South Africa’s Zuma Signs E-Toll Bill as Unions Protest

South African President Jacob Zuma signed a law that may trigger the start of a much-delayed electronic road toll project in Gauteng province that’s faced opposition from trade unions and motorist groups.

“The Act will facilitate the upgrading and development of the transport infrastructure and public transport” in South Africa, the president said in a statement on his office’s website today.

The project’s biggest opponent is the Congress of South African Trade Unions, which is in a political alliance with Zuma’s ruling African National Congress. Delays to the e-toll system partly caused by resistance to the project have cost the South African National Roads Agency SOC Ltd., also known as Sanral, about 200 million rand ($20 million) per month, the agency said in July.

Gauteng is South Africa’s most populous province and commercial hub. The e-toll project will run on freeways around Johannesburg and Pretoria, the capital, and has been opposed because of the extra cost on road users.

“We will be organizing more mass actions” against e-tolls, Cosatu spokesman Patrick Craven said in a mobile-phone interview from Johannesburg. “Our opposition to e-tolling has always been of political principle as people are asked to pay twice,” he said, referring to the toll and taxes.

Financial Viability

Trading in Sanral’s bonds has been paralyzed amid investor concerns about the company’s financial viability. The agency has 1.5 billion rand of five-year notes reaching maturity on Oct. 31 and total debt of 32 billion rand, according to data compiled by Bloomberg. The debt will be financed through short-term bank loans, Vusi Mona, Sanral’s general manager of communications said in July.

The start of the e-toll will reassure investors that the roads agency is able to meet its financial obligations, Sanral Chief Executive Officer Nazir Alli said in an e-mailed statement. “The delay in the announcement of the toll commencement date had put our toll portfolio under pressure,” he said.

Shares in Austria’s Kapsch TrafficCom AG (KTCG), which would operate the e-toll system, rose as much as 7.4 percent, the biggest gain in more than two years. Almost 68,000 shares traded, 4.5 times the three-month daily average. The stock was 6.4 percent higher at 36.50 euros as of 1:13 p.m. in Vienna.

“This surely is good news for the project,” Marcus Handl, a spokesman for Kapsch, said in a telephone interview. “The law is only a prerequisite. To us, it is decisive what Sanral does and this is what we’re waiting for.”

Two Weeks

While Sanral hasn’t announced the e-toll’s start date, the Opposition to Urban Tolling Alliance group said the system could come into operation next month.

“With Sanral’s current dire financial situation and their claim of readiness, one must assume that Sanral will start to toll within two weeks,” OUTA said in an e-mailed statement. “They would be wise to await the outcome of the Supreme Court’s ruling on OUTA’s appeal in the next few weeks.”

South Africa’s biggest opposition party, the Democratic Alliance, said yesterday the signing of the bill was “premature and disrespectful of the judicial process,” the South African Press Association reported, citing Ian Ollis, the party’s transport spokesman.

Kapsch posted three quarterly losses in the fiscal year ended March 31 partly because of delays to the start date. The company will get an annual revenue boost of more than 50 million euros from the project, board member Andre Laux said in June, a figure that has infuriated opposition groups.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.