1. THE USER PAYS PRINCIPLE
THE CASE FOR
THE USER PAYS PRINCIPLE

2. The state of road transport in SA today
The National Development Plan refers to the SA road network as South Africa’s largest single public asset with a replacement value of some 1.7 trillion ZAR.
Vehicle ownership has doubled since 1994 to 12 million registered owners.
39% of these in Gauteng.

3. The state of road transport in SA today
83% of total freight transport on SA roads
94% of motorised person trips are road based
Increasingly challenging to maintain and upgrade around 724,000 km network.

4. The state of road transport in SA today
SANRAL manages 22, 043km of road
Only 2.9% of 750,000km of total SA roads
But this network carries 33.1% of the traffic, more that 70% of all long distance road freight.

5. The state of road funding today
85% (19,105 kms) of national roads funded through fiscus and 16% (over 3,092 kms) of SA’s national roads are tolled.
Comparatively in USA 18,500/47,662 or 38.8% miles are tolled.
2015 Survey in USA indicated 85% of road users prefer this principle of user pay.

6. Global trends in infrastructure funding
Harnessing the power of the private sector
Changing funding models – PPP model
Political risk and corruption impacts government’s ability to attract investors.

7. Why not the fuel levy? 5 reasons Unfair contributions. Not ring fenced
Bias towards high income users
Diminishing fund
Estimated increase to fuel price of between R0,40 and R1,10 per litre

8. Why not increase tax? 5 reasons why
Govt unable to meet funding requirements of basic services
Govt already funds 84% of non-tolled national roads
R42, 8 billion shortfall in tax revenue from last year - revenue growth has slowed
Weighty tax burden – 12th highest in the world! .

9. Operating Cost % of Toll Revenue
USA varies between 24% - 54%
In South Africa, assuming only 90% compliance: cost would amount to approximately 18.5%.
GFIP

10. Why not a complete hybrid model? 5 reasons why
Costly to administer and manage
Indiscriminate tax
Can’t isolate the income

11. The User Pays System – Explained
Accepted as part of the National Development Plan.

12. Who we are Established in 2010
Technology and toll collection services for SANRAL
1,200 South Africans employed
Presently owned by Kapsch

13. Gauteng Freeway Improvement Project (GFIP)
Designed to support Gauteng’s growth and reduce congestion – traffic increase of 3% per year
Planned lanes: 201km
Future upgrades: 423km
Planned new routes: 158km
User pays / tolling required to fund expansion.

14. History of the User Pays Principle
Originated from the polluter pays concept
First mentioned in 1972
1996 White Paper on Transport Policy
Remains government policy and is in the new and updated road policy

15. Examples of successful user pays
Rail networks
Carbon Tax

16. Fair and balanced remedy
Only affluent road users pay
Gautengers pay for Gauteng Roads
Registered emergency and public transport vehicles don't pay
No increase in living costs for poorer communities
Registered users have maximum cap

17. Gauteng generates 38% of all SA's economic activity
Gauteng as the Powerhouse
Expanded lanes = efficient movement = boost economy
Nodal development greatly facilitated
Improves supply chain logistics

22. Downstream benefits Expansion and growth accelerated
Creation of job opportunities
Collected taxes can be used to help eradicate povery.

23. Santiago Open Road Tolling: Case Study
Chilean legislation first contemplated tolling on 1835.
Investment: 4,300m USD (2010)
Total Length: 158 km
Total Gantries: 73
Compliance: %

24. Santiago Open Road Tolling: Case Study
Approximately 5.0 million vehicles daily.
Four Concessions:
North South System – 600mUSD(2001), 61.2km, 28 gantries
San Tiago East West – 600mUSD(2005), 44km, 16 gantries.
Vespucio North West – 350mUSD(2003), 29km, 15 gantries.
Americo Vespucio – 650mUSD(2005), 24km, 14 gantries.

25. Our biggest challenges
Poorly communicated
Public consultation not visible enough
Public trust in the system – very low
Compliance levels are currently at 30%

26. ETC’s future plans Our approach
Political support and clarity for Gauteng road users
Address and resolve road-user debt
Ensuring ongoing affordability and fairness of toll fees
Local ownership of e-Toll operations
Provide added value and services for e-tag registered users

27. THANK YOU CONTACT ME +27 (0) 11 083 2030
+27 (0) 11