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Operation Roads Toll Roads South Africa

The Operation of Roads and Toll Roads in South Africa 2020

Liz Kneale | South Africa | 25 October 2020

The Operation of Roads and Toll Roads in South Africa 2015

Ian Peddie | South Africa | 22 July 2015

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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”.\r\n\r\nSecond 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. \r\n\r\nAccording 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.” \r\n\r\nSanral’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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The Operation of Roads and Toll Roads in South Africa
The Operation of Roads and Toll Roads in South Africa 2020

Full Report

R 1 900.00(ZAR) estimated $105.19 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 73.63 (USD)*

Historical Reports

The Operation of Roads and Toll Roads in South Africa 2015-07-22

R 1 900.00(ZAR) estimated $105.19 (USD)*

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Table of Contents

[ Close ]
PAGE
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

Report Coverage

The Operation of Roads and Toll Roads focuses on the current state of the sector and the challenges faced by Government and stakeholders. The report also profiles nine industry players, including Bakwena Platinum Corridor Concessionaire (Pty) Ltd, which employs 122 people in the management and operation of its two toll roads, and the country’s largest employer in the sector, toll operator Tolcon Group (Pty) Ltd, which employs approximately 1,000 people in Limpopo, North West, KwaZulu-Natal and the Western Cape.

Introduction

This report reviews the operation of South Africa’s road network of 747,000 kilometres, with an emphasis on national roads. The Department of Transport is responsible for policies relating to South Africa’s roads while road building and maintenance is the responsibility of the South African National Roads Agency (SANRAL) as well as the nine provinces and local governments. Funding for non-national roads is provided from the country’s tax base while national roads are funded by SANRAL, partly from the fiscus but also through self-acquired sources. National roads are generally well-built and maintained and are likely to stay that way, while other roads vary in their standards and are likely to deteriorate as government struggles to balance its budget and deal with ever-increasing demand for funds across all departments under its control. Government has put in place some strategies and programmes to overcome the maintenance backlog, underpinned by the National Transport Masterplan (NATMAP) 2050 which coordinates policies and strategies across all Transport Departments in the country.

Strengths

• Better roads sooner than if public involvement.
• Direct and indirect job creation.
• Fast fund raising.
• Foreign investment.
• Revenue dedicated to expenditure on the scheme, so no political interference.
• Tolls act as a form of congestion relievers.
• Upgrading improves safety.

Weaknesses

• Failed toll schemes load taxpayers.
• The introduction of tolls can cause traffic diversions and thus congestion.
• Toll road schemes can have an inflationary effect due to increased investment.
• Toll roads negate use of public transport.
• Unplanned residential or industrial nodes as a way of avoiding paying tolls.

Opportunities

• Best in class toll roads.
• Build, maintain and operate roads which otherwise would not be possible.
• Competitive and transparent procurement.
• Direct cost for road users, not all tax payers.
• Mitigation and flexibility in managing macro-risks.
• Reduce strain on the tax base.
• Strong corporate institutions with appropriate resources.

Threats

• Inadequate financial and economic analysis.
• Inappropriate sharing of risks (private investor).
• Lack of competitive procurement.
• Public resistance (willingness to pay not assessed such as in the eToll fiasco in South Africa).
• SANRAL unable to attract private investors due to inadequate returns.
• Unrealistic revenue and cost estimations.

Outlook

The global economy’s recovery, or not, will have bearing on South Africa’s own economic performance, the tax base and government’s capacity for financing road development and maintenance. State-owned companies and municipalities will continue to face substantial investment requirements, and moderation in the main budget deficit must be controlled.\r\n\r\nThe economy will have a similar impact on the willingness of private investors to become involved with large capital projects. Specifically:\r\n
• They may be undermined by lower than expected usage of their Concession roads;\r\n
• Interest rates in the capital markets need to remain favourable;\r\n
• The unfavourable exchange rate makes imports prohibitive, but foreign investment positive.\r\n\r\n\r\nNational Non-Toll roads\r\nFunding of non-toll roads will remain under pressure and will become worse, especially if access to funds are tightened.\r\n\r\nToll Roads\r\nSANRAL has declared that the following roads will be implemented and/or completed by utilising SANRAL funding: \r\n
• N1-N2 Winelands Toll Highway Project - Upgrading for Safety\r\n
• Gauteng Open Road Tolling - Electronic Tolling (E-toll)\r\n
• N2: Upgrade between Umdloti interchange to Tongaat toll plaza[10]\r\n\r\n\r\nSimilarly SANRAL has plans for three additional concession/state toll projects: \r\n
• N2 Wild Coast Toll Highway \r\n
• N1-N2 Winelands Toll Highway \r\n
• R300 (N21) Cape Town Ring Toll Highway.[10]\r\n\r\nThe Minister of Transport has announced that 14 projects with the overall budget allocation of R400m for the 2015/16 financial year are planned. \r\n

Read More..
The Operation of Roads and Toll Roads in South Africa
The Operation of Roads and Toll Roads in South Africa 2015

Full Report

R 1 900.00(ZAR) estimated $105.19 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 73.63 (USD)*

Historical Reports

The Operation of Roads and Toll Roads in South Africa 2020-10-25

R 1 900.00(ZAR) estimated $105.19 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.1.1. Non-National Roads 2
2.1.2. National Roads 3
2.2. Geographic Position 10
3. SIZE OF THE INDUSTRY 10
4. STATE OF THE INDUSTRY 15
4.1. Local 15
4.1.1. Corporate Actions 15
4.1.2. Regulations & Government programmes 16
4.1.3. Enterprise Development and Social Economic Development 17
4.2. Continental 18
4.3. International 19
5. INFLUENCING FACTORS 20
5.1. Government Intervention 20
5.2. Labour 23
5.3. Economic Environment 23
5.4. Rising Input Costs 23
5.5. Cyclicality 24
5.6. Information Technology 24
5.7. Environmental Concerns 24
6. COMPETITION 25
6.1. Barriers to Entry 25
6.2. Research and Development (R&D) and Innovation 27
7. SWOT ANALYSIS 27
8. OUTLOOK 28
9. INDUSTRY ASSOCIATIONS 30
10. REFERENCES 30
10.1. Publications 30
10.2. Websites 31
ORGANOGRAM 32
COMPANY PROFILES 33
BAKWENA PLATINUM CORRIDOR CONCESSIONAIRE (PTY) LTD 33
ENTILINI CONCESSION (PTY) LTD 36
INFRASTRUCTURE CONCESSIONS SOUTH AFRICA (PTY) LTD 38
INTERTOLL (AFRICA) (PTY) LTD 39
N3 TOLL CONCESSION (RF) (PTY) LTD 41
PT OPERATIONAL SERVICES (PTY) LTD 43
SOUTH AFRICAN NATIONAL ROADS AGENCY SOC LTD (THE) 45
TOLCON GROUP (PTY) LTD 49
TRANS AFRICAN CONCESSIONS (PTY) LTD 51