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South African Government Sets Up Gauteng E-Tolls Committee

by Lorys Charalambous, Tax-News.com, Cyprus

07 May 2012


Following the recent decision in the South African High Court against the levying of e-tolls, originally planned for the end of last month, on the Gauteng Freeway Improvement Project (GFIP), the government has appointed a review committee to look at all aspects of financing the project.

Minister in the Presidency, Collins Chabane, confirmed that the committee would look into issues such as the recent court decision on e-tolls, the implication of that decision on the South African National Roads Agency Limited (SANRAL) and the ability to pay back the debt already incurred in financing construction of the new road.

The GFIP, one of SANRAL’s largest projects to date, would have been the country's first multi-lane free-flow toll system using e-tolls. Those tolls had been reduced already, last year, by the federal government agreeing to a fiscal contribution of ZAR5.75bn (USD736.25m) to the project.

However, an application was brought before the North Gauteng High Court by an alliance of transport and consumer groups led by the Opposition to Urban Tolling Alliance (OUTA) for an interdict against the levying and collection of the e-tolls, which were said to be “an inefficient, costly and unnecessary additional burden on road users, who already pay through a number of taxes for the benefit of road use”.

In reply, the National Treasury indicated that there would be serious negative implications for the future financing of roads and investment in public transport were SANRAL to be interdicted from implementing the e-tolls collection system; with the latter adding that, as insufficient financial resources are available to implement capital intensive projects (such as the GFIP), the most equitable way to pay for the road improvements is through a ‘user-pay’ principle.

After, on April 28, OUTA was successful in court and SANRAL was restrained from levying and collecting the GFIP e-tolls, a full review is seen as the only way of carrying this matter further, and the setting up of the committee is the first step on that path.

The governmental committee will be chaired by Deputy President Kgalema Motlanthe, and its members will include Sbu Ndebele (Minister of Transport), Pravin Gordhan (Minister of Finance) and Malusi Gigaba (Minister of Public Enterprises).

"This committee will among other things move with urgency to ensure that SANRAL's financial stability is not affected in any way,” Chabane said. “The committee will assess the government's response to the North Gauteng High Court ruling and other related legal matters. It will also meet with appropriate stakeholders in order to find constructive solutions and consensus on the outstanding matters."

TAGS: court | South Africa | tax | law | fees | construction | Africa

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