Gauteng Freeway improvements are economically efficient

The panel heard today that studies by independent economists have shown that the Gauteng Freeway Improvement Project (GFIP), or the e-toll project, is economically efficient.

The South African National Roads Agency (Sanral) commissioned an economic impact study by the Graduate School of Business of the University of Cape Town and ARUP in 2008, and again in 2010.

"The study showed that the project is economically viable and provides very high benefits to not only Gauteng, but also South Africa," said Barry Standish, director of Stratecon and one of the economists who ran the study.

Even when excluding all road user benefits such as security and lighting, the average impact of the system on consumer goods is only 0.09%. This ignores the fact that some consumer goods are moved on rail or secondary roads and assumes that all toll tariffs after VAT and company tax are passed on to the final consumer, with no time-of-day discounts and caps, among others. This means that R100 will become R100.09 for the movement of dry goods into Gauteng and delivered to the final destination.

With an e-tag, this is reduced to an average of 0.05%, i.e. R100 becomes R100.05 for Class B and C vehicles.

The reality is, GFIP gives out-of-pocket savings and is, at its core, economically efficient.

Although the socio-economic benefits of the system are the core driver when the decision was made to implement, policy considerations also played a role.

"If there is a choice of funding methods which is the one that will shift the road user to choose public transport," said Andrew Marsay, transport economist, "this is the funding model which must be chosen. Tolling does that."

Issued on behalf of Sanral.