How will e-toll affect the market?

There has been much controversy regarding the South African National Roads Agency (SANRAL) e-tolling system that is officially planned to launch in Gauteng within the next few weeks. 

Initially planned to be implemented early in 2011, the decision was made to postpone the R20 billion project until further notice. “This came as a relief to many consumers living in and around the region, even if it’s only on a temporary basis,” says Adrian Goslett, CEO of RE/MAX of Southern Africa, “as it would add even more pressure to their already stretched budgets from the increased cost of living.” 

Essentially the system consists of 49 electronically operated toll gantries that are spread across 185km of existing national roads on sections of the N1, N3, N12 and R21 freeways in greater Johannesburg and main links between Johannesburg and Pretoria. Tolls are automatically charged without vehicles stopping via an electronic tag or e-tag and deducted from the owners’ linked pre-paid account.  The electronic system is to be used so that the flow of traffic is not affected in anyway. SANRAL decided that building many toll points as opposed to only a few means that commuters would only pay for the section of road that they used. The collection from these toll points will be used to fund a six-phase project known as the Gauteng Freeway Improvement Project.

“We could see many homeowners or tenants in the rental market moving closer to their place of business. As many consumers commute from the Johannesburg area to Pretoria and vice versa, it is likely that these commuters would want to avoid the rising cost of travelling that has already been affected by fuel price hikes,” says Goslett. “Aside from the rental market, it will also have an impact on property buying decisions in the Gauteng region with buyers opting to purchase property as close to where they work as possible, with commuting already a consideration for many buyers.”

He notes that the system could also bring about other trends among consumers such as an increased number of the public car-pooling or using alternate modes of transport such as the Gautrain. Property within proximity to Gautrain stations has already seen significant growth and the implementation of the E-toll could further impact on these areas.

The e-tolling system will also have a significant cost implication to consumers that commute along the national freeways regularly. It could also impact other service costs in Gauteng as well as inflate consumer prices for food and other commodities. Large retailers and supermarkets that rely on the national road network for delivery will be affected by an approximate 11% increase in transport costs and will in turn be forced to pass that onto the consumers by increasing their prices. This will mean that households in the Gauteng region will pay more for goods and services, which will impact on potential home buyers and their ability to save for a deposit for their new home or show positive affordability ratios.

“Most services will be affected by the system, which in turn will impact homeowners and consumers in some way. Furniture removal operators, for example, are charged on a volumetric basis rather than per axle, which means that, on average, some of these operators can expect to pay around R75 000 per month. This cost will need to be made up somehow, which means it will be transferred to homeowners who want to move house,” says Goslett, “Municipal authorities should also be aware of the fact that if their area has few alternative access routes, the tolling of major access routes could make their municipality less attractive as a location for residential and commercial activity.”

The tolling tariffs and discount structures for the system were released to the public on 6 February 2011. A driver of a light vehicle - the predominant category of most road users - who has an e-tag can expect to pay approximately 47c/km, while those without an e-tag will pay 33% more. This means that a return trip from Rivonia in Sandton to Hatfield in Pretoria will cost R45.42 for registered e-tag users and R60.58 for a driver who has not registered. There are discounts of up to 45% for drivers who use the routes on a frequent basis making the absorption of the cost more manageable. There are also various discount structures for commuters travelling during off-peak times. 

“Homeowners in the Gauteng region will need to investigate the likely impact that e-tolling could have on their financial situation so that they can engage in proactively identifying ways to lessen the negative effects.  Pre-emptive planning will go a long way in finding cost-effective solutions once the system is implemented,” Goslett concludes.

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