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Sanral borrowing money to pay debts

The roads agency owes R1.5 billion, while sales of e-tags are "extremely slow".

A motorist uses the N12 highway, a proposed toll road in Johannesburg on Thursday, 15 November 2012. Picture: Werner Beukes/SAPA.

JOHANNESBURG - The South African National Roads Agency, Ltd (Sanral) has moved to dampen fears that it's financially in ruins in light of low e-tag sales and continuing delays in its e-tolling project.

While it admitted that e-tag sales have been "extremely slow" and that it is struggling to pay back its R1.5 billion debt to investors, the company insisted that it is not broke.

At a roundtable meeting with journalists on Wednesday morning, the agency pushed the fact that tolled roads form only a fraction of its business, meaning problems in that area are not consuming the company as a whole.

Speaking on Talk Radio 702 later on Wednesday, Sanral's Chief Financial Officer Inge Mulder further explained the structure of its portfolios.

"Sanral is clearly split between a non-toll portfolio and a toll portfolio. The non-toll portfolio is 84% of our business and is solely funded by grants from the National Treasury."

She said the other 16 percent of its business is tolled, meaning 16 percent of its roads in terms of kilometres.

However, she admitted that paying back the debt would be a difficult task.

She pointed out that they would have to continue funding maintenance of existing roads while also paying back the R1.5 billon, meaning even higher amounts would have to be raised.

Their difficulty comes because they are unable to issue any more bonds when they can't pay returns on the current ones.

She explained that investors in the agency "are not too keen on buying more bonds."

There has not been a major sell-off of the bonds either, suggesting that investors are still relatively confident in the agency.

"They are quite happy to keep the bonds, they are not selling them, so they are fairly comfortable seeing Sanral as a continuing entity, but they are not going to buy more at this stage."

Sanral is now turning to banks to lend them money in the short-term, which they plan to pay off as soon as they can begin issuing bonds again.

"Once we can start issuing bonds again, we can actually repay that short-term instrument."

She said the banks have been "fairly good" in helping the company but conceded that Sanral would prefer to work with longer-term funding due to the long-term nature of its assets.

Responding to a question about fuel-levies replacing the e-tolling programme, she said it was not up to Sanral to decide, and would not give her opinion on the debate.

"The proposal must come from government, Sanral is just an implementing authority, so if the government's policy changes then that is what will happen."

Government, in turn, could not help Sanral with their financial woes.

"Government is also a borrower, so whether Sanral or government borrows, it's the same problem."

At the roundtable meeting earlier in the day, Alex van Niekerk said he did't have exact figures of e-tag sales, but believed more than 600 000 e-tags have been sold.

"The uptake of e-tags are extremely slow in terms of the period we're in. There's a lot of 'let's wait and see'.

He says if e-tolling were to launch tomorrow, they could handle the flow of transactions and chase motorists who don't pay.

Van Niekerk also says that he can fight off the legal challenge by the Opposition to Urban Tolling Alliance (Outa) against the multi-billion rand project.

He says its job is to implement e-tolling, not win the hearts and minds of South Africans or justify government policy.

The roads agency maintains it's ready to launch e-tolling once a parliamentary process has run its course and President Jacob Zuma signs a required bill into law.

The agency's spokesman Vusi Mona said the timeframes given were merely timelines and are always subject to change.

"Timelines are timelines and they do change. What's not in dispute is this is government policy. Parliament has passed the bill and Sanral has to implement it."

The agency needs to pay off the R1.5 billion debt by 31 October.

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