Transport challenges in KwaZulu Natal: SA National Roads Agency & Provincial Portfolio Committee submissions

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14 February 2011
Chairperson: Ms N Bengu (ANC)
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Meeting Summary

The Chairperson and Members of the Kwazulu Natal (KZN) Legislature’s Portfolio Committee on Transport briefed the Committee on concerns about the proposed N2 Wild Coast toll road. Whilst acknowledging the good intentions behind toll roads, maintenance and upgrades, the Committee was not able to support further tolling on KZN roads, owing to the impact on the poor and other end users. It had rejected proposals for further tolling of the KZN roads. The Provincial Department of Transport said that KZN already had tolls on 27% of its national road network, and the new toll would bring this up to 35%. A major concern was that KZN residents would effectively be subsidising the costs of 410 km of toll road in the Eastern Cape since, although the KZN road was shorter and the toll rates were less, the traffic volumes were much higher. The background to and appeals against the proposed road, lodged in 2003 and 2009, were outlined. The Minister's final decision was still awaited. The stated objective of the proposed new road was to improve the existing road, give a shorter and safer route, and to provide mobility and access to economic activity along the Wild Coast. However, in reality, it would not improve the situation in KZN. It would adversely affect the traffic volumes, environment, transport costs for commuters, and discourage economic development, since the proposed alternative route traversed built-up areas, and would damage that road. The tolling would have a knock-on effect on the eThekwini Integrated Transport System, and businesses’ increased costs would be passed on to consumers, or businesses would move. Tourism would also be affected.  

The DA Members were opposed in principle to tolling, which was regarded as double taxation. They asked why the fuel levy could not instead be increased by a small amount and used as an alternative to tolling. The SANRAL funding model was criticised by both the DA and ANC as incorrect. Members asked what would happen to the roads after the toll concession expired. The South African National Roads Agency (SANRAL) outlined the position, although it could not address policy or funding issues, and confirmed that the issue of double taxation had been raised with the Minister. Members were particularly concerned about the effects of increased transport on commuters and on food prices. They queried the statistics, asked whether the Eastern Cape supported the development of the corridor and the tolling, and enquired why heavy duty vehicles tended to be licensed in Eastern Cape. They queried the positioning of toll plazas, what SANRAL was doing to uplift local communities, and what alternatives might be available. A Member of the KZN legislature pointed out that SANRAL was concerned with national roads but rural roads were also being neglected. Effectively this placed commuters in the invidious position of having to pay the tolls to travel on safer roads, or risk accidents on poorly maintained roads. SANRAL outlined a study which found, by comparing time taken, and wear and tear, that it was cheaper for businesses to use the toll road. The Chairperson berated SANRAL for responding selectively to the presentation. Members urged that road funding had to be prioritised, roads must be properly classified and that the creation of a road fund could lead to jobs, whilst the cost effectiveness of using small enterprises must also be considered. Members noted that complaints by stakeholders meant that the consultation processes were poor, and that other alternatives were not properly considered. Members questioned where SANRAL accessed its funding.  The Committee wished SANRAL to show the proper respect to the Committee, and ensure that its Accounting Officer, Chairperson and Board were present at meetings to answer the Committee’s questions. The Minister would need to respond how the KZN issues were to be addressed.

The Committee also adopted Minutes of meetings on 14 September and 16 November.

Meeting report

Transport challenges in KwaZulu Natal: SA National Roads Agency & Provincial Portfolio Committee submissions
The Chairperson welcomed Committee Members, Members of the KwaZulu Natal (KZN) Provincial Legislature’s Portfolio Committee on Transport and officials from the South African National Roads Agency Limited (SANRAL). She stated that this meeting had been called following receipt of a letter from Mr Mxolisi Kaunda, Chairperson of the Provincial Portfolio Committee on Transport, raising concerns about the tolling on roads in the province.

Mr Mxolisi Kaunda (ANC) then introduced the delegation of other members of the Provincial Portfolio Committee on Transport, comprising of Mr Thulasizwe Buthelezi (IFP), Mr Radley Keys (DA), Mr Omie Singh (ANC) and Ms Linda Hlongwa (ANC).

Provincial Portfolio Committee submission
Mr Kaunda commended the National Department of Transport (DoT) for having afforded KZN the opportunity to launch October Month in 2010, a campaign based on road safety, which had contributed to dropping road deaths by 50%. He said that his Committee had liaised with relevant stakeholders in preparation for this presentation on road tolls in the province. Whilst acknowledging the good intentions of toll roads, maintenance and upgrades, he stated that the Committee did not agree with further tolling on KZN roads, owing to the impact on the poor and end users.

Provincial Department of Transport submission
Mr Patrick Dorkin, Senior Manager: Policy and Planning, KZN Department of Transport, provided an overview of the proposed N2 Wild Coast toll road. He stated that KZN was already the second highest tolled province in the country, after Gauteng, having tolls on 27% of the total national roads network. The new tolling of the N2 Wild Coast road would increase the tolled network to 35%. He felt that this was too high. He indicated that the proposed N2 Wild Coast toll road would consist of improvements to the existing N2 as well as a completely new road. The length of the proposed road was 560km, with 150km in KZN, and 410km in the Eastern Cape (EC). The provinces must then bear the costs, or respectively R2 billion to KZN and R7 billion to EC. The toll fees would be R61 in KZN and R260 in the EC. However, because of higher car volumes on the KZN section, although the toll rate was cheaper, KZN residents would effectively be subsidising those of the EC.

Mr Dorkin then presented the background to the proposed N2 toll road. It was part of the government's Wild Coast Spatial Development Initiative, which was started in 1997, and which aimed to address poverty, uplift communities and help with job creation. The strategy sought to extend the development corridor running along the KZN South Coast into Pondoland and ultimately link this with the Garden Route. The submission of the original Environmental Impact Assessment (EIA) had been done on 28 February 2003, and a decision was given by the Department of Environmental Affairs and Tourism (DEAT, as it was then named) on 3 December 2003. Appeals were lodged. The appeals were upheld by the then-Minister of Environmental Affairs and Tourism, owing to a conflict of interest by the environmental consultant. The submission of the final EIA report was completed in December 2009, and a decision was granted by the DEAT on 19 April 2010. Appeals were submitted to the Minister by all stakeholders, and the Minister's final decision was still awaited.

The objective of the proposed N2 Wild Coast toll road was not only to improve the existing road but also to provide a shorter and safer road, with a distance saving of approximately 75km. It was further intended to provide mobility and access to economic activity along the Wild Coast.

Mr Dorkin indicated that the toll would give very limited capacity improvement to KZN. He cited the Isipingo-Winklespruit section  of 15km, which would be tolled after that addition of a single lane, for 10km of road. The mainline toll and six new ramp tolls would generate the highest toll income along the route. Additionally, the proposed Isipingo Toll Plaza would process the highest traffic volume in the country. This would lead to traffic delays, increased air pollution, an escalation of transport costs to the commuter, and would actually discourage economic development. Other social issues had been raised. In KZN, the route would not promote rural development, as it followed the coastline, which was already developed. The proposed alternative of utilising the R102 road was not suitable for high traffic volumes, as this road traversed densely built-up commercial and residential areas, would result in severe congestion, would damage the road and would negatively impact on traffic and pedestrian safety along the route. Moreover, the increased traffic volumes would result in the R102 having to be upgraded to accommodate the higher volumes. The costs of this upgrade would have to be borne by the local municipalities and the Provincial DoT.

The economic consequences discussed included the effects the tolling would have on the eThekwini Integrated Transport System, increased transport costs for business, which would in turn increase operating costs and commodity prices, and discouraging of economic development, since industry and commercial businesses would move to other areas to avoid the toll costs. Tourism was highlighted as one sector that would be adversely affected by the tolls. It would raise the costs to tourists, who may then choose other destinations.

Mr Dorkin concluded with remarks that the proposed tolling of the N2 Wild Coast road was tabled to the Provincial Transport Portfolio Committee, and was rejected. Although he was in support of the development of the new corridor, he did not support that this should be done by the additional tolling on the KZN section. He reiterated that KZN motorists should not have to subsidise the road in the EC. The proposal had been referred to Cabinet for a decision by EXCO.

Mr S Farrow (DA) stated that his party was opposed to tolling, as it was tantamount to double taxation. He asked why the fuel levy, which was R30 billion at last estimate, was not used as a source of funding for national roads. He noted that although provinces received equitable share distributions, much of this money was diverted to other provincial priorities and was not solely used for transport matters. He indicated that SANRAL's funding model ought to be reconsidered, as tolling burdened motorists and the economy. He sympathised with the KZN position, particularly as it was being asked to subsidise the EC. He enquired about whether the road would reverted to the Provincial Department after fifteen years, when the toll concession ended.

Mr Dorkin stated that the concession was for thirty years, and in this period the concessionaire was tasked with the capital cost, maintenance and upgrading of the road. He could not say what would happen after thirty years. He expressed his support of SANRAL, saying that it was merely an implementing agent of the DoT and was not responsible for raising revenue for road construction and maintenance.

Mr Mbulelo Peterson, Regional Manager, SANRAL, apologised that the Chief Executive Officer of SANRAL, Mr Nazir Alli, was unable to attend. He agreed with Mr Dorkin, and confirmed that SANRAL was only the implementing agent of the DoT. He stated he could not speak on funding or policy as these were within the ambit of the Minister. He indicated that the Minister would be holding a summit on road infrastructure where these matters would be discussed. He requested that the Committee await the Minister's input on these matters. He said that toll concessions were generally for thirty years. If the roads were not tolled, then money would have to be found from the national fiscus. The concessionaire was tasked with whatever maintenance and upgrading of the road was needed over this period. After 30 years, the road, which must be in an agreed condition, would revert to SANRAL.

The Chairperson stated that the Committee needed to look at the issue of double taxation and ring-fencing the fuel levy to ensure it was used for the stated aims in the provinces.

Mr Peterson indicated that the issue of double taxation had come up in deliberations with the Minister.

Mr M De Freitas (DA) stated that the poor ended up suffering from tolling. He enquired about the EC's stance on the proposed N2 Wild Coast toll road, and the methodology used to calculate the statistics presented by Mr Dorkin.

Mr Dorkin responded that EC supported the corridor, though he was not certain about their stance on the tolling. He added that all the statistics used in the report were taken from the EIA report received from the environmental consultants.

Mr E Lucas (IFP) asserted that he was very irritated about toll roads. They required constant monetary input, and the knock-on effect of higher transport costs that they caused primarily affected the poor. He then enquired about the high volumes of Eastern-Cape licensed, heavy duty vehicles in KZN, and asked where these licensing fees went.

Mr Dorkin responded that the EC had the lowest license fee charge, which was the reason why many companies, including multinationals such as Telkom, registered their entire fleets in the EC. He added that the National Department was not only looking at standardising license fees across provinces, but also ensuring that heavier vehicles paid more for their licenses.

Ms N Ngele (ANC) indicated her support for the concerns expressed by the KZN Portfolio Committee and concurred with Mr Farrow's comments about tolling. She added that increased taxi fares affected not only work commuters but also the poor, and that the knock-on effect extended down to food prices, which again negatively impacted upon already struggling communities. She asked about the standard distance between one tollgate and another.

Mr Peterson clarified that money from the fiscus could not be used on toll roads, and that only money collected from the tolls could be used to maintain the toll roads. He added that toll plazas were located strategically wherever was most appropriate, so there was no standard distance. Traffic volumes would be one of the factors considered when deciding where to place a toll plaza.

Ms D Dlakude (ANC) asked SANRAL what community upliftment and job creation programmes it had in place. She also asked why toll fees kept increasing, as it would logically be expected that they should decrease over time.

Mr Peterson indicated that toll fees were not increasing, but were being adjusted for inflation. He added that SANRAL had more upliftment programmes than any other agency of government. He stated that 80% of all road maintenance was done by small, micro and medium enterprises (SMMEs) and 90% by previously disadvantaged people. Additionally, SANRAL offered bursaries for university studies, for offering maths and science in high schools, built laboratories in high schools, offered internships on all its projects and also empowered communities through skills development.

Mr Farrow said that the Committee needed to look at how roads were financed. One possibility was to add a further 10c on the fuel levy and this would be more palatable than Gauteng residents having to find an additional R1000 per month to travel on the roads. Other sources of funding included government grants, licensing fees and emission taxes. He suggested that a Private Members Bill could be introduced to ensure that the fuel levy was ring fenced.

Mr T Buthelezi (IFP, KZN Legislature) stated that there was a fundamental concern with the heavy burden that tolling placed on the economy. He implored the Committee to look at SANRAL's funding model as tolling increased the cost of business to the extent that job creation was unlikely. He added that whilst SANRAL was concerned with national roads, rural roads were also neglected. 

Mr Farrow stated that the Minister had already undertaken to create a dedicated road fund, with allocations to the various spheres of government, under the Division of Revenue Act (DORA). He indicated that road funding needed to be prioritised, that roads had to be properly classified, and that the creation of this road fund would lead to job creation.

Mr Dorkin responded that there was a dedicated road fund created in the 1960s, funded by a percentage of the fuel levy. He supported what Mr Farrow said and stated that he hoped the National Treasury, similar to what it had done with the Transnet pipeline from Durban to Johannesburg, would allocate a specific amount to the road fund.

Mr A Singh (ANC, KZN Legislature) stated that tolling burdened commuters and communities. He added that these tolls may have the unwanted effects of discouraging tourism, and thus increasing unemployment, and also criminalising communities if they tried to defy the barriers to transport that the tolls had created.

Mr Peterson responded that the cost-benefit analysis of tolled and non-tolled roads was difficult to quantify, but that in certain instances, such as the Tsitsikama road, people opted not to use the free alternate route, but utilised the tolled Tsitsikama road as it was better maintained, had better traffic flow and led to time savings. Business had issued a report looking at the impact of poor roads, which tended to be potholed and congested, and had found that in the long run, comparing time and wear and tear, it was cheaper to just pay the toll fee. Mr Peterson also argued that tolls did not necessarily discourage economic development.

The Chairperson berated Mr Peterson for responding selectively to the presentation.

Mr Peterson acknowledged that he was focusing solely on the proposed N2 Wild Coast toll road.  

Mr Farrow stated that the cost effectiveness of using SMMEs to maintain roads also needed to be considered. The Vukuzakhe Group in KZN had managed to amass R22 million in three years from this maintenance.

Mr M Kaunda (ANC KZN) stated that Zibambele and Vukuzenzele were saving schemes, where each of the 40 000 women involved had contributed R20 per month, and they now had R12 million in their coffers. The DoT was assisting them with entry into the mainstream economy.

Ms Ngele asserted that the fact that the stakeholders were complaining meant that SANRAL's consultation process was poor.

Mr Peterson responded that the proper consultation process was followed, over a period of some months, in compliance with the legislation. After objections in 2005, the Department was instructed to start the process again. This demonstrated that people's concerns were taken seriously.

The Chairperson outlined some comments. Firstly, she said that a caring government agency, rather than tolling a 10km stretch for thirty years, simply because it had added one additional lane, should rather have requested funding from the government. This demonstrated flaws in SANRAL’s funding model.

Secondly, she asserted that SANRAL needed to become more sensitive and responsive to people's needs. Currently, it was refusing to take on board other views. She enquired why the proposed new road would be tolled, despite the stakeholders’ clear indications that they did not wish to be burdened with tolls. SANRAL was effectively forcing communities to choose between financial ruin, pointing out that about 60% of many people’s earnings were already needed to pay for their transport, or death on dangerous and ill maintained roads that were being touted as alternative routes.

Thirdly, the Chairperson asked if the funds that SANRAL borrowed on the open market, were borrowed in South Africa or from international markets. She also asked if the companies getting concessions to run the toll roads were South African.

Fourthly, the Chairperson stated that SANRAL ought to accord the Committee the respect it deserved. In future, the Committee would expect the Chairman and members of the SANRAL Board to be in attendance, as they took the decisions that the Committee was questioning. Additionally, since the National Assembly was the highest decision making authority in the country, it would have been correct protocol for the Accounting Officer of SANRAL, namely the Chief Executive Officer, to attend rather than attending the meeting of a provincial legislature, which clashed with this meeting. SANRAL was seemingly dismissive of people's concerns. The manner in which it was carrying out its mandate impacted negatively on people.

The Chairperson said that this matter could not be concluded at this meeting. The Minister would need to explain how he was responding to the issues affecting KZN. She reiterated that important issues had been raised, and excessive tolling had a negative effect on the end user of the road.

Other Committee business
The Chairperson stated that the Director General of the DoT had informed the Committee of the Transport Lekgotla to be held from 24 to 26 February. She announced the delegates who would attend the Southern African Bus Operators Association (SABOA) Conference and the lekgotla.

She noted that the Committee’s Strategic Meeting, originally planned for 18 and 19 March, was moved to 25 and 26 March.

Adoption of Committee Minutes
The Minutes of 14 September 2010 were tabled and adopted.

Mr Farrow noted that the Minister had stated that a full report from the task team would be made available, but that Members had only received a presentation.

The Chairperson asked the Committee Secretary to ask the Department’s Parliamentary Liaison Office for the full report, and circulate it to Members.

The Minutes of 16 November 2010 were tabled and adopted.

The meeting was adjourned.


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