Auditor-general casts doubts over Sanral
Material uncertainty exists as to whether the national road agency will be able to continue as a going concern
AUDITOR-GENERAL Kimi Makwetu has warned that a material uncertainty exists that may cast significant doubt on the ability of the SA National Road Agency (Sanral) to continue as a going concern.
Makwetu attributed the doubt to Sanral’s continuing problems with the collection of e-toll fees and funding for the Gauteng Freeway Improvement Project (GFIP).
He said the material uncertainty relating to Sanral’s ability to continue as a going concern was indicated in notes on Sanral’s financial statements that its funding strategy for the next 12 months related to toll operations was dependent on a Cabinet decision regarding e-tolls on the GFIP.
Sanral indicated that R726 million cash was collected from the GFIP in the year to March. It said the board had requested the shareholder to address the impact of the poor collection rate with the Cabinet to ensure the sustainability of Sanral.
“The shareholder, Minister of Transport, and the president committed to resolve this matter by May 31, 2018,” Makwetu said. The warning comes despite Sanral recording a significant reduction in losses to R260.35m in the year to March from R4.96 billion in the previous year.
Sanral chairperson Roshan Morar said in its integrated report released yesterday that 2017/2018 was a watershed in that Sanral found it necessary “for the first time” to transfer an amount of R1.667bn from the non-toll business to the toll road portfolio.
Morar said this transfer, made with the concurrence of the transport minister, was to reduce losses incurred as a result of sustained non-payment of toll fees by users of the GFIP.
The transferred amount was in addition to the special grant of R406m made by the Treasury to offset the reduced income on GFIP, he said.
This transfer resulted in an operating deficit of R801m on Sanral’s nontoll function in the year, compared to the R380m deficit in the previous year.
In reviewing the cash requirements for the next 12 months to March 2019, Sanral said it required a minimum of R4.3bn, of which R3.8bn was required to refinance maturing debt.
It stressed its funding strategy for 2018/19 was dependent on the Cabinet decision on GFIP.
Sanral said the government issued guarantees totalling R37.9bn, of which R24.30bn had been used by end-March this year.
“The current funding requirements project that this limit will only be breached after March 2020,” it said.
Sanral added that the transport and finance ministers had reaffirmed their commitment to finding a solution to the GFIP challenge and would recommend to President Cyril Ramaphosa that “engagements in this regard should include the Gauteng ANC chairperson, who is also the Premier of the provincial government”.
“Until a final decision is taken by the President on this matter, the e-toll scheme continues to operate and Sanral will continue with legal and administrative processes that are aimed at ensuring continued toll operations and improve debt recovery,” it said.
Sanral’s total revenue increased to R16.285bn in the year from R13.95bn.
Total revenue realised across all toll routes managed directly by Sanral increased by 5.77 percent to R5.194bn, with GFIP revenue declining by 4.8 percent while revenue from all other toll roads operated by Sanral realised increasing by 12.8 percent.
Total expenditure declined by 2.3 percent year-on-year to R26.523m, of which 66 percent was related to non-toll roads. Sanral chief executive Skhumbuzo Macozoma said Sanral deliberately “exercised restraint” in issuing construction tenders within the toll road portfolio because of the financing difficulties.