South African National Road Agency: briefing

Meeting report

TRANSPORT PORTFOLIO COMMITTEE
26 March 2003
SOUTH AFRICAN NATIONAL ROAD AGENCY: BRIEFING

Chairperson: Mr JP Cronin

Documents handed out:
Presentation by South African National Road Agency

SUMMARY
The South African National Road Agency Limited (SANRAL) presented their budget and work programme for the financial year 2003/04. The Committee noted a discrepancy between budget deficit figures quoted by SANRAL and those prepared by the Department of Transport. It was decided that this must immediately be referred to the Department for investigation, in consultation with SANRAL.

SANRAL reported an increase in toll revenue over the previous year by R500 million, or 6%. All money generated by the toll network, whether by loan or toll fees, were used only on the toll roads themselves. They reported that the largest chunk of the budget would be used for routine road maintenance. The Agency stressed that these toll roads were being erected in consultation with the public.

MINUTES
Mr Cronin welcomed a Mozambican delegation to the meeting, and submitted apologies on the behalf of the Cross-Border Agency. The Agency was due to present on the same day, but had not been able to make it.

Overview of SANRAL activities
Mr Nazir Alli, CEO, and Mr Nhlanhla Buthelezi, Management Accountant, represented the South African National Road Agency. Mr Alli opened his presentation by reminding the Committee that, although the budget and programmes presented were for the 2003/04 financial year, projects undertaken by SANRAL quite often ran into two or three years. He was proud to announce that a further 2500 km's were to be added to the already 9700 km's of National Roads, and that these extra roads would be incorporated this year. This would be in consultation with the provinces under which they currently fall, and final implementation would be subject to available resources. Mr Alli could foresee no problems with this incorporation.

Mr Alli added that currently the National Roads are made up of 5300 km's of non toll roads, and 1900 km's of toll roads. A programme to begin major maintenance on some additional 10200 km's of roads, which Mr Alli referred to as his Strategic Network, is due to begin this year. This would aid the agendas of social and economic growth. Although the project has been in the pipeline for around five years, it has finally gained the impetus for launching, and will be part of the 2003/04 Work Programme.

Mr Alli presented a slide showing the age breakdown of the National Roads, with 58% being more than 21 years old. Mr Alli said that roads are designed to last a certain number of years, but did not specify what this age limit was. (Please see attached presentation)

Under the heading 'Asset Management Information' Mr Alli discussed the system used to timeously update the conditions of National Roads. He maintained that he could, at any time and due to this information, report on what the condition of each millimetre of the national roads are at this point. Along with this Pavement Management System is the Bridge Management System, which does for bridges what the former does for roads. He also briefly discussed a classification system which is in place as not all roads carry the same traffic. Mr Alli mentioned that all systems and technologies - including monitoring and testing equipment - currently employed were developed by SANRAL, often in conjunction with the CSIR.

At this point, Mr SB Farrow (DP) asked for an explanation of the structure of SANRAL. Mr Alli described SANRAL as decentralised, with branches taking care of a certain number of kilometres, as proportionally as possible to the region they reside in. Staff compliment is approximately 120, and though SANRAL would ideally enjoy twice that much, they can cope, due to the optimisation of technology. In certain areas and certain circumstances, municipal engineers are used to complement staff.

SANRAL Budget
Mr Alli went on to present the budget for the forthcoming financial year. He read out the various figures, but drew the Committee's attention to an important point. Each year, Mr Alli maintained, the amount allocated by Treasury fell short of the amount requested. This has led to an accumulated deficit in 2003/04 of R2148 million since April 1998. An example was the difference in 2003/04 between the funds requested (R1855 million) and the funds allocated (R1171 million). This would show a deficit for this financial year of R684 million.

Mr Farrow asked for a reason for the discrepancies between the figures quoted by SANRAL, and those quoted in the National Treasury's compilation of Estimates of National Expenditure for all Departments.

Mr Alli could not confirm a reason for this discrepancy.

Mr Cronin checked the figures, and concurred with Mr Farrow's findings.

Mr AR Ainslie (ANC) suggested that the meeting be stopped and postponed to a later date, to allow for investigations between SANRAL and the Department of Transport, to ascertain the cause of this discrepancy. Mr Ainslie felt that it might have a direct bearing on further budgetary discussions. Mr Cronin agreed with Mr Ainslie, but felt that the committee should allow Mr Alli to continue with his presentation. The meeting continued.

With respect to spending allocations, Mr Alli reported that the largest chunk of the budget would be used for routine road maintenance. With regards to Periodic and Special Maintenance under Operating Expenditure, Mr Alli explained that these were terms used in engineering, and really just related to asset management.

On the issue of Capital Expenditure, the major point raised was New Facilities. Mr Alli explained that it is vary rare that a whole new road is built, and that the budget allocation of R178 million for New Facilities is for the building of, for example, pedestrian bridges and rest stops along the National Roads.

Mr Ainslie asked at this point whether, when roads are transferred from the provinces into the National Roads network, the funds allocated to provinces for these roads will be transferred as well.

Mr Alli said that this was not the case. Allocations for provinces are much lower than what is needed, and it was, in his opinion, unfair to request that these meagre funds be transferred. They can, perhaps, be used by the provinces in other avenues.

Mr Alli closed his presentation with a brief discussion on the situation of toll roads in the national road network. He reported an increase in toll revenue over the previous year by R500 million, or 6%. He stressed that all money generated by the toll network, whether by loan or toll fees, were used only on the toll roads themselves. None of these funds filtered back into SANRAL for any other purpose.

Discussion
Mr Ainslie asked about the recent increases in toll tariffs, whether Mr Alli had any percentages to report to the Committee. He also asked about unsolicited bids for toll roads. He asked what was happening with proposals for these toll roads, and whether SANRAL worked with local authorities on this matter. He also wished to know whether alternate routes are planned when toll roads are envisioned, although this is no longer a legal requirement.

Mr Alli reported an approximate 8.5% increase in toll tariffs. With regard to unsolicited toll road bids, Mr Alli answered that SANRAL consulted with local authorities and provincial premiers on these bids, but no new programmes were in place at this moment. Research on bids is usually carried out by SANRAL, with costs mostly being shared with the private sector. No new unsolicited bids have come to SANRAL's attention. Mr Alli gave the example of the Chapman's Peak bid. This was the responsibility of the province, not SANRAL. Regarding alternate routes, Mr Alli said that yes, alternate routes are still planned to coincide with toll roads. It is generally accepted that an alternate route is planned when the toll plaza presents an inconvenience to the road users.

Mr GD Schneemann (ANC) asked why so many new toll roads were 'popping up' all over the Pretoria area. He also asked about the weigh-bridge projects previously launched, whether Mr Alli had any feedback on these, and had there been any progress.

With regards to toll plazas in Pretoria, Mr Alli said that toll projects were ongoing, especially in Menlyn and Brooklyn. Mr Alli stressed that these toll roads were being erected in consultation with the public, and that SANRAL does not act irresponsibly in this regard, taking societal concerns and opinions into account.

With regard to weigh-bridges, there has been a break in the erecting and implementing of these installations, as Treasury had not given extra funding to go into these projects. He cited one possible logistical reason, in that the weigh-bridges need to be staffed by the provinces. Mr Alli also reported an average loss of R600 million due to overloading on National Roads.

Mr SB Farrow (DP) praised SANRAL for the state of roads at present. He stated that he had just travelled some 6000 km's of National Roads, and encountered very few, if any, pot holes. Mr Farrow asked what the implications, to SANRAL, were of funds provided for job creation and poverty relief. He also suggested charging for billboard advertising along National Routes to generate extra income.

Mr Alli, in reply to the comments on the state of National Roads, conceded that every effort is made to fill a pot hole (of a certain size) within 24 hours of its appearance. He could report no specifics on the use of funds for job creation and poverty relief, but would see that the committee received a document outlining this. With regard to billboard advertising, Mr Alli regretted that they were only permitted to charge an administrative charge in respect of advertising. The same, he said, went for funds that could be generated by the payment of overloading fines. These, Mr Alli maintained, could only come into SANRAL's coffers through a constitutional change.

In closing, Mr Cronin stressed again the importance of sorting out the discrepancy in deficit figures. He referred to SANRAL's Annual Report, which had not yet reached the Committee due to a delay between SANRAL and the Auditor-General. The Auditor General needs to approve the Annual. Mr Cronin would ask the Department of Transport re-circulate a document on unsolicited toll road bids by the private sector that was circulated last year. Finally, with regard to weigh-bridges, he stressed the importance of the project, and that there must be a follow up with the Department and Treasury in this respect.

The meeting was adjourned.