South Africa’s Government to Help Pay for E-Tolls Shortfall

South Africa’s government will help pay for the cost of freeway upgrades around Johannesburg as it reduces the fees charged through electronic tolls.

“We will include a national contribution to meeting the associated costs,” Finance Minister Nhlanhla Nene told lawmakers in his budget speech on Wednesday. “Concerns regarding the socio-economic impact of toll tariffs have been heard, and revised monthly ceilings will shortly be proposed.”

The South African National Roads Agency SOC Ltd., known as Sanral, started electronic toll roads in Gauteng, South Africa’s richest province, in December 2013 to help pay for 20 billion rand ($1.75 billion) in road improvements. The toll system was delayed for years because of opposition from labor unions and consumer groups. The ruling African National Congress in the province called for a review of the system last year after losing support in the May election.

Sanral may reduce capital spending as it struggles to increase funding because of uncertainty related to the amount of revenue it can raise from tolls, the National Treasury said in the Budget Review.

“The longer it takes to resolve the matter of e-tolls, the more this situation becomes a burden on both the company, Sanral, and government,” Nene told reporters in Cape Town before the budget speech. The government contribution is “to make sure that Sanral remains sustainable and that Sanral continues to deliver on its infrastructure mandate,” he said.

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