Clem7 toll road bankruptcy has not been disaster for Brisbane

The Clem 7 urban inner city toll tunnel in Brisbane was doomed from the start financially, not least because projects associated with it were not completed on time, and it was built on the back of grossly optimistic demand forecasts. It is an impressive piece of urban infrastructure, as I reported previously here, with 4.8 km of tunnel on a fully electronic free flow inner city highway. 

However, forecasts of 60,000 vehicles a day did not come to pass, with demand peaking at 27,000 a day at best. The A$3 billion (US$3.25 billion) project simply ran out of cash, as revenue couldn’t meet operating costs and debt repayments, so the owners – RiverCity Motorway group – went bankrupt owing A$1.3 billion (US$1.41 billion). One big problem for the road was that the Airport Link motorway, which would feed traffic from the airport onto the project, is not due to open until 2012. That is also a toll road project, and given RiverCity’s massive writedown of the value of Clem 7 from A$1.56 billion (US$1.69 billion) to A$258 million (US$280 million), Airport Link faces a similar risk.  RiverCity was publicly floated in 2006 at a price of A$1, but its final trading value was A$0.01 before going into administration. The risk with Airport Link is the Queensland government is a part investor in the company responsible for that A$5 billion (US$5.4 billion) project. According to the Sydney Morning Herald, ARUP is responsible for the demand forecasts for that road.

Hedge funds now own a third of the debt associated with the toll road, but the road still functions. The website is here with all the details about how to pay the toll, noting that it is operating under administration with the firm Korda Mentha. One report notes that once the Airport Link is opened, it is a chance to bail out of the road and sell it on to realise what little value is left. However, the big losses have been taken, and investors have been looking for those to blame for the overly optimistic demand forecasts. Engineering consultancy AECOM is being blamed because it was responsible for two sets of forecasts of demand, which reportedly gave different results to different client.

Lord Mayor of Brisbane, Campbell Newman is buoyant though as was reported by the Australian Broadcasting Corporation:

"My reaction is of course that I'm very sad for small investors who've lost money, but having said that, the fact remains that this project, this tunnel will be open for 100 years," he said.

"It'll deliver congestion-busting benefits for many generations of Brisbane motorists.

"It can't be taken away, it can't be shut down or closed, so it will be here delivering what it's meant to deliver in the future."

He's right of course, still, the bankruptcy is expected to reduce interest by investors in new Australian toll roads according to Queensland Treasurer Andrew Fraser, simply by the fact that it raises the risk profile (but should also raise the due diligence activity) around such investments. You see, paying for road use is not quite like paying for other activities!

Yet all of this vindicates the policy of putting this out to the private sector. The capital cost has not been born by taxpayers, but by private investors who, in this case, made a mistake. The risk has indeed been successfully transferred, and a bankrupt owner has still left a first class asset for motorists and the city.

New Zealand's toll road that probably shouldn't have been one

The Northern Gateway toll road north of Auckland is New Zealand’s first electronic free flow toll road, using only ANPR technology to detect vehicles. The road comprises an extension to Auckland’s Northern Motorway which is the main corridor between the city and its northern suburbs and the region of Northland. The extension is a bypass of seaside suburbs Orewa and Waiwera, saving time and relieving those suburbs of considerable congestion. So the economic (and environmental) benefits are considerable for those not even using it.  As with many toll roads, this is partly reflected in the fact the road is only 50% toll funded (and because if it was any more the road would be largely empty).

Northern Gateway is basically a bypass

The road is not a PPP.  The road and the tolling system is run entirely by the government agency responsible for the state highway network and the tolling system – the New Zealand Transport Agency (NZTA). The toll system has had a host of teething problems, largely related to human behaviour as people did not exactly act as was expected (in terms of how they pay or their willingness to establish accounts).   This is unsurprising, as NZTA has never had experience with free flow tolling so was hardly in a position to make such predictions.

Embarrassment over this have meant that the NZTA has taken a fairly relaxed attitude to non-compliance.

So it is not surprising that the NZ Herald reports that no violators have ever been referred to the courts, with unpaid tolls only being referred to debt collection agencies. The worst violator owes almost NZ$1050 in tolls (US$909). The reason for not forwarding to the courts is the cost of doing so, which does raise the wider issue around the incentives on NZTA to get this right.  Compliance and enforcement should be part of a comprehensive strategy, something that is commonplace on toll roads in other countries, but new to New Zealand.  A private concessionaire may have known better what to do, but the previous Labour government figured it could borrow money cheaper than any private concessionaire, and there were insufficient advantages in getting the private sector involved to offset the higher interest cost expected from private investors compared to the state.

For the road itself, non-compliance was at 3.7% in December 2010, which after two years of operation is a little high, but not catastrophically so. It has been on a downward path, but the level of non-compliance in part reflects the road being a rural intercity motorway, not an urban motorway, so the proportion of regular traffic is lower than in cities.

The Automobile Association claims one reason for non-compliance is that it is difficult to pay the toll, because roadside kiosks see “queues” as people stop to pay, and online and phone based options are not “user friendly”. Given that phone payment is only possible from 0830-1700 Monday to Friday, it’s hardly surprising. Likewise there is no easy SMS payment option like in some countries.

NZTA has since announced new “admin charges” for payment options, ranging from zero for account holders and online payment to NZ$3.80 (U$3.20) for phone payment. The latter suggests the system used for phone payment is remarkably labour intensive and well out of step with systems overseas (call centres should not cost that much and automation could reduce this).

The entire system is crying out for privatisation or to be opened up to competition from service providers who may do it more efficiently. The underlying problem is that the politics around toll roads clouded the finances.

The previous government passed legislation allowing for tolling of new roads, and the now-defunct highways authority (misleadingly called Transit New Zealand) was keen to be in charge of the first such road (beating any local authorities), so decided that the long delayed Northern Gateway project (or ALPURT B2 as it was then called) would be the first, because no other likely projects were in the pipeline. 

This was despite analysis showing it would not make much money if you took into account the costs of setting up the tolling system. So Transit convinced the then government that it was ok for NON-tolled road users to pay for the multi-million dollar tolling system through motoring taxes, to subsidise tolls. This was before there was any realistic chance of there being more than perhaps two other toll roads that could have been opened in the depreciated lifespan of the tolling system (which is about seven years).

In other words, the tolls were introduced in spite of the finances not really adding up, because the government wanted a toll road to show its legislation was not in vain. In truth, the Northern Gateway neither has the volumes of traffic nor the level of regular users to make tolling anything more than marginally useful to the finances of the project, even though its tolls are purportedly paying half of the cost of the project, the system to collect the tolls is 100% subsidised by other road users (and the road itself is only 50% toll funded).   

Of the possible policy reasons to introduce tolls, affirming a government policy is not a good one.  Neither is "making sure we are first and set the standards for toll roads" which was the reason for Transit New Zealand pushing tolls.  The proper reason is to accelerate a road project with new money paid for by users who value the benefits from using the road greater than what they pay through conventional motoring taxes.

Given that the likelihood is that there may only be two more such toll roads in the next ten years (only one has been funded), then some serious questions ought to be asked about reform, especially as the entire system will need replacing in around five or so years.  It needs to be investigated by those who have experience with such systems, and there are plenty in Australia.  It needs to not be shadowed by politics and concern by those in the NZTA who fear for their jobs, or fear the inevitable finger pointing about the project.   What is needed is some financial honesty and transparency about what went wrong, and how to proceed with the tolls (now that they are there) on this road and future ones.   The focus should be on maximising net revenue with significant improvements to customer service.

Dare I suggest this reform be done before the next toll road, the Tauranga Eastern Link, is completed?

Spain's gloomy economy affecting toll road demand

Euro Weekly News reports that the Alicante Ring Road is experiencing its lowest levels of traffic since it opened, and that other Alicante toll roads are at volumes of traffic not seen since 2000.

Last year, traffic on Alicante Province’s toll roads fell by five per cent against 2009 figures which had already dropped 15 per cent against the previous year. The drop is mainly on Alicante’s second ring road between El Campello and Elche, according to the Ministry of Development.

The ring road is the AP7, as seen below, providing a major bypass to the holiday city with has a normal population of over 770,000. 

View Larger Map

All of this doesn't bode well for any of Spain's private toll road concessionaires, which are facing severe challenges to their own viability as many are facing chewing up significant reserves whilst demand is well below forecasts (and what is necessary to service their debts).

Mozambique to push forward with private toll roads

Times Live South Africa reports that Nuno Mapossa of the Investment Promotion Centre in Mozambique has said that a toll road will be built between Mozambique’s capital Maputo and the KwaZulu-Natal northern coast. It would greatly enhance access which is currently available by road only on a 130km dirt route.

Chairman of the Mozambique Roads Fund, Elias Paulo, was reported by Macauhub as saying that guidelines for three new private concession toll roads will be prepared before the end of 2011. Furthermore:

According to Mozambican daily newspaper Notícias, the government plans to grant concessions on the Maputo-Maxixe section of National Road 1, as well as National Road 6 linking Beira to Machipanda, on the border with Zimbabwe and National Road 7, which links Vanduzi in Manica province, to Changara in Tete province.

Mozambique’s first private concession highway, EN4 from Maputo to the South African border, has been a success, with 35,000 vehicles a day compared to forecasts of only 13,000.  Mozambique has had a hypothecated roads fund since 1990, which has successfully ensured that taxes collected from road users (e.g. from fuel taxes) are dedicated to maintaining the road network.  This is inadequate to fund major improvements, which has encouraged the government to use tolling to allow major strategic highway improvements to be self funding over time.

Weekend shorts: India, London and Transurban

India

In Thane District, Mumbai, India, there is a political problem with tolls. People don’t know what they are paid for. So, according to the Times of India, the State Excise Minister, Ganesh Naik, has decided that at every toll plaza electronic signs should be installed to tell people where the money is going. He accepted the suggestion by MP Eknath Shinde who said:

I suggest that toll operators must put up computerized display boards listing out the total cost of the project, the toll collected till date, and the number of vehicles passing through the toll plaza and their daily collection data

This is intended to give people confidence that the tolls aren’t being wasted, and I suggest provide an audit to ensure toll plazas are collecting what they should.

The report continued:

Thane district has a total of 14 toll plazas and residents of Thane, Navi Mumbai, Kalyan have to pay anywhere between Rs 30(US$0.68) to Rs 50 (US$1.13) towards toll every time they drive in or out of the city.

The Minister asked for an investigation into whether any toll plazas might be eliminated. Now if ever there was a country crying out for more up to date tolling, it would be India. Manual tolls always carry risks of corruption and theft, and there are relatively easy ways of addressing this.

London

Guardian journalist Dave Hill asked Transport for London for a breakdown of the estimated £55 million p.a. net loss in revenue from the closure at the end of 2010 of the Western extension to the London Congestion Charge zone. It replied that it would lose £65 million gross and save £10 million p.a. in operating costs. Of the gross revenue, one third is from enforcement revenue. Yes, about £21 million p.a. was made from the Western extension in fines through Penalty Charge Notices. In other words, the money is made from people not complying with the law. Now it doesn’t take too many people to make that much money. Given the fine is £60 if you pay within 14 days (£120 if you pay within 28 days), compared to what was an £8 charge, you need 9 times as many law-abiding users to make as much money as one violator (operating costs for pursuing violators are higher, and let’s assume quite a few don’t pay in time). Any urban road pricing scheme ought not to be THAT dependent on violation revenue, but it should be a gentle notice to those considering it. The real money can be made from enforcement, as the fines have to be high to deter people, and you need few violators to make a lot of money. I gather non-compliance with the London scheme is less than 5%, so less than 1 in 20 vehicles that should pay, don’t pay. That is about right, but from that 5% one can make over a third of revenue.

AND just to show you shouldn't believe everything you read, a website called Ars technica (!) claimed this:

"the government built an extensive network of surveillance cameras with license-plate-reading technology as a way to fight car bombings by the Irish Republican Army. The network proved useful a decade later when London introduced a congestion charge (now £10) for entry into central London. The cameras snap pictures of all vehicles entering and leaving the congestion zone and match their license plates against government records."

Except that it wasn't the same network. A bespoke network of cameras were introduced that would take two images - a context one, and an ANPR one - were introduced.

Then it makes another mistake saying:

We've already mentioned the London congestion tolling system, and Singapore has had a similar system, known as cordon tolling, in place since the 1970s.

No, Singapore had a paper based system called Area Licencing Scheme since the 1970s, and replaced it with a non-cordon system called Electronic Road Pricing, using quite different technology (involving prepaid smartcards) that applies varying prices on different roads at different times. Similar? Barely.

Then it concludes:

Unfortunately, the people building these systems don't seem to be making privacy a priority.

I guess if you don't bother looking at how Singapore DOES make privacy a priority (prepaid anonymous smartcards), or Eroads in New Zealand does (measuring distance only against a prepaid licence), or the Swiss system (which only measures distance), then you'll make this mistake. However, if you only talk to people in your own country, then it's hardly surprising you'll get a rather distorted view.

Transurban

Australian toll road investor Transurban is a shining star in a world of toll road investors that have been burnt by the poor economic conditions in Spain, Portugal, Ireland and the US. According to The Australian, just under half of Transurban’s revenues come from one road – Melbourne Citylink. It isn’t difficult to understand why. Citylink includes the main highway from Melbourne’s main airport to the city (and there is no parallel rail link), as a result is a north-south bypass of the city, and an east-west one as well, providing connections from the south and east to the airport. It is in such a strategic position it is bound to do well, and its revenues grew 15.4% in the 6 months to December 2010. It bought Sydney’s Lane Cove Tunnel, which has tremendous potential as Sydney’s primary artery north. The company has been wise to not jump on more questionable assets, like Brisbane’s Clem 7 tunnel, but will have its eyes on roads with potential for growth. In that respect, I’d have thought it would have been disappointed that the British Government is not now selling the Dartford Crossing. Its share price is A$5.15 as of last quote, and it has been trading within a range of A$5.07-$A5.50 during the last 6 months.

Luxembourg city Mayor rules out congestion charging for now

Some of us working in the road pricing field are always looking to see if largely ignored countries or cities might be considering introducing some form of pricing.  The fact that Valletta, Malta and Znojmo, Czech Republic both have forms of urban road pricing is more often than not ignored.  So what about Luxembourg?  One of the smallest independent countries in Europe, surrounded by fellow Schengen area countries, it is difficult to determine exactly where you enter and exit the country, as there are no border controls or remnants of border controls.

In 2010, Luxembourg city was rated the 10th most congested city in Europe by satellite navigation provider TomTom. The key reason being that Luxembourg (the country) has the highest per capita car ownership in the world, yet a third of Luxembourg city households are car free.

In an interview with website 352LuxMag, Mayor Paul Helminger says that 40% of car trips in the city are for journeys of less than 2 km. The city’s strategy to reduce congestion has been to reduce car parks, reserve parking for residents and promote walking. Five park and ride facilities have also been built linking to rail and bus services, with two more to be built. Trams are being reintroduced to the city after an absence of fifty years.

However, when asked about congestion charging, the Mayor said no. He believed that if people simply were more aware that they need not use a car to get around, it would manage congestion “for a while”. In short, other measures have not yet been tried sufficiently to take such a politically bold step!

Florida moves forward to more electronic free flow tolling

Florida Turnpike’s Homestead extension went all electronic earlier this year according to the Miami Herald. 80% of users were already paying using the DRSC/tag and beacon “Sunpass” system (which is owned by the Florida Department of Transportation and usable on 600 miles of toll roads in the state). Those not equipped will have their number plates detected using ANPR technology, which when matched to vehicle ownership databases, will see a bill sent in the mail to the registered owner, with a US$2.50 surcharge. This is obviously intended to incentivise greater takeup of the Sunpass. The Florida's Turnpike Enterprise and the Miami-Dade Expressway Authority are seeking to convert all toll roads in southern Florida to be electronic free flow to reduce operating costs, congestion at toll booths and accidents from vehicles at toll plazas.

So far the following toll roads have gone electronic free flow:

- Gratigny Parkway;

- Homestead extension;

- Don Shula expressway;

- Snapper Creek expressway.

To convert in the next three years are:

- 112 Airport expressway; and

- 836 Dolphin expressway.

What more can be said but to encourage Florida to continue joining the 21st century with modern tolling technology. What may be more interesting is seeing how easily they can enforce out of state vehicles that fail to pay tolls. That is perhaps one of the biggest risks for some states, which for south Florida is unlikely to be a significant issue.

California toll roads hit by decline in demand

The LA Times reports that usage of Orange County’s toll road/toll lane network has dropped, apparently due to people being less willing to pay for the time savings that the roads offer. Comparing 2007 to 2010, usage of the San Joaquin toll road declined by 19%, whereas usage of the Foothill and Eastern toll roads declined by 17%. The 91 Express Lanes also had a decline in usage, but has had usage partly recover as of late. The most recent attempt to change this has been a “raffle” with prizes of credit to toll accounts, to attract users.

Whilst people are being more prudent about whether to spend money on saving time, compared to other expenditure, it is also likely that the time savings offered have reduced, because with declining travel patterns, congestion on untolled roads will have declined making them more attractive. When the economy recovers, and employment picks up, congestion will increase, as will the disposable incomes of motorists, so it would be reasonable to expect some recovery in demand. However, as long as there are untolled alternatives, toll roads and lanes will always be seen as a “premium” product, which is easy to surrender when times are tight.

Israel gets windfall in privatisation of Cross Israel Highway

The Israeli government had indicated some time ago that it intended to embark on a programme of privatisation, including its 49% stake in Road 6 franchisee Derech Eretz Highways (1997) Ltd. The road, known variously as Road 6, the Cross Israel Highway or the Yitzhak Rabin Highway, is Israel's largest toll road, employing fully electronic free flow technology, with tolls measured according to the number of gantry points a vehicle passes.

Wikipedia describes the highway here, with the official website here in Hebrew.  It is 104 km long, started construction in 2002 and has a franchise through to 2029.

Derech Eretz's 51% private stake is held in equal proportions by Israeli companies Israel Infrastructure Fund and Shikun & Binui.  According to Israeli business website Globes, the government's stake had been valued at up to NIS550 million (US$162 million).

The price obtained is far in excess of that.  Globes now reports that Noy Infrastructure and Energy Fund has agreed to pay NIS1.4 billion (US$412 million) for the road.  It is the first investment from the fund which was established on 1 May. 

Globes reports further on the composition of Noy:

Noy Fund's partners in its winning bid for Road 6 include top investment institutions Psagot Investment House Ltd., Menorah Mivtachim Holdings Ltd. (TASE: MORA), Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), DS Apex Holdings Ltd. (TASE:DSAP), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5), and Eliyahu Insurance Company. 

The other bidders oddly only wanted to buy part of the concession, making Noy the clear winner, and making it suddenly a key strategic investor in infrastructure.  

What must happen now is for the other two private investors to respond.  They must decide if they will match the offer of Noy to keep their respective proportions of shares.  They can do nothing, sell their stake to Noy Fund, or match it.  None of these will concern the government.  Indeed they will probably see the Noy bid as a boost in confidence in the future viability of the toll road.

Clearly, the view is that there is money to be made from this critical highway, which is Israel's major north-south artery bypassing Tel Aviv.  My question is whether Noy will be looking elsewhere to make further investments in toll roads.

Tolls not yet finalised for South Africa's Gauteng network project

South Africa has one of the best managed highway networks in the developing world, and indeed can teach more than few developed country jurisdictions how to manage networks (yes that means cities and states in the USA, and local authorities in the UK among others). SANRAL (South African National Roads Agency Limited) is considered by the World Bank to be an example of international best practice in developing country highways management. As a limited liability company, it shows that a national highway network can be managed on a commercial basis, which would be considered almost revolutionary in the USA, if not in France, Italy and Japan where this is quite the norm.

One of South Africa's biggest highway improvement projects since the end of Apartheid has been the Gauteng Freeway Improvement Project. The project involves 185km of new and upgraded roads, including a ring bypass of Johannesburg, and tollways between Pretoria and Johannesburg and Pretoria and Johanneburg’s Oliver Tambo International Airport.  It is being funded through borrowing, with tolls to pay off the debt.  It is NOT a PPP, as the borrowing is being undertaken by SANRAL, as a state owned company, but is all being handled commercially.  In essence, many of the advantages of a PPP are being realised, because the government operates roads in a commercial manner.

The tolling system that is being introduced will use electronic tolling gantries (using DSRC/tag and beacon technology to the 5.8GHz EU standard). Customer service options will include being able to establish and pay accounts online, by phone, at roadside kiosk or at retail customer service centres. Tags are acquired for a deposit of 50 Rand (US$7.30), which is credited into the prepaid account.

The proposal has been controversial, because it is charging existing as well as new roads.  It is across a network, as can be seen on the map on this page.  I wrote previously about the controversy around the scheme, as some motorists are upset that they must have a tag to get a discount, and some see barrier-free tolling as being easy to evade (probably around concerns that South Africa's vehicle licence plate database may have a significant number of inaccuracies regarding ownership details and addresses).

Today the big issue is the level of charges. It will be a form of distance charging, but by using DSRC and ANPR cameras, the distance is measured by passing various points on the network, not the constant measurement of distance as seen in GPS based systems.  This is akin to the heavy vehicle tolling system operated on Austrian motorways by ASFINAG (the Austrian government state owned enterprise responsible for the motorways).

The Wheels 24 website reported in February that the prices without tags were expected to be:

- Cars R0.66/km (about US$0.10)

- Heavy trucks R3.96/km (about US$0.58)

With tags the prices would be:

- Cars R0.495/km (about US$0.07)

- Heavy trucks R2.97/km (about US$0.43)

The price schedule includes a range of vehicle types. However, tags generally offer a 25% discount. There will be differential pricing by time of day, with discounts at night times. Buses may get a 50% discount (presuming they are registered legal scheduled services), and there are frequent user discounts (something unknown in the tolling world).  South Africa's Independent Online reported claims from SANRAL Chief Executive Nazir Alli that "if your travel costs are between R380 and R550, you would get a 15% discount and, if the value of your travel is greater than R900 at any given point in time, you qualify for 50% discount."  Such a discount may well be crucial in gaining grudging support.

A full map showing the detailed prices according to segment is located here, although it indicates that the Minister suspended the prices and has yet to announce new ones.

Revenues have been forecast at R300 million per month (US$44 million) intended to pay back loans of R20 billion (US$2.9 billion) to finance the upgrades.

Business Day reported that a dedicated police enforcement unit is being established to enforce the tolls, by identifying vehicles that are repeat offenders and having the power to stop vehicles and arrest the driver. Clearly the need to use force is seen to be necessary!  Given concerns about the risks of evasion, this is not surprising, if enforcing fines by post and court order is problematic.

However, the big question remains the toll rates. According to the South Africa National Roads Authority (SANRAL), the Minister of Transport created a Steering Committee to decide on the toll rates. The toll system was meant to commence operation in June, but it has been decided tolls will not be collected until all of the road upgrades are complete. Clearly the South African government thinks that the revenue from tolls is not as precious as ensuring political acceptability of toll levels.

It also appears that a significant body of opposition has appeared, last minute, to oppose it, with motorist lobbyists and trade unions opposing the tolls.  The Mail and Guardian Online quotes COSATU (Congress of South African Trade Unions) spokesman Patrick Craven claiming the tolls will generate "grotesque profits".   This claim seems utterly absurd, when the tolls will be dedicated to repaying debt incurred to upgrade the highway network.  SANRAL as a company is state owned, and wont be profiting anyone personally from the tolls.  FEDUSA (Federation of Unions of South Africa) agrees with COSATU and sees it as "privatisation" according to the Times in South Africa, both supporting a general strike in protest.

The South African AA, and "economist Mike Schussler" claim fuel taxes are better, presumably because it means everyone driving pays for the cost of upgrading a small part of the network.  None answer why this is so, or what happens as vehicles get increasingly fuel efficient (and the poorer tend to not be able to afford the newest most fuel efficient cars).   Eyewitness News reports how more members of the public are outraged at the tolls.  Fin 24 also reported how the AA believes it will result in alternative routes being gridlocked.

capita GDP (PPP basis) of just over US$10,000 a year, it means an average 17% cut in income.   The alternative is to go by the about to be opened, Gautrain, rapid commuter rail service (which is brand new and will operate at speeds of at least 160km/h (100mph)) between the cities, or competing bus and conventional rail services.

Surely what this all demonstrates is the need to lead with communications on the tolling right from the start.  It is always very difficult to toll existing roads, rather than simply new roads.  What South Africans face is new tolls on existing roads to pay for improvements to these roads, improvements that many clearly don't think are worth paying for.   It is fundamentally the risk of having fuel taxes and tolls on the same stretch of road, with no untolled alternative.

Ultimately, the South African government will almost certainly have to implement the tolls, probably at a greater discount initially, to get the necessary revenue, but what this should provoke in the country is a more fundamental debate about the future of road funding.   It means that the role of fuel tax vs. tolls be investigated, which should also include considering whether fuel tax may be better replaced with some form of wider network tolling system.   It is exactly the debate going on in the US, and in a different form in the Netherlands and Australia.  

Given how committed South Africa is to the Gauteng project, I suspect it will be implemented largely as planned (possibly with some short term compromise on price), but a new wider strategy is needed.  That strategy should be developed bottom up, be objectives led, take into account technological options, but more importantly the economics of road funding and financing over the longer term.  South Africa already has a world class model for road management, it now needs to develop a similar approach to road charging and more importantly, get motorists on board with a new deal - one that ensures they do not feel ripped off or cheated, where they see they get value for what they pay.  I don't think the country is far away from being able to do that, but right now the Minister of Transport must be wondering quite what to do - none of the options are going to be cheap, but all will be better than raising fuel tax.

UPDATE:  One writer to News 24 argues that the tolls are good value, and opponents are wrong to think someone is profiting heavily from money collected to pay off a substantial debt over more than ten years.