2 February 2009
The South African National Roads Agency Limited (Sanral) is to raise a further R25-billion in debt finance for upgrades and freeway construction projects over the next two years.
The agency is responsible for the design, maintenance, operations and rehabilitation of South Africa’s tolled and non-tolled national roads. The country’s network of national roads currently stands at about 16&nbps;170 kilometres, and Sanral is responsible for extending the network to 20&nbps;000 kilometres by 2010.
It raised more than R4.6-billion last year to fund current projects, including the major Gauteng Freeway Improvement Programme (GFIP), which will cost an estimated R20-billion.
Apart from the freeways in Gauteng, Sanral’s capital investment programme includes the N2 Tsitsikama Toll Road in the Eastern Cape; the N17 East road extension in Gauteng province; the N1 South and R30 Bloemfontein-Kroonstad road; the N1 Polokwane bypass in Limpopo province; and the Marianhill extension and Dube Trade Port interchange, both in Durban.
Good market ratings
Briefing investors in Pretoria last week, Sanral CEO Nazir Alli said the agency remained on track to raise the funds needed to undertake its current programme, of which much of the civil works are scheduled to be completed by October 2010.
He said he also expected the agency to complete its projects on budget, although close attention was being paid to the price of bitumen, one variable aspect that was influenced by the oil price determined by international markets.
Alli was confident that there would be solid participation from capital markets in the company’s debt offerings.
“Economic conditions are certainly tougher than they were when we began issuing debt to finance the major projects now underway,” he said. “However, indications are that investors will continue to be assured by our good market ratings and track record of efficiently maintaining the network and settling debt.”
Gauteng freeway improvement programme
Alli told investors that the Gauteng freeway improvement programme was proceeding well and largely according to plan: “In any road project, there are always weather issues. However, the recent heavy rains in Gauteng have not caused any major setbacks,” he said.
“People are responding well to the disruptions due to major road works on such a large scale. We are confident that the ultimate result will be worth the wait for motorists.”
Alli explained that the new Gauteng freeway network would be operating on the “user pays” principle after October 2010, with an Open Road Tolling System requiring each vehicle to carry an electronic tag.
“Tolls will be deducted each time a vehicle passes under one of 38 overhead gantries set about 10 kilometres apart across the Gauteng Freeway System,” he said. “Sanral envisages that tags would be linked to bank accounts, or could be recharged at retail outlets, or through the internet.”
According to Sanral, accounting and financial management of tolled and non-tolled roads were separate because toll fees were not used to cross-subsidise non-tolled national roads, which were funded by government.