R25bn to be raised to improve roads

The South African National Roads Agency Limited (SANRAL) is to raise a further R25bn in debt finance to upgrade and improve critical road networks in the country.

According to SANRAL, it raised more than R4,6bn last year to fund current projects including the major Gauteng Freeway Improvement Programme (GFIP), which is estimated to cost R20bn.

"The organisation expects to invest about R25bn in freeway construction projects over the next two years," SANRAL said.

SANRAL Chief Executive Officer Nazir Alli is also expecting continued solid participation from the capital markets in the company's debt offerings.

Speaking after a presentation to investors in Pretoria recently, Alli said SANRAL remained on track to raise the funds needed to undertake its current programme of which much of the civil works are scheduled to be completed by October next year.

Alli also expects SANRAL to continue completing projects on budget, although close attention is paid to the price of bitumen, which is one variable aspect which is influenced by the movement of oil price on the international markets.

"Economic conditions are certainly tougher that they were when we began issuing debt to finance the major projects now underway.

"However, indications are that investors will continue to be assured by our good market ratings and track record of efficiently maintaining the network and settling debt," he said.

SANRAL is responsible for design, funding, maintenance, operations and rehabilitation of South Africa's tolled and non-tolled national roads.

Accounting and financial management of tolled and non-tolled roads were separate because toll fees were not used to cross-subsidies non-tolled national roads, which were funded by government.

South Africa's network of national roads stands at 16,170km and SANRAL is responsible for extending the network to 20,000km by 2010.

According to Alli the GFIP is proceeding well and largely according to plan.

"In any road project, there are always weather issues. However, the recent heavy rains in Gauteng have not caused any major setbacks.

"People are responding well to the disruptions due to major road works on such a large scale. We are confident that the ultimate result will be worth the wait for motorists," he said.

The GFIP, Alli said, will be operating on the user-pays principle after October 2010. The Open Road Tolling system to be used will require each vehicle to carry an electronic tag.

"Tolls will be deducted each time a vehicle passes under one of 38 overhead gantries set about 10km apart across the Gauteng Freeway system.

"SANRAL envisages that tags would be lined to bank accounts, or could be recharged at retail outlets or through the Internet," Alli said.

In addition to the GFIP, SANRAL's capital investment programme includes the N2 Tsitsikama Toll Road, the N17 East Road Extension, the N1 South and R30 Bloemfontein-Kroonstad road, the N1 Polokwane Bypass, the Marianhill Extension and the Dube Trade Port Interchange. - Nthambeleni Gabara, BuaNews

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