Bloomberg News

South Africa’s Gordhan Says Gauteng Toll Decision Is Final

February 24, 2012

(Updates with union strike threat from first paragraph.)

Feb. 23 (Bloomberg) -- South Africa’s decision to go ahead with a toll road around Johannesburg is “final,” Finance Minister Pravin Gordhan said, as unions prepared to call a strike against the levy.

Opposition from the Congress of South African Trade Unions, the nation’s largest labor federation and an ally of the ruling African National Congress, to the tolls on freeways in Gauteng province won’t prompt the government to reverse the decision, Gordhan said in a speech broadcast by the South African Broadcasting Corp. today.

The government will allocate the South African National Roads Agency 5.8 billion rand ($727 million) to pay outstanding debt, helping to lower toll fees to 30 cents a kilometer (0.6 mile) from an original proposal of 66 cents, Gordhan said yesterday. Taxis and public buses will be exempt from the fees.

“Government has gone out of its way to find money it never intended to allocate,” Gordhan said. “It is fortunate we had the revenue we could set aside. We have a generous option on the table.”

Zwelinzima Vavi, Coastu’s secretary-general, said government support for the project was inadequate and motorists couldn’t afford to pay more for transport.

“We are going on strike on March 7,” he said in an interview with the Johannesburg-based eNews Channel. “We cannot be held up as cash cows.”

Government spokesman Jimmy Manyi said the Cabinet has approved the toll plan and wouldn’t tolerate any attempt by unions to disrupt its implementation.

‘Fact of Life’

“This is not just a bad dream,” Manyi told reporters in Cape Town today, following the Cabinet’s bi-monthly meeting. “It’s a fact of life. The user-payer principle has been affirmed.”

Sanral, as the roads agency is known, sold bonds in the past four years to finance the Gauteng Freeway Improvement Project that helped to widen, upgrade, resurface and build 185 kilometers of roads around Johannesburg. It plans to use toll revenue to service the debt.

The extra yield investors demand to hold the agency’s 9.75 percent bonds due 2020 rather than South African government debt narrowed three basis points, or 0.03 percentage points, to 47.4 basis points, a four-month low, according to data compiled by Bloomberg. The spread has narrowed from as high as 58.9 basis points on Dec. 12.

‘Spirit of Compromise’

Frequent road users will pay a maximum toll of 550 rand a month, while heavy vehicles can save 20 percent by using the roads during off-peak times, according to the National Treasury. The government will pass laws to give Sanral powers to enforce the tolling system, it said.

“We’ve listened to the commuter public and now we can meet them halfway,” Gordhan said. “The spirit of compromise must prevail. Let’s not create an adversarial relationship.”

The road agency, which is responsible for maintaining and expanding the nation’s 16,170 kilometers of freeways, will spend 38 billion rand in the year through March 2013 on new roads and maintenance.

--With assistance from Mike Cohen in Cape Town. Editors: Karl Maier, Ben Holland, Digby Lidstone.

To contact the reporter on this story: Robert Brand in Cape Town at rbrand9@bloomberg.net Andres R. Martinez in Cape Town at amartinez28@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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