Bank loan

Brics bank loan of 7 billion rand from Sanral stopped by National Treasury

Concerns over low e-toll collection rates on the Gauteng Highway Improvement Project (GFIP) were one of the main reasons the National Treasury rejected a request for a government guarantee of R7 billion. to cover a loan to the South African National Roads Agency (Sanral) by the New Development Bank (NDB) of the Brics economic block (Brazil, Russia, India, China, SA).

The request to the National Treasury was made by Minister of Transport Fikile Mbalula in October 2019.

It came about after Sanral’s chief financial officer, Inge Mulder, disputed the Organization’s Undoing Tax Abuse (Outa) allegations in an article published by Moneyweb last Tuesday (November 16).

The article referred to a judgment rendered last week by Judge J van der Schyff at the North Gauteng High Court overturning Sanral and former CEO Skhumbuzo Macozoma’s refusal of Outa’s request for information on the trans-African concessions (TRAC), one of Sanral’s long-distance tolls. dealers, through enforcement of the Promotion of Access to Information Act.

Judge van der Schyff ordered Sanral to provide Outa with the requested documents within 15 days of service of the order on the agency.

Outa’s demand, which is an attempt to gain more transparency from Sanral on possible “excessive profits” made by the agency’s long-distance toll concessionaires, has met no opposition.


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Lawyer Stefanie Fick, head of Outa’s accountability division, confirmed on Wednesday November 24 that the order had been served on Sanral.

Contested statements

Mulder disputed Fick’s statements in a founding affidavit of the claim, and reported by Moneyweb, that Sanral received a R7 billion loan from the NDB (commonly known as the Brics Bank) repayable over 15 years but the purpose of the loan is unknown.

“The aforementioned allegation, contained in a Moneyweb article dated November 16, 2021 and titled ‘Court Order May Reveal’ Excessive Profits ‘by Sanral Long Distance Toll Concessionaire’, is incorrect,” she said. declared.

“Sanral would like to state that it has not received any loan, of any amount, from the new Brics development bank.

“The New Development Bank approved a loan on their side, but the loan was never approved by the South African government, through the National Treasury, and therefore was not used,” Mulder said.

“No loan agreement has been signed between Sanral and NDB either, which would constitute a facility that could be used.”

The NDB’s approval of the loan in Sanral, based on a statement released by the NDB, received wide coverage in the media in September 2019.

The directors’ report in Sanral’s 2020 integrated report for the year up to March 31, 2020, mentioned the NDB loan.

He said: “During the year, the New Development Bank (NDB) approved a loan of Rand 7 billion to the Sanral toll program, which will be used to finance various recently completed toll projects and road projects. toll station currently under construction. “

However, Sanral’s 2021 integrated report did not mention that the National Treasury had rejected the request for a guarantee of R7 billion to cover the NDB loan.


Mulder said Mbalula’s letter informing Sanral of the National Treasury’s rejection of the guarantee claim was dated February 12, 2020.

The National Treasury confirmed having made this decision in December 2019.

Mulder said that for Sanral to use the NDB loan, the approval of the National Treasury for the loan and guarantee agreements was required “even though Sanral would use the existing government guarantee of R31.91 billion for this loan”.

“The National Treasury, through the Ministry of Transport, has indicated that the GFIP / electronic toll problem must be resolved before the National Treasury accepts this loan or any other,” she said.

The National Treasury was more blunt in explaining why it rejected the request for a guarantee to cover the NDB loan of R7 billion.

He said the Minister of Finance (National Treasury) does not approve the loan facilities for SOEs, adding that the specific terms and conditions of the loan agreement are determined by the relevant lender and the SOE, in this case NDB and Sanral respectively.

Risk for the tax authorities

One of the conditions for issuing the NDB loan to Sanral was that the R7 billion loan be guaranteed by the government, according to the National Treasury.

“A government guarantee allows the government to guarantee payment to the NDB from the fiscus if Sanral defaults on any of the principal or interest payments on the R7 billion NDB loan.

“Therefore, issuing a guarantee to Sanral for the purpose of securing a loan from NDB has the potential to bind the National Revenue Fund (NRF) for any default by Sanral in the loan repayment terms.

“Sanral would then use the state guarantee to leverage the R7 billion loan from NDB and thus fulfill the condition agreed between Sanral and NDB for issuance of the loan.

“After reviewing the relevant information provided by Sanral and the Ministry of Transport, the then finance minister did not agree to issue a guarantee for Sanral,” he said.


The Treasury said several issues were identified in the decision not to accept Mbalula’s request.

He said that the most important of these was that “given the low toll collection rates on the GFIP, there was uncertainty about Sanral’s ability to generate sufficient operating revenues that would allow the ‘entity to repay the principal and interest amounts due under the NDB loan so as not to trigger a default, which would then oblige the government to settle the guaranteed obligation on behalf of Sanral ”.

Mulder said the goal of the NDB loan was to fund large investment projects on existing toll roads, which were urgently needed, such as the N3 and N2 in KwaZulu-Natal.

She added that Sanral had sufficient capacity under its R31.91 billion guarantee to fund these projects, but the NDB loan would have been more profitable and more accessible than the capital markets at the time. .

Moneyweb asked Sanral why it requested a loan facility for toll roads when these roads are supposed to be funded and maintained with the revenue from the toll charges collected.

Mulder said that all large infrastructure projects are financed by debt because public entities do not have access to large sums of money to apply from the start to investment projects.

“It’s called the J-curve, where the initial investment costs are borrowed and paid off over time,” she said.

“Sanral (formerly Roads Board) has issued bonds in the capital markets to finance its toll motorway program since the 1990s. Sanral has also already provided loans with the European Investment Bank as well as a loan of the export credit agency with a local bank.

“To expand (capital works) the existing infrastructure, the initial construction cost is borrowed and reimbursed with existing toll revenues. This is called the Income Supportable Loan (LSR) model.

“Before starting the capital works, it must be proven that the costs can be reimbursed with the existing revenues, since the maintenance must also continue,” she said.

Mulder added that Sanral had used its existing bonds to ensure that liquidity was available once construction began on projects that were intended to be financed through the NDB loan facility.

“The R7 billion loan would have been released during construction and not as a single lump sum,” she said. “Effectively, the bond issue does the same, the rate is just more expensive.”

Why no update?

Outa CEO Wayne Duvenage said Sanral should have provided an update and revealed that he did not take out the NDB loan.

“It’s frustrating that they [Sanral] are not transparent. But they are not. They keep you in the dark, ”he said.

Fick said that the fact that Sanral did not take out the NDB loan does not change the reasons why Outa wants specific information on the dealership contracts.

“These roads are supposed to be self-sufficient, but toll charges keep going up. They [the concessionaires] are in the business of making money, but not at the expense of taxpayers.

“At some point they break even and whatever they earn they put in their pocket.

“Shouldn’t the toll charges then become less, not more?” ” she asked.