The South African National Roads Agency Limited Road Infrastructure Roll-Out Presentation to the Portfolio Committee Wednesday 6 November 2002 Cape Town

Contents Network Strategic Objectives Challenges Non-Toll Roads Proposed 5 Year MTEF SANRAL Contribution to Poverty Relief Progress Toll Roads Concession Contracts

National Roads (7,200km) National Routes (5,300km) – 12,500km Strategic Network (7,500km) – 20,000km Primary Network (18,000km) – 38,000km

STRATEGIC NETWORK KMS Existing National Road Network 7,200 Provincial Roads-Transfer Already Agreed: - Free State 760 - Eastern Cape 850 - Western Cape 600 - Limpopo Province 1,950 Provincial Roads-Transfer to be Finalised 8,640 TOTAL STRATEGIC NETWORK 20,000

STRATEGIC OBJECTIVES To provide and manage a sustainable National Road Network Minimise the cost of road transport Stimulate economic growth Promote Black economic empowerment and value for moneys Be sensitive to the environment Meet the needs of our road users and investors Inspire innovative and effective research and development

CHALLENGES Capacity of delivery institutions (Private and Public) Use existing capacity within Govt Institutional fragmentation Network layout and responsibilities Development of Human Capital Within the Agency Within the industry sector Sources of funding

Non-Toll MTEF Submission 2003-05 (R Mill) 2003/04 2004/05 2005/06 Baseline fm 2002/03 1,171 1,241 1,315 Depreciation ZAR 117 124 132 Border posts 62 47 5 Traffic Control 180 220 200 Network Expansion 325 880 1,650 TOTAL 1,855 2,512 3,122

PROPOSED 5 YEAR MTEF National and Provincial Roads Macro Impacts of Funding Levels

PROPOSED 5 YEAR MTEF National and Provincial Roads Ideal situation 5-10% poor to very poor condition Maintain rest between fair and very good condition Match to capacity Earmarked allocation for rural/community roads, +/- R3 bn

PROPOSED 5 YEAR MTEF National and Provincial Roads National and Provincial road condition under this scenario  

PROPOSED 5 YEAR MTEF National and Provincial Roads WHAT WE ACHIEVE Growth of backlog halted/slowed Rural (inter/intra village) roads boosted – increase economic growth Many opportunities for jobs, SMMEs and ABEs Stabilise & grow sector Retain skills Develop Human Capital

PROPOSED 5 YEAR MTEF National and Provincial Roads Rural (village) roads; R150-300k/km to upgrade rural roads Labour; 30-40% of construction in community pockets Every R100m/year on construction; 513 000 – 684 000 person days on directly employed 300-600 km upgraded per year =>R3bn over 5 years; 11,5 – 15,4 million person days over 5 years Upgrade 7500-15000km of rural roads Leave R670 – R900m in rural economy over 5 years Excludes multiplier effect of 4 - 6

PROPOSED 5 YEAR MTEF National and Provincial Roads Immediate Strategy; Use MTEF funds to build Govt and industry capacity Adapt spending to maintain good roads and prevent further deterioration Ring fence 10-15%/year for rural (inter/intra village) roads for socio-economic improvement

SANRAL CONTRIBUTION TO POVERTY RELIEF 107 Projects in rural areas R230 million allocated of R294 million Estimated employment 950 600 person days R51,6million on labour Skills development Types of project; Weed eradication Nurseries for indigenous plants Roads safety projects (education, infrastructure) Roads and Bridges

SANRAL CONTRIBUTION TO POVERTY RELIEF SDI’s; Lebombo: Hluhluwe-Kosi Bay (85%) St Lucia Wetlands Park (98%) Total Investment R310,2 million 3900 Jobs created

PROGRESS-TOLL ROADS Funding of roads has always been a controversial subject. This is not only true from a fiscal point of view – tax based revenues need to serve a large number of disparate demands – but also from a road user point of view in having to pay tolls. It is important to note that the Agency manages approximately 80% of its total network as non-toll roads. This places a large financial burden not only on the Agency but also on National Treasury. It is for this reason that alternative funding instruments be used and developed to address the infrastructural needs of our country while at the same time reducing the stresses on tax based revenues.

PROGRESS-TOLL ROADS We are mindful that the implementation of toll roads hinges on many political, economic and social concerns. They are not simply a matter of capital augmentation but also depend on such deeply embedded societal concerns, such as:  Equity  Income transfer  Environmental issues  Attitude towards taxation  Role of Government

PROGRESS-TOLL ROADS In terms of public sentiment towards toll roads there is seldom a distinction drawn between Agency toll roads and toll roads operated by the private sector under concession agreement.

Extension to existing toll routes PROGRESS-TOLL ROADS Extension to existing toll routes Route Kms Status N1 Great North 108 - Construction underway, completion due early 2003 N2 Tsitsikamma 54 - Final environmental approval awaited N3 Mariannhill 86 - Process anticipated to commence mid 2003 N4 Pretoria 71 - Construction commenced, completion expected mid 2004 N17 Springs-Ermelo 170 - Pending proclamation of national roads

PROGRESS-TOLL ROADS Proposed New Toll Routes (Additional information available in Horizon 2010) Route Kms N1 Kroonstad-Three Sisters 671 N5 Winburg-Harrismith 224 N8 Kimberly-Maseru 374 N12 Johannesburg-Three Sisters 901 N2 Richards Bay-Ermelo 436 N11 Ladysmith-Middleburg 349 N12 Edenvale-Daveyton 27

PROGRESS-TOLL ROADS Proposed New Toll Routes The feasibility studies are underway and the Public Participation Process is currently being designed. Please refer to “Horizon 2010” for further details

PROGRESS-CONCESSIONS Existing Concession Contracts Maputo Development Corridor (100%) N3 Jhb to Cedara (95%) Platinum (60%) Total Investment R9.7bn Direct foreign investment R 1bn Jobs created - 10200

PROGRESS-CONCESSIONS Works in the near future; Wild Coast Development Corridor– commences 2003 N1/N2 Development Corridor in Western Cape – commences 2003/2004 Estimated Investment R3,8bn Estimate of Jobs 8000

Proposal for sustaining expanded non-toll network Proposed total network TOTAL 20 000 km NON-TOLL 13 200 km TOLL 4 000 km CONCESSION 2 800 km (1) Current MTEF funding 2002 (5 300kms) 1 061 (2) Annual expenditure requirement, current toll & concession network 725 370 355 (3) Annual expenditure requirement toll & concession expansion 2 500 2 100 400 (4) TOTAL NATIONAL ROAD NETWORK ANNUAL EXPENDITURE (1+2+3) 4 286 2 470 755 (5) Total private sector contribution to annual expenditure requirement (public sector saving) (2+3) 3 225 (6) Reallocation of 65% of public sector saving (5x65%) -1 600 -500 (7) REVISED PUBLIC SECTOR FUNDING (1+6) 3 161 (8) Available for other uses (5-6) 1 125 Of the total “saving” to the fiscus, it is proposed that 65% be consolidated into the treasury funding of non-toll roads in order to susin the expansion in the non-toll network and the remaining 35% put to other uses.