Guateng Highway Tentatively Back On Route
BMI View: On the back of a recent favourable high court ruling, the Guateng Highway e-toll saga might have a happy ending after all. Political wrangles, corruption scandals and populist measures have thus far marred the project and left Sanral wading in debt, and the South African infrastructure sector in a quagmire. We monitor the developments closely; yet though we highlight the upside risk we have refrained from incorporating the event in our forecast at this stage.
In South Africa, grand infrastructure projects are often providing a source of fiscal legitimacy for the government. I.e. explaining how much and where the proceeds of the tax money are going. Hence, when e-tolling was introduced for the controversial 185km long Gauteng highways, it became the subject of heated debate, union protests, and a number of legal battles. Travellers were now forced to pay for what was previously 'free' or, reportedly, covered by the income, road, fuel, motor vehicle and VAT taxes.
However, following the most recent ruling by the North Guateng High Court, which ruled against the application to put the implementation of e-tolling on hold, the project could potentially be back on route in 2013. Furthermore, with the ANC election now confirmed and with Cyril Ramaphosa elected as Zuma's deputy (the former is praised by the pro-business society) we could see an ease to the political wrangling that has as of lately impeded growth in the infrastructure sector.
|The Lack Of Consistency|
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