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I have today written to the Chair of the Standing Committee on Finance, Hon Thaba Mufamadi, to request that Finance Minister Pravin Gordhan is summoned to brief the committee on the status of South African National Roads Agency Limited’s (SANRAL) debt following the recent delay in the Gauteng Freeway Improvement Project e-tolling.

Today’s meeting of the Finance committee revealed that 5% of the Government Employees Pension Fund’s (GEPF) bond holdings are made up of SANRAL bonds, but Hon Arthur Moloto, the chair of the fund’s board of trustees today confirmed that only half of the R15,7bn worth of bonds have a government guarantee. This raises the question of government pensioners’ exposure to default risk associated with almost R8bn worth of their pensions.

The Hon Moloto maintains that the unguaranteed amount is subject to an implicit government guarantee given that the state is the sole shareholder of SANRAL but whether National Treasury agrees is unclear. The Finance committee needs to establish government’s position on the unguaranteed debt and risk of default given that SANRAL’s ability to service the debt now appears compromised. This issue will have implications for South Africa’s credit rating.

In addition, the Finance Minister needs to shed light on SANRAL’s bond issues and the GEPF’s bond purchases that apparently began around 2008. Questions arose in committee around whether the GEPF had knowledge of the e-tolling project when they purchased the SANRAL bonds. GEPF officials appeared, however, uncertain as to whether the purchases were based entirely on SANRAL’s credit rating, or whether they may have had knowledge of the e-tolling project that was not publically available at the time.