A Review of Highway Agencies in the South Asia Region

A Review of Highway Agencies in the South Asia Region
research projects, including:
Accelerated pavement testing (rigid and flexible pavements);
Updation and revision of technical methods for highways and technical
recommendations for highway documentation;
Cost-effective ways to upgrade gravel roads;
Large tri-axle testing; and
Pedestrian safety management.
C1.5 Financing Road Infrastructure
C1.6 Performance Indicators
SANRAL uses two mechanisms for financing its assets. The SANRAL Act (1998) stipulates a
distinct separation in the funding of its operations:
Non-toll roads are funded by government allocations, and are not allowed to borrow or
be cross-subsidized from toll road income, and vice versa; and
Toll operations can be divided into two types – those funded by SANRAL itself and
operated on its behalf, and roads concessioned to private parties under PPPs.
Toll Operations
Financing
Revenues from toll and funds raised on the capital market are used to finance toll roads.
SANRAL is backed by a government guarantee of US$820 million.
All borrowings are repaid by the toll fees collected from users in accordance with the “user
pays” principle that SANRAL has employed since 1998. Consequently, the cost of borrowing
has an impact on road-user costs. The initial toll tariff is generally determined in the range of
80 percent of the user benefit provided by the toll route. These tariffs are adjusted annually
for the consumer price index, approved by the Minister of Transport and gazetted.
The volatility of construction, maintenance and operations costs has led SANRAL to
examine other toll-tariff structures. SANRAL is considering shifting from a user-benefit
model to a cost-plus model. The user-benefit model is based on savings in distance, vehicle
operating costs and time, for which a percentage in the range of 80 percent is used to
determine tariffs with the result that benefits to the road user exceeds the value of the tariff.
The cost-plus model is based on the actual cost of providing the toll road, a margin of which
is used to determine the tariff.
Two principles have been introduced by SANRAL into its toll road business portfolio:
Comprehensive Toll Road Operations and Maintenance (CTROM) contracts and the
Concessioning of Toll Roads.
Roads under CTROM contracts are operated and maintained by the private sector in
accordance with set performance criteria. The latter broadly provide that the operators take
responsibility for the complete range of operations and maintenance of the toll route in
return for a publicly tendered fee. CTROM contracts are now firmly established, and plaza
and routine road maintenance operations are running well on the toll road network.
Also PPPs have been introduced where the road is concessioned for a period of time (30
years) to a concessionaire that is responsible for the funding, maintenance and operation,
including future upgrades of the road. Each road is a self-contained financial entity, run
in terms of conventional company law (including paying tax as any company). An overall
concession price is negotiated that could include some form of shadow tolling agreement.
SANRAL monitors its activities and performance through a set of performance indicators.
122