The Organisation Undoing Tax Abuse (Outa) has sounded the alarm over the National Roads Agency’s (Sanral) sudden change in accounting practices, which has seen e-toll revenue triple seemingly overnight.
As per Outa, Sanral changed its financial reporting practices from the International Financial Reporting Standards (IFRS) to the Generally Recognised Accounting Practices (GRAP) in 2023/24.
In so doing, it revised Gauteng e-toll revenue up by more than ten-fold, from R589 million to a total of R6.507 billion for the 2022/23 financial year (FY), and from R569 million to R5.374 billion for the 2021/22 FY.
Collectively, Sanral now claims it didn’t see revenue of just R1.158 billion from e-tolls between 2021 and 2023, but rather R11.881 billion, an increase of 1,025%.
Furthermore, in its latest financials for the 2023/24 FY, Sanral has reflected its Gauteng e-toll revenue at R6.502 billion, while Outa’s data shows that total collections could not have surpassed R550 million.
Sanral now also defines “revenue” for tolls and e-tolls as “revenue is recognised when the customer passes through the toll”. However, it previously only recognised revenue that it expected to collect.
“To now reflect revenue that wasn’t able to be collected as income, and then immediately writing this off in their expenses, is a complete change to prior accounting practices,” said Outa CEO Wayne Duvenage.
“By reflecting Gauteng e-toll revenues in this manner, what Sanral has in effect done is depicted that it was expecting to make more revenue from the 186km GFIP network (R6.502 billion) than it achieved from the combined collection of over 1,600km of their entire Sanral-managed toll roads, which record revenue of R4.6 billion for 2023/24.”
Sanral has similarly revised its e-toll debt, now recording almost all e-toll “revenue” as e-toll “debt” and “impaired debt”.
The e-toll debt at the end of 2023/24 is listed as R28.937 billion, with almost all of that – R28.726 billion – listed as “impaired”.
“In Sanral’s Integrated Report (IR) for 2024, the figures for 2022/23 have been rewritten, showing R22.2 billion in toll debtors, most of this now impaired. Compare this to Sanral IR 2023, which shows R9.8 billion in toll debtors for 2022/23,” said Duvenage.
“Thus the e-toll debt more than trebled from what was recorded last year for 2022/23 to what is recorded now for 2023/24.”
Outa labels this sudden and unexpected change in accounting practices as “creative accounting at its best.”
“Sanral has simply offset its inflated (uncollected) income, by reflecting almost the equal value thereof as ‘impaired’ expenses for the corresponding financial periods,” said Duvenage.
Points of contention
Apart from the reclassification of e-toll debt, Outa highlighted various points of contention in Sanral’s IR 2024.
Duvenage said Treasury increased its grant allocations to Sanral for its non-toll road portfolio by over R6 billion (up by 25%) in 2024 – from R18.126 billion in 2022/23 to R24.302 billion in 2023/24.
“At the same time, Sanral has been unable to spend these grants, and Sanral’s IR 2024 reflects unspent non-toll road government grants totalling R42.162 billion,” said Duvenage.
Furthermore, approximately 15 years ago under IFRS accounting principles, Sanral revalued its assets from R10 billion in 2008 to R239 billion by 2013.
It repeated this between 2023 and 2024, increasing the value of its assets by 29% based on its 24,384km of tarmac.
“We cannot find a correspondingly high road development expenditure or road acquisitions from the provinces that could account for such a high asset value improvement,” said Outa.
“This is the kind of accounting that would normally send auditors scurrying to prevent another Steinhoff debacle, and more so because Sanral’s assets are non-disposable.”
Outa additionally remains concerned that the Gauteng province was compelled to pay off 30% of Sanral’s Gauteng Freeway Improvement Project (GFIP) debt, when government had already granted R28 billion directly to Sanral to off-set the initial R21 billion GFIP debt over the past 12 years.
This excludes the R23.736 billion that Sanral received in 2022/23 through the Special Appropriation Act 2022, which Sanral IR 2024 notes was “to reduce the GFIP debt” and Minister of Finance Enoch Godongwana included in the Medium-Term Budget Policy Statement 2022.
“Outa would like to know how Sanral spent all this funding,” said Duvenage.
Construction of Msikaba Bridge as part of the N2 Wild Coast Road Project
Away from the e-toll debacle, Outa questions why Sanral’s Market and Communications budget has ballooned by over R460 million over the last few years.
In 2024, the entity spent R612 million on market and public relations, compared to just R150 million “a few years ago,” said Duvenage.
Another alarming statistic is Sanral’s restatement of its 2023 employee costs, from R492 million to R528 million.
“What accounting errors related to salaries could have possibly gone wrong and unaccounted for, after the close of the prior financial year?” questioned Duvenage.
“We also believe there is gross over-payment of funds to a handful of non-executive directors, who between five of them have earned a massive R10 million during the 2024 financial year, which was 18% higher than the R8.2 million paid to six of them in 2023.”
Finally, Outa inquires how the budget for the 112km N2 Wild Coast Roads Project escalated from R6.4 billion in 2007, to around R10 billion by 2018, to R23.5 billion in 2024.
“Outa would like to remind the public not to be distracted by the Gauteng provincial government’s ‘foul-play’ cry against e-toll defaulters, for the province’s financial woes. Trying to blame the defiant motorists for the Gauteng provincial government’s financial challenges is a red herring. Motorists had every right to defy the corrupt e-toll scheme, and their use of these roads has been more than covered by their fuel levy contributions to National Treasury,” said Duvenage.
“Outa believes a deep-dive independent forensic investigation into the financial affairs, procurement practices, and general governance at Sanral would be very revealing of gross overspending and board meddling in a number of areas.”
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