Sanral's E-toll Accounting Practices Raise Concerns for OUTA Amid Debt Confusion

The South African National Roads Agency Limited's (Sanral) latest financial reporting maneuvers involving its e-toll collections have been flagged by the Organisation Undoing Tax Abuse (OUTA) as "creative accounting." The shift from the International Financial Reporting Standards (IFRS) to the Generally Recognised Accounting Practices (GRAP) marked a pronounced increase in e-toll revenue reporting, unexpectedly reflecting a ten-fold surge from R589 million to R6.507 billion for the 2022/23 financial year. The previous year saw similar revisions, painting a financially distorted image of the Gauteng e-toll system.

OUTA CEO Wayne Duvenage has publicly questioned the validity of Sanral's reported figures, suggesting an almost mirroring increase in both revenue and impaired debt expenses, contributing to an inflamed portrayal of financial health. By reporting expected revenue that was not collected and reflecting it as such, Sanral's accounting practices have come under intense scrutiny. This has led to a reported e-toll debt at the end of the 2023/24 fiscal year of R28.937 billion, with a staggering R28.726 billion acknowledged as "impaired".

Further inspection of Sanral's financials brings additional peculiarities to light, such as the increase of Treasury grants for non-toll roads, up by 25% in 2024, despite a significant amount of these grants remaining unspent. Simultaneously, Sanral's assets valuation surged by 29% in a single year, raising eyebrows regarding the possibility of asset value inflation without corresponding road development expenditure or acquisitions.

Issues don't stop there with OUTA voicing concerns over the cost management of various Sanral sectors. Spending on Marketing and Communications scaled up to over R612 million in 2024, soaring above the previous average of R150 million. Employee costs underwent revision, and payments to a limited number of non-executive directors were called out for being disproportionately high.

The ongoing concerns extend to operational matters where OUTA argues there is a high level of board involvement, leading to potential overreach. Additionally, the cost of the N2 Wild Coast greenfields project has escalated dramatically over the years, with projections indicating a completion cost of around R23.5 billion.

OUTA has thus suggested an independent forensic investigation into Sanral's financial affairs and practices, to provide a comprehensive review of potential irregularities and mismanagement.