Report Coverage
This report focuses on the design, construction, operation, management and maintenance of roads and toll roads, and includes information on the state and size of the sector, infrastructure developments and budgets and influencing factors including coronavirus, policy, road conditions and the status of e-tolls. There are profiles of nine companies including Sanral and companies involved in tollgate operations such as Tolcon Group, Entilini Concession, Trans African Concessions and Electronic Toll Collection and N3 Toll Concession.
Introduction
This report focuses on the design, construction, operation, management and maintenance of roads and toll roads. Roads systems form the backbone of South Africa’s socio-economic activities by enabling the movement of people and goods. The Permanent International Association of Road Congresses (PIARC) states that roads provide access between locations for business and people. For the business sector, this means easy access to suppliers, markets and clients. For citizens it means access to work, education, shops, healthcare facilities, cultural activities, family and friends. Without good road infrastructure, transportation of goods and people are limited and inefficient. Road construction and maintenance also provides skilled and unskilled job opportunities. Road infrastructure often represents the most valuable asset of any country. The coronavirus lockdown restrictions on economic activity and the movement of goods and people have cost the South African National Roads Agency (Sanral) more than R640m to date. Government has not yet decided on the future of the controversial Gauteng Freeway Improvement Project (e-tolls) with motorist payment compliance dropping to 20% per month in March 2020. South Africa’s road maintenance backlog on the 750,000km road network is growing steadily and is estimated at R197bn. This situation could be alleviated by Sanral’s planned R30bn investment in road construction projects and the 15 road related projects worth R47bn that form part of government’s rollout of 51 strategic infrastructure projects.
Strengths
• Sanral collaboration with universities and the Council for Scientific and Industrial Research to promote research and capacity development.
• Sanral transformation policy to break the “asphalt ceiling” by enabling black contractors to participate in road construction projects.
Weaknesses
• Lack of a comprehensive funding policy for roads.
• Lack of government funding for road network maintenance and expansion.
• Poor state of the construction industry.
• Road maintenance backlog is estimated at R197bn.
Opportunities
• 15 road transport projects valued at R47bn and estimated to create 50,000 jobs included in the 51 strategic infrastructure projects and Sanral’s R30bn investment in construction projects.
Threats
• Impact of coronavirus lockdown regulations on the economy and Sanral.
• No government decision on the future of the Gauteng Freeway Improvement Project.
• Public resistance to payment of e-tolls.
• Reduction in the Budget allocation for road transport.
• Suspension of road construction activities during the lockdown.
• Violent protests and attacks at road construction sites.
Outlook
South African Road Federation immediate past president Saied Solomons said it would take billions of rands to restore South Africa’s physical road network if maintenance is not taken seriously. “Roads are a vital public asset and can deliver a higher economic return on investment than any other type of infrastructure,” he said. “The real cost of not maintaining roads is difficult to quantify because poor roads are dangerous and affect road safety. They lead to higher transportation costs and bottlenecks on busy routes. They prevent people from accessing goods and essential services. They increase vehicle operating costs owing to frequent repairs and require more fuel use and they increase carbon dioxide emissions. Dealing with road maintenance across our 750,000km network will help avoid a debt burden on future generations”. Second quarter GDP figures indicated that construction fared the worst of all economic sectors, declining by more than 30% year-on-year. However, economist Roelof Botha, compiler of the Afrimat Construction Index, stated that “arguably the most important tangible driver of recovery in construction is the infrastructure drive by government, which will be implemented in close cooperation with the private sector”. This includes 15 road-related projects valued at R47bn and estimated to create 50,000 jobs that form part of the 51 strategically-important infrastructure projects gazetted in July 2020 and Sanral’s planned R30bn investment in construction projects. According to Sanral’s Macozoma, government must decide on the future of the Gauteng e-tolls project as “Sanral is facing ever-increasing debt issues due to the non-payment of e-tolls by Gauteng drivers and this is threatening the liquidity of the state-owned enterprise. We need an answer and we need it urgently. We are not pushing the e-toll agenda at all costs anymore.” Sanral’s long term Horizon 2030 strategy includes the development of an integrated funding model to diversify sources of income and be more resilient than the present twin-track approach of a government-funded non-toll road portfolio and a road user-funded toll road network. Income-generating opportunities include advisory road construction services, training and development programmes, exploiting Sanral’s land portfolio, wayleaves, outdoor advertising, property development and management. Sanral plans to establish a central toll division to consolidate its toll road management and engineering expertise and investigate the establishment of a separate toll subsidiary. The Africa and Beyond Initiative will explore international business opportunities to provide commercial services.
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View Report Add to CartTable of Contents
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1. | INTRODUCTION | 1 |
2. | DESCRIPTION OF THE INDUSTRY | 1 |
2.1. | Industry Value Chain | 4 |
2.2. | Geographic Position | 7 |
3. | SIZE OF THE INDUSTRY | 8 |
4. | STATE OF THE INDUSTRY | 10 |
4.1. | Local | 10 |
4.1.1. | Corporate Actions | 13 |
4.1.2. | Regulations | 13 |
4.1.3. | Enterprise Development and Social Economic Development | 16 |
4.2. | Continental | 18 |
4.3. | International | 20 |
5. | INFLUENCING FACTORS | 22 |
5.1. | Impact of the Coronavirus Pandemic on the South African Roads Sector | 22 |
5.2. | Roads Policy for South Africa | 25 |
5.3. | Economic Environment | 26 |
5.4. | Gauteng Freeway Improvement Project (GFIP) | 28 |
5.5. | Infrastructure Projects | 31 |
5.6. | Road Conditions | 36 |
5.7. | Rising Operating Costs | 37 |
5.8. | Technology, Research and Development (R&D) and Innovation | 38 |
5.9. | Labour | 39 |
5.10. | Environmental Concerns | 41 |
5.11. | Vehicle Overloading | 44 |
5.12. | Cyclicality | 44 |
6. | COMPETITION | 45 |
6.1. | Barriers to Entry | 46 |
7. | SWOT ANALYSIS | 47 |
8. | OUTLOOK | 47 |
9. | INDUSTRY ASSOCIATIONS | 49 |
10. | REFERENCES | 49 |
10.1. | Publications | 49 |
10.2. | Websites | 51 |
APPENDIX 1 | 52 | |
Summary of Notable Players | 52 | |
APPENDIX 2 | 54 | |
Road Construction, Upgrading and Rehabilitation Projects on the African Continent | 54 | |
COMPANY PROFILES | 58 | |
BAKWENA PLATINUM CORRIDOR CONCESSIONAIRE (PTY) LTD | 58 | |
ELECTRONIC TOLL COLLECTION (RF) (PTY) LTD | 61 | |
ENTILINI CONCESSION (RF) (PTY) LTD | 62 | |
INSTATOLL AFRICA (PTY) LTD | 64 | |
N3 TOLL CONCESSION (RF) (PTY) LTD | 66 | |
PT OPERATIONAL SERVICES (PTY) LTD | 68 | |
SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LTD (THE) | 70 | |
TOLCON GROUP (PTY) LTD | 73 | |
TRANS AFRICAN CONCESSIONS (PTY) LTD | 75 |