Thursday, 10 April 2014

South Africa's controversial toll system goes live - but faces serious non-compliance

To be fair, for personal reasons, I have neglected the issue of the Gauteng Freeway Improvement Project in South Africa, which undoubtedly has been the most controversial road pricing issue in Africa in the past year. It involves introducing free flow tolling on a 201km network of mostly upgraded and some new highways in South Africa.

Map of entire Gauteng Freeway Improvement Project including all toll gantries

I've written a few articles about this project in the past three years, including noting the risks of non-compliance, when tracing vehicle owners and fining them hasn't been fully developed.

Unfortunately, those risks weren't properly heeded.  I wish I hadn't been right, but I was, there are some serious problems - not with the technology, but with the business processes and preparation for the toll system's introduction.  

You'll find almost all of my articles about South Africa are about this project, by looking at this page and the older articles here (unfortunately I used links to SANRAL - the government's highway company - website for images which are no longer valid).

Tolling was launched on 3 December 2013 and whilst Kapsch, the well-known equipment and system supplier for the scheme, reported that the launch had been a success, there are other stories indicating some nuances to this.   It should, of course, have been technically successful, given the launch date was put back nearly a year.  Given it uses what is now (EU) standard DSRC 5.8GHz technology with ANPR cameras, it would have been a surprise had there been a major failure. 

However, the Times (South Africa) reports that there is a shortfall in revenue of just under R500m (US$48m) from recovery of overdue tolls.   Bills of around R543m have been sent but less than 10% have been paid.  It had cost R50m in debt recovery costs (around US$4.8m), of which R32.8 is postage and invoicing costs (US$3.1m) and the remainder in processing the invoice (from detection to identifying the vehicle owner).  

Therefore, in my view, whilst the on-road systems are working, the customer management function has been disastrous, not because those undertaking it are incompetent, or that the technology is wrong, but because adequate provision was not made for handling the human factors. So, motorists are by and large driving and ignoring bills, and the longer this goes on, the more they are going to do it.


90% non-compliance is astonishing, when it should be the other way around, with 90% having paid and 10% not paying.  It smacks of poor marketing, but also poor planning to manage the initial flood of invoicing.  

I'm far from surprised.   In any new fully free flow system, there are going to be issues of non-compliance, and with so much effort surrounding the countering of bad publicity, it is far from surprising that many motorists are just ignoring invoices.  Frankly, unless SANRAL acts quickly to recover debt and impose penalties (or incentivise a shift to tag based accounts), it faces longer term sustained leakage of revenue.

This is actually quite fundamentally basic policy on toll collection in a fully electronic free flow environment, with the fact this is in a developing country making it all the more difficult.  I am astonished that SANRAL has failed to prepare for this adequately, or that it did not have a contingency for a period of sustained losses whilst it engages in a lot of debt collection and ultimately, enforcement action (for recidivist violators).   In a country without a tradition of free flow tolling, and with issues of traffic law enforcement, it should have been absolutely core to revenue protection to have a strategy for how to deal with large volumes of non-payments.

The Times report states more:

Sanral's billing system has been beset by problems, including failure to provide invoices on time, billing of people who do not own cars and an increase in the displaying of cloned number plates.

Roodt said the high number of outstanding fees could also be indicative of motorists being under financial strain.

"Clearly what is happening here is that the public is not agreeing with what the government has legislated. People could be battling or do not want to follow the government's instructions," he (DA MP Ian Ollis) said. 

Cloning of number plates was foreseeable, but the whole thing smacks of the fundamental problem with implementing electronic tolling in any country - the infrastructure to identify liable vehicles and their owners must be robust.  It typically is not something government agencies are keen to highlight, since they are responsible for it, and tolling contractors aren't specialised in undertaking what is actually a combination of database management and law enforcement. 

When introducing tolls on existing roads the problems are highlighted further, because unlike new roads, motorists are much less likely to simply not drive on them, as their choices are to use other modes, if available and convenient, or not drive.  

According to the Mail & Guardian, there are around 2.5 million monthly users of the road network, with 1.2 million users are registered with tags.  It should have been more like 70% tag use from the start, and the goal must be to get that to around 80% by the end of the year.  Yet apparently even those with tags are not necessarily paying bills, which should be the priority.  If you can't enforce tag account holders to pay their bills, what hope is there of getting others to do so?

It is going to be a hard year ahead, but one that SANRAL needs to grasp - urgently.  It will need to spend millions now to fix this, but it will pay off in the longer term and should be an object lesson in how not to introduce free flow tolling.   

5 comments:

  1. I am one of the roughly 70% of motorists who refuse to pay for etolls in Gauteng South Africa. Here are my main reasons:

    1. There is inadequate public transport, and the public transport that does exist, is unsafe. It is also not reliable

    2. The alternative roads are not in a good condition. Some have many potholes, others are just plain bad. The alternative roads were congested even before the etolls were introduced. Some of them go through dodgy areas. This combination of factors forces me to use the etoll roads.

    3. Sanral representatives have often lied and been deceptive. Here is one example from today: https://www.jp-sa.org/media.asp

    4. The pricing system is complex. I am an IT specialist, and I had difficulty understanding it.

    5. The billing system is difficult to understand.

    6. The dispute process is cumbersome. It is time consuming to lodge a dispute. Sometimes it is even more expensive to lodge a dispute than the amount you are disputing !

    I shall continue to support the strong civic organisations that are against etoll, such as OUTA - outa.co.za.

    You say that Sanral should have had a strategy to deal with large volumes of non-payers. This will be extremely difficult in a province where the payment rate for traffic fines is 10%, with authorities being unable to collect the rest.

    There was earlier talk about SANRAL having its own mobile police force to stop and arrest etoll offenders. They also wanted to have courts next to the roads where etoll offenders could be immediately prosecuted.

    This in a country where 1 in 10 rapists is arrested, and of these, a very low percentage are successfully prosecuted

    There is a general perception that some of SANRAL's methods for pricing and billing are not legal in South Africa. This still needs to be tested in law. A prominent law firm has offered to defend at no charge the first person to be prosecuted for not paying etolls.

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  2. Thanks for your comments. I can understand your concern, but will respond in turn to the six points.

    1. Most toll roads around the world don't have parallel public transport that is a reasonable alternative for many of the users. You'd expect to pay to use public transport, you should also expect to pay to use a road. I don't know the public transport regulatory environment well enough, but there should be scope for bus companies to start commercial services using the road if the demand is there.

    2. Absolutely there should be basic maintenance of other roads, and so the motoring taxes that are still collected should be spent on untolled roads.

    3. I am not going to take a position on this, but let readers decide for themselves as to how they interpret the example you present.

    4. It is too complex to start with, but there are other examples elsewhere or more complex charging structures. It is a key component of any consumer service that users should know what they have to pay. Communicating that is critical.

    5. Same issue applies, it is incumbent upon providers to communicate effectively.

    6. Likewise such a process should be straightforward. There are examples elsewhere of how to do this.

    The only effective way to enforce is to do so by posting final demands to legal owners, and then taking some to court for unpaid debts.

    I think a big issue is tolling existing roads that have been upgraded, whilst maintaining motoring taxes for using the road. I'd argue that the motoring taxes spent while using the road should be spent on it, reducing tolls.

    In principle the tolls are right, the implementation has had some key issues.

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  3. Please allow me to give an update, and respond to some of your points:

    On point 1: Are you saying that I should pay to use a road that was previously free and is now tolled without an effective transport system ?

    We were promised a transport system. It never materialised. I have to pass through 4 toll gantries to get to my place of work, a distance of 21 km). The location of the highways are such that most commuters would need to pass under a gantry to get to work. They crisscross many suburban residential areas to get to work.

    Point 2: Yes, I agree with you, but the level of confidence that it will happen is very low. The public has little belief that the taxes collected will go for the purpose that it was intended. Rather there is talk of tolling more of the province's highways.

    Point 4: You seem to be saying that a complex system is OK ? It is very difficult for me to work out how much my monthly liability will be beforehand...

    Point 5: Yes, they should be communicating with us more effectively, but right now all we are getting is smoke and mirrors, evasiveness and threats.

    You are saying that final demands should be posted to us, and some being taken to court. Myself and my fellow motorists are waiting for this opportunity for our case to be presented in court. You seem to be comfortable with SANRAL threatening one million of its road users and the government agreeing to to 1 million of its citizens being threatened for opposing a system that we believe is unfair and that has been illegally foisted on us ?

    The fine is R1000 per gantry and / or 6 months per unpaid gantry pass in jail. Seems like myself and my fellow motorist will be spending the rest of our lives in jail for unpaid etoll debt. This in a country where a celebrity paralympic gets 5 years for murdering his girlfriend, where a celebrity artist gets a suspended sentence for mwowing down four children during an illegal drag race in a suburb residential are, where only 10% of traffic fines are paid in the Gauteng province, and no attempt is made to collect the rest.

    The constitutionality of the etolling environment is yet to be tested in court. Sanral have admitted that they are not fully compliant with the South African Consumer Protection Act.........Read that again, a government agency is not complying to the laws made by the government, and then they expect us to comply to their laws?

    Some updates:
    1. There was an national election recently in South Africa, and the majority of the ruling party was reduced from 63% to 53% in the Gauteng province. It is generally accepted that this was largely because of etolling.

    2. Sanral wanted to start prosecuting, but then the Gauteng provincial government did a U-Turn on their position regarding etolls, and they started a review panel to discuss the impact of etolls. This was the first meaningful review we have had. The Department of Transport requested Sanral to cease prosecutions until the review panel had completed its work. Previous consultations were legal, but generally regarded as not being meaningful.

    3. The South African Post Office has been on strike for the past three months, so invoices posted by Sanral has not reached the commuters. Sanral says that we should not wait for the invoice, but contact the call centre to get details of how much we pay. To get an amount to pay we must first register with Sanral, I am hesitant to do this. Their terms and conditions are one-sided an onerous, and I do not want them to have my details, since personal details of motorists have been abused in the past.

    In conclusion I agree with you that the implementation has had some key issues. However they cannot be resolved overnight. It will take time to attend to them.

    I disagree with you that etolling is right, and I strongly believe that a court of law will prove me right.

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  4. This blog appeared on mynews24 this morning. It confirms independently a lot of what I have already said, plus some other issues that I did not mention : http://www.news24.com/MyNews24/e-Tolls-Panel-More-of-the-same-from-SANRAL-and-the-DOT-20141110

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  5. Another update. Payment rates on etolls when driving on Gauteng's highways has been low. The government has introduced a 60% discount for all outstanding fees levied from December 2013 to August 2015. The discount expires end April 2016 (https://www.enca.com/south-africa/take-advantage-e-toll-discount-sanral)

    Uptake of discount by motorists has been very low - the civil action group, OUTA (Opposition United Against Tax Abuse), says that the uptake has been less than 2% - http://www.outa.co.za/site/less-2-sanrals-e-toll-discount-heeded/.

    SANRAL (South African National Roads Agency Limited) is starting to issue legal letters of demand against motorists in an attempt to frighten and coerce us into paying the outstanding toll fees - http://businesstech.co.za/news/lifestyle/118146/why-we-are-coming-after-you-sanral/.

    Myself and my fellow 1 million plus motorists await with interest the outcome of the court cases. We are confident that a court of law will find that the etolls are invalid and unconstitutional. Keep the following in mind.

    - The etoll gantry cameras have been found not to be certified for use in South Africa. So the government agency, SANRAL (South African National Roads Agency Limited) may be using their equipment illegally. This case is before the National Consumer Council of South Africa awaiting a decision.

    - The terms and conditions for using the toll roads are 90% compliant with South African consumer law; i.e. they are illegal

    - There are doubts about the reliability of Sanral’s equipment. Recently a motor vehicle passed through some gantries, left the highway, and was involved in an accident. SANRAL’s records showed that the vehicle had passed under a gantry at the same time that it was standing on the side of the road after the accident. This is clearly an impossibility.

    - The South African Government has twice acted in contravention of the constitution of South Africa. Now they expected us to pay toll fees for driving on existing highways that were upgraded, to get to our place of work everyday, and without an adequate supporting public transport system.

    - Legislation is in the pipeline to link receipt of vehicle licenses to etoll payments. A motorist that does not pay etolls will be able to renew a vehicle licence when it becomes due on its annual renewal date, but will not receive the new licence disc, even though he pays for it. He will thus not be able to display the renewed licence on his windscreen and be liable for a fine. The government has received in excess of 100,000 comments. mostly against the proposed legislation. This was the highest number of comments ever received for any proposed legislation

    OUTA have been raising funds to defend the first motorist that appears in a court of law for not paying etolls. JPSA (Justice Protect South Africa) is supporting the initiative. A top legal firm has offered their services for free for the first court case.

    South Africans are taxed heavily. We see the tolls as just another tax increasing the burden on us. A million plus motorists await with interest the outcome of the court cases.

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