Funding Mechanism for Roads

Road  

For both freight and passenger transport, road-based transportation is currently by far the most relevant of the modes in South Africa. Consequently, in the following, this overview accords this transportation mode a corresponding weighting. 

The advent of democracy in SA brought with it a shift to both sectoral and spatial financial Treasury allocations, and government having to reconsider the road funding options and strategies used over the last two decades prior to 1994. 

In a direct response to diminishing fuel levy-based road funding in the mid-70’s, the political will to introduce user charges to maintain the national road network emerged in the mid-80’s. 

At that time, the 12 000 km network was already carrying 70% of the country’s economic traffic. The result was a dedicated bond was issued to fund road infrastructure and the seed for subsequent SANRAL -driven PPPs was sown). 

A principle of road funding is to endeavour to recover costs as directly as possible from those who benefit from the road. This implies toll roads for the national system and for urban arterials; funding of provincial roads from a fuel levy; and funding of purely access roads from the general tax base, be it general taxation in the rural environment or the municipal rates base in the municipal environment. 

Equally, as the case internationally, there are three levels of government, central, provincial and municipal and hence three levels of institution in providing and managing roads. In the broadest sense, the sources of road funding should match the level of institutional governance for the roads affected with the function of the road shifting from largely economic on the national road system, through to largely social on the access road system. 

The idealized concept is to apply direct user cost recovery on toll roads carrying in excess of 4 000 vpd; utilise a fuel levy for economic roads carrying less traffic; and utilise the general tax base for ‘social access’ roads. Furthermore, acceptable methods to apply shadow tolls for roads that meet the needs of a few intensive users (e.g. coal haulers and commercial timber growers) are currently being explored. In short, the country is endeavouring further to externalise road benefits and costs within available institutional structures and technology. 

To the extent that rail and bus subsidies underpin the operations costs of public transport, these will be factored in with regard to private bus operations, the taxi recapitalisation programme, SARCC rolling stock renewal and municipal road rapid transit transport initiatives currently receiving attention ahead of the FIFA World Cup in 2010.  

SANRAL is rolling out ITS to meet the challenge of congestion. It has also received R.2.1bn additional funding for the maintenance of the national road network, whilst a similar amount is allocated to SARCC for rolling stock, and signalling systems for priority corridors. Rapid transit networks in host cities have also received a R5.5bn leg-up from the 2010 World Cup with regard to development of integrated public transport infrastructure. At SADC level, a Protocol on Transport, Communications and Meteorology, Articles 4.5 and 4.6 commit countries to implement road funding policies and harmonized national road user charging systems, as well as harmonized cross-border road user charging systems – respectively. 

Currently, a Regional Cross Border Road User Charges Collection Association is contemplated by the SADC countries. It is hoped that this will go a long way to harmonizing RUC in the region following the implementation of the Draft MoU on harmonization of these cross-border RUCs. Currently, most countries implement fixed per entry fees, with the exception of Malawi, Zambia and Zimbabwe levying distance-based charges and SA no charge. Cross border charges are the highest entering the DRC and lowest for Lesotho. 

Funding Mechanisms in Province 

The Eastern Cape has been experiencing a critical shortfall in funding for transport planning and implementation, at all three levels of government, for many years, resulting in the deterioration of transport infrastructure to unacceptable levels with long lasting negative effects. The need for a long-term transport funding strategy is critical to ensure sustainable transport systems for the future. 

The Eastern Cape White Paper on Transport for Sustainable Development lists a number of policies supporting maximum use of existing funds, the identification of other funding sources and the re-investment of transport related revenue to ensure long-term sustainability. 

Issues and Concerns 

·          From a review of International Road Federation statistics, SA should be spending approximately 5% of GDP on road infrastructure for a country at its stage of development. In fact, it is spending about 2%, which suggests, as with many other countries that the road system is under some stress. 

·          The development of a technique to prioritise the different transport planning and implementation projects is seen as a high priority. This technique should also serve as a guide to the other planning authorities in the Province. Existing systems will be evaluated as a basis for the development of the new system. 

·          Of the current 15’600 km (or 2.1% of the country’s total network) national road network under SANRAL’s care, only 2’400 km are tolled. However, some of the 46.1% (348’100 kms) of provincial roads cater for intra-provincial travel, and may, justifiably, be considered of national importance. Pending thorough analysis during Phase 2, and notwithstanding the already envisaged creation of a 20’000 km strategic national road network, it may be argued that a portion of the provincial networks fall within the ambit of NATMAP, and, in the face of the generally low provincial funding base, it will be critical that funding (and/or Institutional) options for these tertiary roads are developed during Phases 2 and 3. 

·          With regard to accelerating of PPP funding opportunities, procurement processes are deemed to present limitations as they viewed as overly complex, time consuming and expensive. The regulatory approval processes are said to be also complex, time consuming and unpredictable. Further analysis and international benchmarking will be necessary in the following phases of NATMAP with a view to ease and facilitate PPP funding opportunities in transportation. 

·          NATMAP will also have to take a view on society’s fair share of the burden of externalised costs of road traffic accidents and overload – respectively estimated at about R.13bn and R.650m a year. Equally, as yet un-quantified externalised costs of transportation emissions and private passenger transport need to be squarely addressed.