Finance Minister Pravin Gordhan, on behalf of the government, has applied for leave to appeal against the interdict by the North Gauteng High Court that is preventing the South African National Roads Agency Limited (Sanral) from collecting tolls on the upgraded Gauteng freeways.

The government has asked the Constitutional Court to hear the matter in July.

In a statement released on Wednesday, the government said that Judge Bill Prinsloo’s judgement was an “unprecedented intervention” in public finance matters and was a “fundamental breach” of the division of powers as stipulated in the Constitution.

“At the heart of the dispute in this case, lies a fundamental issue regarding separation of powers and whether or not a court can exercise discretionary judgement over a governmental policy decision on appropriate funding mechanisms, revenue sources and the allocation of nationally raised revenue,” Gordhan said in court papers.

Prinsloo’s April 28 judgement interdicted Sanral from starting e-tolling on Gauteng’s upgraded highways pending the outcome of a judicial review, after the Opposition to Urban Tolling Alliance took the matter to court. Tolling was meant to start on April 30.

Gordhan said the government decided in 2007, in terms of the provisions of the Sanral Act, to finance the construction and maintenance of an improved Gauteng freeway system through raising debt that would be repaid through open road tolling revenue.

“Citizens who enjoy higher-than-standard infrastructure ought not, as a matter of policy, to be subsidised by others who do not,” Gordhan said, pointing out that the equitable division of nationally collected revenue between provinces would be compromised by a replacement of toll revenue with general government support.

Owing to uncertainty about the implementation of the e-toll system, ratings agency Moody’s has downgraded Sanral’s rating by two notches, raising the risk of a default and leading some investors to consider selling their bonds.

Government said Sanral’s cash reserves, that included the R5.75-billion received from the National Treasury, would be depleted by the first quarter of 2013 should the e-tolling system not go ahead.

Failure to collect tolls raised the risk of Sanral defaulting on its loans, which would trigger an immediate repayment of the entire loan book of R37.1-billion. In such an event, government would be obliged to repay the rest of the unguaranteed debt of R14.1-billion.

“Should the guarantee be called, there is a considerable risk of negative consequences for the South African government’s capacity to raise funds from capital markets. The credit rating of South Africa would also be impacted on negatively, since Sanral is a wholly government-owned entity,” Gordhan stated in his affidavit.

Sanral would also be required to show in its financial statements for the year ended March that its existence over the next 12 months was assured, to avoid a qualified audit report.

However, Auditor-General Terence Nombembe has indicated that he might issue a disclaimer on July 31, given the uncertainty regarding when tolling may commence.

“This could prompt another ratings downgrade,” Gordhan noted.

Further, the uncertainty could impact the ability of other State-owned enterprises, such as Eskom and Transnet, to access capital markets, thereby jeopardising the implementation of government’s wide-scale infrastructure projects, the Minister stated.

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