South African Government to Appeal e-Tolling Interdict in Constitutional Court

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The South African government has put forward an application to the Constitutional Court of South Africa to appeal the interdict by the North Gauteng High Court that is stopping the South African National Roads Agency Limited (SANRAL) from enforcing its e-toll system and collecting tolls on certain roads in the Gauteng province.

This application was made by Minister of Finance, Pravin Gordhan, after the decision was made by Cabinet at a meeting on 16 May 2012. Minister Gordhan is being supported in the application by the Minister of Transport, the Minister of Water and Environmental Affairs, the MEC of Roads and Transport (Gauteng) and SANRAL.

The idea of the e-toll system first came about in 2007 when the government decided to finance the construction and maintenance of a new Gauteng freeway system through raising debt, which would then be repaid using the user pay principle: those who would be getting the benefits of the improved system would contribute to its costs.

The interdict handed down by the North Gauteng High Court is being contested by the government on constitutional grounds. Their view is that Justice Prinsloo’s judgement intervenes in public finance matters and is a breach of the division of powers provided for in the Constitution.

Without the collection of tolls, SANRAL now faces the risk of defaulting on its loans which has led to uncertainty amongst investors and a downgrade of their rating by rating agency Moody’s. Should SANRAL default on its loans, they would need to repay their entire loan book of R37.1 billion, a figure they would not be able to cover. In this event, government would be obliged to step in and repay the rest of the unguaranteed debt of R14.1 billion.

Minister Gordhan states in his affidavit that should this happen; there could be negative consequences for South Africa including a negative impact on South Africa’s credit rating and the South African government’s capacity to raise funds from capital markets.

Considering the uncertain future SANRAL now faces, the government has asked the Constitutional Court to hear the matter urgently, as soon as July 2012.

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