To date, the South African National Roads Agency Limited (Sanral) have not provided a detailed insight to the cost of the Gauteng Freeway Improvement Project (GFIP), thereby giving society another reason to shun the e-toll system. Government’s lack of clarity on the matter has opened up conjecture about what it is, that they are not telling the public. 

At the outset, there is the glaring discrepancy between Sanral’s own estimates of the 185 km project in 2006 (at R6.4-billion) and what the final price was in 2012, being R17.9-billion, excluding the e-toll infrastructure.

When queried by the media about the seemingly high costs of the project in 2011, Sanral said there was nothing untoward and that the project’s costs (then standing at R15,6-billion) were not out of line. However, the Competition Commission’s announcement of collusive behavior by the construction companies, indicated the costs were indeed out of line, sparking questions as to what the GFIP ought to have really cost. 

This became a matter that civil action body Opposition to Urban Tolling Alliance (OUTA) sought clarity on, largely because if indeed the project’s overall cost was substantially lower, the cost of the e-tolling superstructure and operating expenses would have been proportionately too large to justify the scheme as a rational funding mechanism. This would most certainly be true, had the Minister of Transport (Jeff Radebe at the time) been aware of the high toll collection costs in 2008.

Could this be the reason why Sanral have been less than enthusiastic about making a detailed public statement on the extent of price fixing and tender collusion, which has undoubtedly taken place? Sanral probably don’t want to say much because if they do, they open themselves to acknowledging that they have a problem. Until they do, OUTA will not let up on this issue, as it is inconceivable that the public should be required to settle an odious debt incurred by the authorities.

Because Sanral wouldn’t inform society of what the best price for GFIP ought to have been, OUTA set out to establish this number for themselves, by asking a well qualified and highly experienced road construction engineer to cost the GFIP.

However, it really wasn’t a difficult nut to crack, especially when one considers tenders awarded for other road construction (new and rehabilitation) projects over the past few years. Once applying the rate and measurement contract pricing methodology, including the provision for contract price adjustment and P&G allowances, Quantity Surveyors and Civil Engineers find it easy to establish what a reasonable cost for the GFIP ought to have been at 2010 rates.

The question we ask road construction Quantity Surveyors, Project and Civil Engineers to this day is simply this: given the parameters below please establish for yourselves what a the project would cost (using 2010 prices):-

1. 185 kilometers of freeway, plus an additional 30 km for interchange work, giving rise to a surface area of approximately 7.8-million square meters for a new asphalt surface, of which 66% was applied to the existing freeway (skimming, preparation and resurfacing) and 34% applied to new lanes (road construction from the base).
2. Geological conditions and earthwork environment: Good.
3. Add in the 185 km concrete median barriers plus a few extra kilometers at certain interchanges.
4. Add in 185 km median lighting with masts at roughly 50 m apart.
5. Add in two new 2-lane flyovers of roughly one kilometer each.
6. Generously add in the equivalent of 5 000 m² of new overhead bridge construction and 7 000 m² of underpass bridge work.

The responses we have received reflect that R17.9-billion is outrageously high, even if the entire project was constructed as a new road. Bearing in mind that two thirds of the project was merely a resurfacing of an existing freeway structure, the semblance of a serious unwarranted debt to society begins to emerge. OUTA’s estimates for GFIP come in at nothing more than R10.8-billion, which would indicate that society appears to have been overcharged by roughly R7.1-billion (or 65%).

We question, however, whether this overcharge can all be attributed to the tender collusion. There is reasonable doubt that the construction companies would not be that brazen to increase the cost by even as much as 15% above the going rate for a project of this nature, given that Sanral presumably monitors such matters. This in turn raises speculation as to what the real driving forces behind this overcharge could have been. Was it maladministration, fraud, incompetence or collusion, or a combination of these factors?

This brings us back to consideration of the original questions:-  (a) Had the GFIP come in at around our estimated R10.8-billion, thereby attracting an annual finance cost of around R1-billion per annum (over 20 years including interest), and (b) Had the Minister of Transport known the e-toll collection costs to be over R1-billion per annum, what might his rational conclusion to the e-toll decision as a funding mechanism have been? 

Against this backdrop and the notion that government’s role is to ensure minimised costs and maximum prosperity for its citizens, something is seriously amiss here. Aside from the other issues of meaningless public consultation, the onerous conditions and unworkability of the scheme, it is clear that society has every reason to reject the e-toll decision, simply because it is an odious debt. 

The unacceptably large gap and unanswered questions leave a clear watermark of a moral hazard lurking in the mess, which cannot be ignored. To restore public confidence a full and independent investigation on this matter is required, as opposed to the current nonchalant attitude of expecting society to merely suck it up.

Written by Wayne Duvenage – Chairperson of OUTA