Gauteng freeway costs overinflated - research paper

Johannesburg – South Africa overpaid by an average of 321 percent for the Gauteng Freeway Improvement Project (GFIP), which cost 832 percent more per lane per kilometre than the Trans-Kalahari road project in Namibia.

This was one of the findings of a 26-page research paper conducted for the Opposition to Urban Tolling Alliance, now named the Organisation Undoing Tax Abuse (Outa), that compared the cost of the GFIP with 11 international case studies.

Read: E-tolls ‘overpriced by more than 300 percent’

The report said the public had every right to feel “ripped off to the tune of a minimum of R10.8 billion” on the GFIP, and that it had significant implications not only for the e-toll scheme’s waning compliance levels but also for the SA National Road Agency Limited’s (Sanral’s) integrity and professional conduct.

It said that if the construction costs were too high, it made the decision to introduce the expensive e-tolls collection process even more ludicrous, while providing “the Gauteng motoring public with more reason not to pay their e-toll bills”.

The report said that had the GFIP construction cost come in at a more realistic price tag of R7bn instead of R17.9bn, the loan repayment costs would have been well under R1bn a year over 20 years at an achievable interest rate of 10 percent.

“This means the servicing of the capital debt of the road upgrade would have cost less than the e-toll collections, which would make the scheme highly irrational and unacceptable,” it said.

Outa chairman Wayne Duvenage said yesterday that the research paper showed there was something grossly wrong with the cost of road construction under Sanral’s watch.

Duvenage said the research showed that the GFIP cost at R17.9bn for the road only, excluding the tolling-related infrastructure, had been overcharged by between 136 percent and 832 percent.

The report said the collusion of construction companies had the biggest impact on the cost, but suggested the price could only have been inflated by 10 percent to 50 percent before raising alarm bells at Sanral.

It said it could not overlook the possibility that a portion of the estimated overcharge might be attributed to incompetence, maladministration or corruption within Sanral and/or between Sanral and suppliers.

It recommended a thorough and independent investigation into Sanral’s acceptance of such high road costs; that all toll and major road construction projects undertaken by Sanral be investigated; that Treasury oversight rules in future apply to Sanral; all future contracts for road projects be conducted in an open and transparent manner; the GFIP toll scheme be cancelled; and Sanral abandon its plans to toll freeways in the Western Cape.

Sanral communications general manager Vusi Mona said last week, before the report’s release, that Sanral could not respond to the allegations until it had seen and studied it, saying Outa “seems to have disgracefully descended into the abyss of making false and unfounded statements to deliberately deceive the public”.