The South African National Roads Agency (Sanral) is owed more than R11 billion in outstanding e-toll fees.
This was revealed yesterday during a meeting between Sanral executives and Parliament's standing committee on public accounts, according to an EWN report.
Earlier this year, the roads agency revealed it had prepared approximately 6 500 summonses targeting e-toll defaulters. According to Vusi Mona, GM for communications at Sanral, the summonses are in various stages of being issued in terms of court processes and serving by the sheriff of the court.
E-tolling on the Gauteng freeway system started on 3 December 2013, after much controversy. However, it has been met with resistance from motorists.
Sanral recently appeared before the Standing Committee on Public Accounts (Scopa) for the second time in its history to clarify R1.165 billion in "irregular, fruitless and wasteful" expenditure.
Good governance
However, in a statement, Koos Smit, acting CEO, says: "We are committed to good governance and stringent financial controls. The committee pointed out some shortcomings and we acknowledge that we need to improve our internal processes. We will do so, and have already instituted disciplinary action against several officials for failing to adhere to our processes.
This year, Sanral received its 13th unqualified audit from the Auditor General (AG).
At the heart of the matter is Sanral's routine road maintenance (RRM) contracts, which are in place on 100% of its network, the agency says.
These contracts are a great incubator of small, medium and micro enterprises (SMMEs) and in line with Sanral's policy of ensuring a significant amount of work is awarded to SMMEs. RRM contracts are awarded for three years and renewable for two years, subject to satisfactory performance.
It adds the finding of irregularity was made because neither the Preferential Procurement Policy Framework Act (PPPFA) nor its regulations define the lowest acceptable price, and Sanral had, in the past, used a method to determine a viable lowest acceptable price.
"As a result, Sanral developed and introduced a statistical method to establish the lowest acceptable price for each RRM contract. This method is independently calculated by the University of Pretoria for every contract and allows for the appointment of a contractor with the most realistic rates at which SMMEs can do work and be financially viable," Smit explains.
According to Sanral, this method was in use for over 11 years, with the AG's knowledge of the rationale. During this time, there were no findings from the AG or complaints from contractors, it points out.
However, in 2013, the AG declared the method non-compliant with the PPPFA, says Sanral.
"We respect the comments made by Scopa members. We have been rectifying the irregularity in a phased approach as we had contracts in place that we left to run their course in order not to incur cancellation claims. The last contracts will expire in 2017. New contracts have since been awarded to the lowest price and in line with PPPFA," says Smit.
Many black-owned SMMEs in the construction and maintenance sectors have received their first experience working on Sanral projects. The training and empowerment programmes that accompany these work packages enable them to become eligible for larger and more complex contracts in the future.
Misleading financial situation
Meanwhile, e-tolls opponent, the Organisation Undoing Tax Abuse (Outa), alleges Sanral has misled Scopa on its true financial situation.
In a statement issued this morning, the organisation says on 29 November, during a heated debate, David Ross, a Scopa committee member, directed a question at Sanral on whether Sanral was misrepresenting its true financial situation and possible insolvency, by reflecting its outstanding debt of over R7 billion (which now stands closer to R9 billion) as an asset under outstanding receivables, instead of as a liability or write-off cost due to the highly probable uncollectable nature of this debt.
It notes Sanral responded that the law (PFMA) does not simply allow it to write off such debt and it will continue to endeavour to collect this debt going forward. "This, however, was not an answer to the question asked by Mr Ross," says Ben Theron, portfolio director on transport at Outa.
Outa maintains it is disingenuous for Sanral to announce IFRS as its financial reporting guide on the asset valuation on the one hand, and then to disregard those same standards when it comes to reflecting its irrecoverable debt from the outstanding e-toll situation on the other hand.
When questioned on what Sanral believes the likelihood is of collecting this debt, its management failed to answer, and instead, Sanral's chairperson, Roshan Morar, indicated e-toll income levels have achieved a slight rise in recent months.
"This response of a slight increase in e-toll revenue was a complete fob-off to the question of Sanral's likelihood to collect the debt. In fact, the slight rise in e-toll income is completely misleading, as their monthly e-toll debt increases by over R200 million per month," says Outa's Theron.
Outa maintains the likelihood of collecting even as much as a quarter of the outstanding e-toll debt is highly unlikely.
The organisation charges that Sanral executives should know this, especially after Sanral's failed Less60 discount dispensation and the fact that there was no increase in e-toll debt collection following its issuing of 6 000 summonses earlier this year.
"This effectively means that according to IFRS and Sanral's own internal policy on debt management, their accounts do not reflect the reality of their financial situation," Theron notes.
"This, we believe, is tantamount to gross misrepresentation by the Sanral board, and their fiduciary duties and responsibilities are now brought into question. This is a serious matter that the board members of Sanral cannot ignore and one they could be held personally accountable and liable for, if indeed an enquiry arises as to their fitness to hold office."
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