THE Cape Chamber of Commerce and Industry wants to know how a R10 billion contract to build two Western Cape tolls roads turned into a R48 billion revenue stream for a consortium of civil engineering companies.
When the contract was awarded to the Protea Parkway Consortium in 2011 the cost of the project was estimated at R10 billion.

According the Cape Town City Council which has analysed the “secret” documents, the R48 billion income for the contractors was calculated in 2010 rands and excluded VAT so it would be and even bigger sum today.

Mr Peter Hugo, Chairman of the Chamber’s Transport Portfolio Committee, said that this was just one of the questions that should be asked about Sanral toll road contracts. “In fact, this week’s disclosures are so disturbing that we now need to take a deeper look at all Sanral contracts going right back to 1994.”

He asked how many other Sanral contracts included provision for Sanral to pay compensation to the contractors when the toll fee income fell short of expectations?

“We know that the Chapman’s Peak toll road contract requires the Province to pay compensation if toll fees do not provide enough revenue for the operators but, until now, we thought this was an aberration. Now it seems it may be a widely used devise to free contractors of commercial risks.”

Another important issue was whether the contracts contained provisions for annual increases in toll fees.

The Chamber had pointed out before that the justification for toll roads was the high construction costs but when a project was completed the cost was fixed in history and it should just be a matter of paying off the loans. Those instalments should not increase unless the interest rate went up and they should come down when interest rates came down. It should work just like a home loan.

“When you open one can and find worms in it you should open all the others to make sure that the whole batch is not contaminated,” Mr Hugo said.

Issued by the Cape Chamber of Commerce and Industry