapprove them. The only project in the country where people were getting reimbursed on toll roads was Chapman’s Peak in the Western Cape, and SANRAL did not reimburse a concessionaire.

Mr Alli said that the National Treasury (NT) contributed R5.7 billion to SANRAL to reduce the tariffs in Gauteng, so that road users would pay only 66c per kilometre. The project in the City of Cape Town would also include infrastructure development at a cost of R250 million. It was important to emphasise that in terms of the legislation, SANRAL was not allowed to take money from the non-toll budget and spend it on tolled roads, or vice-versa. He once again disputed that SANRAL wanted to hide anything away regarding the N1-N2 Winelands toll roads, but went to court only to protect the bid process, as the Public Finance Management Act (PFMA) compelled the entities to get value for money. It was impossible to get value for money without going through a proper competition in the tender process. In essence, SANRAL went to court to protect a certain portion of the information until such time that the review case was being heard, and the feasibility studies had been public documents for some seven years.

SANRAL performed a condition survey of all road networks to identify all the “weak spots” to be rehabilitated. Constraints in the budget sometimes compelled the roads to be maintained in intervals, or sections. A drop in the value of work to be awarded usually translated to a failure to create enough sustainable jobs, and the sustainability of jobs would come only when road authorities in all the provinces were working together. The National Transport Master Plan 2050 (NATMAP­) showed that there was a plan in place for the future, but unfortunately there was a lack of co-ordination in some provinces. The DoT had also highlighted the importance of public transport in reducing road fatalities, traffic volume and the removal of heavy trucks from the roads, as they were dangerous to road users.

Mr Alli said it was important to revitalise rail in the country as it was the most efficient mode of transport. SANRAL regarded rail and road infrastructure as complementary, and the Passenger Railway Agency of South Africa (PRASA) could play a key leading role in this regard. A study by Transnet showed that over 75% of the freight that moved on the surface was transported on the national roads. SANRAL ensured that all the key roads were fenced so as to prioritise the safety of road users, but there had been a persistent problem of stolen fences throughout the country and it was expensive to constantly replace them.

SANRAL was part and parcel of realising the dream of radical economic transformation and had over 1 000 SMMEs working on SANRAL jobs. He asked the Committee to take time to meet these SMMEs and hear their stories.

Mr All said it was important to ensure that there was co-ordination within the relevant government departments as there had been projects that had been delayed for more than three years simply because of the delays in getting water licenses. He hoped that the Infrastructure Bill promoted by the Economic Development Department (EDD) would put emphasis on correlation within the departments to promote efficiency.

SANRAL had been working closely with the DoT to try and find an alternative funding model that would focus in a holistic manner, including subsidies, public transport and some of the projects that were under way. The Moloto Road was not under SANRAL roads previously, and there was still a process of transferring the road from the province to SANRAL. There would be a lot of activity taking place on the road in the coming months, and progress reports would start appearing in SANRAL’s presentations.

Mr Radebe said that the Committee needed to ensure that the issue of the delays in getting water licences was resolved so as to avoid facing the same challenges in the future.

The Acting Chairperson requested SANRAL to provide the Committee with information on the SMMEs that had been assisted in the building and maintenance of roads, and the decision on the court case pertaining to the N1-N2 Winelands toll roads.

The Committee decided that it was impossible to proceed with further presentations because of the absence of the Director-General, Mr Pule Selepe, and relevant Deputy Director-Generals without written apologies. This was construed as a complete disregard of the Committee by the Department, as it was not the first time that such an occurrence had taken place.

The meeting was adjourned.