The Treasury has belatedly clarified its estimates of the costs of e-tolling in Gauteng’s Freeway Improvement Project, putting them far below those of the Opposition to Urban Tolling Alliance (Outa).
Outa’s April court application relied strongly on the argument that the cost of e-toll collections amounted to about R20-billion, which was close to the cost of building the road. In other words, the government was spending R20-billion to collect R20-billion. Judge Bill Prinsloo considered this grounds for a full judicial review of e-tolling.
However, Treasury director-general Lungisa Fuzile said last week that based on a set of "conservative assumptions", collection costs amounted to 75% of total costs in only the first few years and would then drop sharply. By 2017, it was expected that collection costs would be only 20% of total costs. At that stage, a far higher proportion of revenue would be going towards repaying debt.
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Finance Minister Pravin Gordhan said last week that R20-billion of the roughly R60-billion value of the entire project contract was for construction costs and R38-billion for debt costs.
Outa representative Wayne Duvenhage said the alliance had very limited information at the time of going to court. On the basis of the knowledge that the first five-year contract to collect toll fees was worth R1-billion a year (excluding set-up costs), over the 20 years of the road, this would amount to R20-billion.
But Mr Fuzile said that due to a range of variable factors such as the set-up costs and the much higher costs of collection during the first phase when fewer people had e-tags, "collection costs are not static and will move".
"The biggest reason for high costs in the beginning are the set-up costs, which include the physical infrastructure. Secondly, costs of enforcement are higher initially because where people don’t have e-tags, accounts must be sent out and so on. But as most people get e-tags and their accounts are managed electronically, those costs drop," Mr Fuzile said.
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