Finance: SANRAL to Raise Further R25bn for Freeway Projects
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SANRAL has raised more than R4,6-billion in 2008 to fund current projects that include the major Gauteng Freeway Improvement Programme (GFIP). Ratings agency Moody’s currently has SANRAL with a long-term rating of Aa2.za and short-term rating of P-1.za on its National Scale Issuer ratings.
SANRAL chief executive officer Nazir Alli expects continued solid participation from the capital markets in the company’s debt offerings. Speaking after a presentation to investors in Pretoria today (Wednesday), Alli said that SANRAL remained on track to raise the funds needed to undertake its current programme, of which much of the civil works are scheduled to be completed by October next year.
The organisation expects to invest about R25-billion in freeway construction projects over the next two years. The GFIP alone will cost in the region of R20-billion. Alli expects SANRAL to continue completing projects on budget, although close attention is paid to the price of bitumen which is one variable aspect which is influenced by the movement of the oil price on the international markets
“Economic conditions are certainly tougher than they were when we began issuing debt to finance the major projects now underway. However, indications are that investors will continue to be assured by our good market ratings and track record of efficiently maintaining the network and settling debt,” said Alli.
SANRAL was voted Best Borrower 2008 in the Bond Exchange of South Africa’s annual Spire Awards. This award goes to the bond issuer that is committed to excellence and transparency, as demonstrated by regular and consistent sharing of information with investors and other market participants.
SANRAL is responsible for the design, funding, maintenance, operations and rehabilitation of South Africa’s tolled and non-tolled national roads. Accounting and financial management of tolled and non-tolled roads are separate because toll fees are not used to cross-subsidise non-tolled national roads, which are funded by government.
South Africa’s network of national roads stands at 16 170km. SANRAL is responsible for extending this to 20 000km by 2010.
Alli said that SANRAL’s current flagship project, the GFIP, is proceeding well and largely according to plan. “In any road project there are always weather issues. However, the recent heavy rains around Gauteng have not caused any major setbacks. People are by and large responding well to the disruptions due to major road works on such a large scale. We’re confident that the ultimate result will be worth the wait for motorists,” he said.
The GFIP will be operated on the user-pays principle after October 2010. The Open Road Tolling system to be used will require each vehicle to carry an electronic tag. Tolls will be deducted each time a vehicle passes under one of 38 overhead gantries set about 10km apart across the Gauteng freeway system. SANRAL envisages that tags would be linked to bank accounts, or could be recharged at retail outlets or through the internet.
In addition to the GFIP, SANRAL’s capital investment programme includes the N2 Tsitsikamma Toll Road, the N17 East Toll Road Extension, the N1 South and R30 Bloemfontein-Kroonstad road, the N1 Polokwane Bypass, the Marianhill Extension and the Dube Trade Port Interchange.
Proposed new toll road concessions are the N1/N2 Winelands Toll Highway and the R300 Ring Road in the Western Cape and the N2 Wild Coast Toll Highway. These proposed concessions are in various stages of the regulatory approval process.
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