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TOLL ROADS: Open Road Tolling Versus the Fuel Levy


Recent Gauteng Business News

The Open Road Tolling (ORT) system on Gauteng's roads has been the subject of much contention over the past few years, and has come under fire from a wide range of industry and civil stakeholders for the high costs and negative impact this would have on the provincial and national economy.

While it cannot be disputed that the province would benefit from an improved road network, and initiatives to improve the road infrastructure are to be applauded, there are several concerning factors around the Open Road Tolling system. These include primarily the cost of use, the methods of payment and collection and the very real potential for low compliance levels, amongst other aspects, which could result in a minority of compliant citizens and corporates carrying the cost burden for the majority of road users.

The fact remains that a modern road network throughout the country with a complimentary integrated public transport system is in the best interests of all citizens, regardless of whether or not they own a car. This is a matter of primary national interest and the government is obliged to provide appropriate infrastructure.

Contradicting the earlier 'user pay' mantra for all, the most recent ORT announcement by Government chooses to exempt commuter buses and taxis from tolls, however, trucks; municipal vehicles, which could be construed as providing a service of national interest; and economically active people who contribute to the national economy, are not. The Open Road Tolling system also encourages users to migrate to secondary roads to avoid paying the tolls. In such a scenario, these road users would not be contributing towards improved road infrastructure. In fact, the secondary roads would deteriorate faster, at the expense of already stretched municipal budgets, and SANRAL would not achieve its funding targets.

The fuel levy, a system that is already in place with existing collection methods, is currently paid across by fuel companies to the South African Revenue Service (SARS). However if the fuel levy were paid to SANRAL to fund the debt, this would ensure that all road users would contribute and the burden would be shared equitably by all vehicles in terms of their fuel consumption. The fuel levy also guarantees that motorists pay for the use of the roads, irrespective of where they drive, which would help to prevent the degradation of secondary roads.

Concerns Over Open Road Tolling Non-Payment

SAVRALA is concerned that the risk of toll non-payment by many road users has been understated. As proxy for the level of non-compliance, it is useful to note that only about 20% of traffic fines are paid. The implications for an income model based on this level of risk are significant, however, neither SANRAL nor the Department of Transport have yet to indicate the level of non-compliance built into their funding model. In the absence of the national implementation of AARTO (Administrative Adjudication of Road Traffic Act), SANRAL has indicated that they will drive enforcement through the SANRAL Act (1998); however, currently the practical details of such enforcement remain unknown.

Assuming a relatively low level of compliance, which is not just a local issue but a global experience, particularly in the initial stages, road users can expect major increases in toll fees on an annual basis. The implications of this extend further, since law abiding citizens would be effectively paying for non-compliant users. This suggests that compliance levels would drop even further as people would be reluctant to pay if they thought they could get away with it.

The prosecution of offenders will no doubt flood an already overloaded judicial system and curtail its capacity to deal with real criminals. Added to that, the unnecessary use of energy, fuel and paper required to process the tolls and prosecute these offenders will have a negative impact on the environment in a time where reduced carbon emissions and more efficient use of energy and natural resources are of paramount importance.

The increase in inflation as a result of the additional cost to motorists and the freight industry will be reflected in the price of services and goods, basic foods included, which will then have a knock-on effect to the most vulnerable in our community who already have to try and survive after the recent electricity increases and the many other administered prices.
Local tourism will also suffer, as the increased cost of travelling in and around Gauteng will reduce the disposable annual income of Gauteng residents by several thousand Rand.

For fleet owners and car rental companies, costs will be increased not only by the tolls but by the need to invest in human resources and systems to audit and process toll fees. These additional costs will then be passed on to the consumer. It is estimated that the average daily rental cost could increase by R30 (10%) due to toll fees alone.

The Possible Risks of the Open Road Tolling System

While administration of the Open Road Tolling may help to create a few hundred jobs, there is a real risk that thousands of jobs in tourism destinations and in outlying rural areas could be lost. These increased costs will also have an impact on the cash flow of small businesses, as they will have to build these costs into their prices and carry them from the time of toll transaction to when their customer pays the invoice. An emerging business struggling on thin margins may well have to close due to such additional costs.

SANRAL has indicated that the cost of administering the operating tolling system, excluding the purchase of the gantries and other equipment, is estimated at just under R5bn for the next five years. Although the Open Road Tolling gantries have already been built at great expense, perpetuating an inefficient system is not in the best interests of either the citizens of Gauteng or SANRAL itself. These gantries could be put to better use for law enforcement and traffic monitoring purposes, or perhaps even to generate revenue as advertising billboards.

Approved toll fees as published by cabinet vary between 24c per kilometre for motorcycles up to 200c per kilometre for long trucks, with certain discounts applicable to e-tag users, usage at off-peak times and frequent road users, but there is no guarantee that these fees will be collected.
However, if the fuel levy were used for road improvement, the administrative costs would be nil and 100% compliance is guaranteed. This dramatically reduces the associated risks and ensures that money is collected from all users for the improvement of the road infrastructure.

According to SAVRALA's estimates, an increase of less 40c per litre on the fuel levy would translate to less than 4c per kilometre for the average South African motorist driving a sedan. This would enable SANRAL to meet all of its obligations across the country, not simply in Gauteng, with guaranteed compliance, fewer out of pocket expenses and fewer negative impacts on the national economy.

The Gauteng Freeway Improvement Project (GFIP) and all other similar projects in South Africa, along with a focus on developing a competent public transport alternative, are well overdue. However, the Department of Transport appears set on pursuing a second choice funding methodology instead of honestly and constructively engaging with their stakeholders to explain clearly why the more efficient fuel levy cannot be considered.

Road users are not saying they won't pay for the improvements, but are understandably concerned about the inflated costs and inherent issues with the Open Road Tolling system. Which is a more practical solution? You decide.

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