Sanral in financial dilemma

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The agency is continually borrowing money on the open market, and repaying it on a monthly basis. In September Sanral’s total indebtedness was R31.5bn, R20bn of which had been spent on the improvement of the envisaged Gauteng toll roads.

Every month Sanral holds bond auctions which raise an average R300m. These auctions are generally twice oversubscribed, but in September the auction was cancelled because investors got cold feet owing to the uncertainty about the future of the toll system.

Sanral then cancelled further auctions until the implementation of the tolling system. It had hoped that this would be in February and that auctions could resume in March.

The absence of auctions in September, October and February would mean a loss of R900m. Sanral does not normally hold auctions in November, December and January.

By implication the March auction is off the table and there is no indication when auctions will resume.

In terms of the initial planning, the e-toll system was to have begun in April last year. Financial planning was aligned to this date. Sanral is thus saddled with massive debt that has to be paid, but without a meaningful income.

Financial director Inge Mulder previously reported that Sanral had sufficient money, if necessary, to pay off its debt up to the end of May. But by June the money will be exhausted and Sanral will no longer be able to make payments. Government will then have to intervene. This has huge implications for market confidence in Sanral and South Africa, which could be reflected in credit ratings.