SAVE R6.6 BILLION BY CANCELLING E-TOLL CONTRACT

The cancellation of the e-toll contract with the Electronic Toll Collection Consortium would save at least R6.6 billion. This is my calculation based on information provided by the SA National Roads Agency (SANRAL).

At a meeting last week with SANRAL officials, my colleague Neil Campbell and I were informed that if the ETC contract was cancelled the damages would become a legal issue and be settled by negotiation or court action. The tendered cost when the contract was awarded two years ago was R6.22 billion, which excluded VAT, Contingencies and Provisional Sums.

Provisions are estimated at R2.65 billion and includes banking costs, rates and taxes, electricity, and the distribution of tags. The sub-total is R8.87 billion, and with VAT at R1.24 billion, the total is R10.11 billion over eight years, but is likely to be about R11 billion in total if one adds in the Construction Price Adjustment and some other factors.

If the contract is cancelled, lost profits could be claimed as well as the capital cost of what has already been installed, but we could save much of the R4.73 billion operational costs. Add to this virtually all the R2.65 billion provisions and R0.33 billion asset replacement, and we could at least save about R5.8 billion + VAT = R6.612 billion.

This is for an eight year period. Thereafter, operational costs would be about R800 million a year, which would also be saved. The DA proposes that the Transport Department orders SANRAL to withdraw from the e-toll contract and negotiate the best deal to minimise damages.

The roads can then be funded from the fuel levy or general taxation, saving us the exorbitant toll collection costs.

Statement issued by Jack Bloom MPL, DA Gauteng Caucus Leader, November 9 2011

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