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Outa, Sanral continue to exchange barbs

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Outa, Sanral continue to exchange barbs

Photo by Duane

13th April 2016

By: Ilan Solomons
Creamer Media Staff Writer

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Organisation Undoing Tax Abuse (Outa) stands by its position paper on the Gauteng Freeway Improvement Project (GFIP) and the substantive points made therein, along with the overall purpose and intent of the report.  

This was in response to comments made by South African National Roads Agency Limited (Sanral) executives at a media briefing on Tuesday, disputing Outa’s claim that the GFIP was overpriced by as much as 321% when compared with road construction pricing around the world.

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Outa stated on Tuesday evening that Sanral had been incorrect in its assertions about the points Sanral claimed were incorrect, in its attempt to vilify the Outa report in total.

“Outa does not deny that it received questions from Sanral’s attorneys about the report. We responded to Sanral's attorneys (Werksmans) and requested that the engagement takes place directly between Outa and Sanral, without the unnecessary costs of an expensive law firm – at the expense of the taxpayer – unnecessarily serving as a go-between, as Outa has no problem in engaging directly with Sanral.”  

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Outa added it had also sent a letter directly to Sanral CEO Nazir Alli last week, informing him of the same, but said that it had since been instructed that Outa must only engage through its lawyers.

“Werksmans has also refused to answer any of our questions. This incessant need to converse with civil society entities via law firms for a response to straightforward questions, is indicative of an arrogant belief that they have carte blanche to waste taxpayers’ funds at will,” Outa remarked.

It contended that Sanral was attempting to question and bury a position paper, which referenced credible reports on the cost of road construction worldwide, and “which is therefore an opinion and position (ours), on an issue which has been highlighted umpteen times in the past”.  

“If Sanral want to question the empirical evidence of the international reports we referenced, it is for them to verify this with the writers of those case studies, which we have referenced in our report. We believe the case studies are credible and have gravitas in the international road construction industry.

“The fact that Sanral could not find one of the reports which we had referenced, does not mean to say that report is nonexistent. We would not be that stupid to reference a nonexistent report which Sanral is making out that we did,” Outa said.  

Outa further asserted that simple deeper research into the site, would have revealed that the publisher had moved the report to another part of the site.  

“We found it quite easily and will let them have it if they so desire.”

Outa stressed that all the reports it had referenced were available to the public and credible. It added that, when the organisation published an update to its report, which it intended to do, Outa would insert the new links to the report Sanral failed to find.

“We will also reference new and additional information which we have discovered, as a result of a deeper search for more information to further substantiate our claims, which came to the fore following Sanral’s questions,” said Outa.

The organisation claimed that Sanral had tried to vilify its report based on information which it said was incorrect. “They start out by asking where we obtained the number of 185 km for the GFIP from, and try to discredit our entire report, based on a result of their own numbers.  

Further, Outa said it had since accessed presentations given by Sanral’s own management, which references the GFIP and the 15 work packages after the tenders were announced, as being for 185 km.

“In recent years, we have noticed that Sanral has mentioned a very slight increase in the length of GFIP, first to 195 km then later to 201 km, but these numbers were quoted after the project was completed.  So, we stick to our number, as they themselves have referenced on numerous occasions, and to which the costs have been attributed to. Their change in this scope by an extra 16 km needs to be spelt out by them, not us.”

Moreover, Outa pointed out that Sanral had attempted to discredit its paper by saying the organisation got its figures wrong by 100 000%. Outa refuted this claim.

“Honestly, does Sanral seriously think we would misquote a cost in error to the tune of 100 000%,” said Outa chairperson Wayne Duvenage.

“Sanral should know better than to try and make an outrageous claim of this nature, before looking a little deeper into their grossly erroneous assertion,” he stated.

He said Outa was not wrong in its reference to €0.52-million as while the ‘Netherlands Delft’ report did make reference to €0.52-billion on page 33, which Sanral had pointed out in an attempt to discredit a part of the report, it turns out that Outa was correct to amend what is clearly a typo on the Delft report.

Further, Duvenage noted that Outa did not just assume it was a typo, in that further on in the same report, the number was correctly referenced in page 39 in Table 7 as not being in billions of euros, but rather, as hundreds of thousands of euros, which equated to the correct figure quoted by Outa.

He stated that Outa would point out the error to the European report writers and clarify this in its revised report, thereby maintaining its claim, in reference to this report, has in fact been correct.  

“Had Sanral applied their minds, they would quickly realise that it is virtually impossible for a road to cost €0.52-billion per road kilometre, that is R4.7-billion per road kilometer at the applicable exchange rate.

“This simple exercise would have got them to realise (as we did) that the reference to billions in the Delft report was wrong and Outa’s reference was indeed correct.”

Duvenage added that in Sanral’s questions (via Werksmans) it had asked Outa: “On what basis is it ascertained that international pricing should be used as a benchmark to determine the cost of infrastructure developments . . .”.  

He said the problem with Sanral’s inwardly focussed approach exemplified in questions of this nature, was that it insinuated therein that Sanral did not need to – or that it was not necessary to – conduct international benchmarking exercises.

“Yet the grounds for the use of international benchmarking are actually mandated by the Sanral Act, Chapter 3 (Functions, powers and responsibilities of Agency), Section 26 (m) and (s).”

Outa, therefore, asked once again, as was done in its position paper, why it cost Sanral so much more to build roads in South Africa than it did for other parts of the world to do so?  

Duvenage added that it was “too easy” for Alli to just say Sanral went to a public tender process, and those were the prices Sanral got from the industry.

“This atrocious statement implies that he or Sanral has no ability to challenge, question or research possible collusive pricing. We expect our State-owned entities to question and challenge their suppliers and not to simply adopt an attitude of well, that is the price we got, so that is the price we took.

“This is outrageous and another reason why benchmarking is necessary,” he emphasised.

Additionally, Duvenage noted that, in preparing Outa’s responses to Sanral’s 420 questions, “which they unreasonably expected us to respond to in two weeks”, Outa had conducted further and deeper research which would be made available in its soon-to-be-released updated position paper.

“We will add further substantiation to our position, opinions and claims on this matter,” he concluded.

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