The failed e-toll project has saddled the Gauteng province with a substantial R13-billion debt, and it wants to use a state-funded service to settle the tab.
The province recently unveiled its new “revenue enhancement strategy,” explaining that it would use revenue from the Gautrain, a partially state-funded service, to pay back the e-toll debt.
Paying the debt with a subsidized service
Gauteng Finance and Economic Development MEC Lebogang Maile spoke about the new revenue enhancement strategy during his recent 2024/2025 budget speech.
The province’s controversial electronic toll collections (e-tolls) were officially shut down in April this year, leaving behind an estimated R43 billion in debt.
The shutdown was facilitated by the Gauteng Provincial Government (GPG) and the National Treasury, which split the outstanding sum between the two stakeholders.
The Treasury will cover 70% of the fees (roughly R30 billion), with Gauteng on the hook for the remaining 30% (R13 billion).
Consequently, one of the lingering questions behind the scrapping of e-tolls has been how and where the GPG will source the funds needed to pay back this amount.
In March 2024, the former MEC for finance Jacob Mamabolo stated that the province had approached financial institutions to borrow the money needed to pay off the debt while also taking on over R4 billion worth of maintenance backlogs.
New MEC Maile said that Gauteng is still in talks with a financial institution but that the application should be completed by September.
It has not been disclosed which institution is supplying the funds, but Maile stated that it is a reputable provider that is locally based and that the loan would be rand-denominated.
This leaves the matter of how the GPG will pay back the loan it is taking out to settle its e-toll obligations, which is where its revenue enhancement strategy comes in.
Maile explained to Moneyweb that the province has revised its strategy and that it will instead procure a loan to invest in new infrastructure such as the Gautrain Phase 2 expansion project.
The stated idea is that initiatives like these benefit the economy and generate revenue, which can then be funneled back into repaying the loan.
However, one hiccup in this plan is that the Gautrain has never been profitable and partially relies on subsidies from the government to remain viable.
That’s not to say that the service has been without benefit, as it has been praised for “world-class” functionality and helped to alleviate congestion between Johannesburg and Pretoria.
This is more than can be said for many other state-owned entities (SOEs) which have required billions in tax-funded bailouts over the years.
Gautrain Management Agency (GMA) chief operator officer Victor Shange has stated that the GMA’s current goal is to generate alternative revenue to reduce its reliance on subsidies.
The Gautrain will also be a fully paid-for asset once it is handed over to the GPG by the Bombela Concession Company in 2026.
The Organisation Undoing Tax Abuse (Outa) has expressed doubts over Gautrain’s ability to produce enough money to pay back the multi-billion-rand loan.
Outa CEO Wayne Duvenage’s reasons that the Gautrain’s most lucrative routes are the ones already in place that link Tshwane to Joburg and O.R. Tambo International Airport, and that the service has still not generated a profit, meaning that the inclusion of new lines is unlikely to make a difference to its finances.
“If the cost of undertaking such projects is anything to go by, this expansion will be overpriced, take longer to build than it should, and will introduce more debt around the neck of future provincial leaders,” said Duvenage.
The Automobile Association of South Africa has expressed a similar sentiment, arguing that Gauteng’s taxpayers have already contributed R13 billion in subsidies to what it calls “a failing system.”
Other collection methods
The Gautrain plan is just one of the revenue enhancement strategies highlighted by the recent budget speech.
One of the other proposals is to increase motor vehicle licence revenue collections by improving services at driver’s licence testing centres (DLTCs).
This was met with skepticism by Outa, who argued that improving service delivery would not bring in more money without a related increase in fees.
Less than 5% of Gauteng’s revenue is self-generated, amounting to roughly R8 billion of its R190 billion in funding.
Even if the province were to improve collections by 25%, it would only raise its account by R2 billion – far from the amount needed to settle its e-toll debt to Sanral, let alone the interest and capital needed for the loan.
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