OUTA stands by its road overcharges report

In OUTA’s response to SANRAL’s attempt to dismiss the position paper titled “Society’s Odious GFIP Debt, courtesy of SANRAL”, the Organisation Undoing Tax Abuse (OUTA) stands by their position and the substantive points made therein, along with the overall purpose and intent of the report.

12/04/2016 11:38:51

OUTA stands by its road overcharges report

Furthermore, OUTA adds that SANRAL themselves have been incorrect in their assertions about the points they claim are incorrect, in their attempt to vilify the report in total.

Firstly, OUTA does not deny that it received questions from SANRAL’s attorneys about the report. We responded to SANRAL's attorneys (Werksmans) and requested that the engagement takes place directly between OUTA and SANRAL, without the unnecessary costs of an expensive law firm - at the expense of the taxpayer - unnecessarily serving as a go-between, as OUTA has no problem in engaging directly with SANRAL. We then also sent our letter directly to Mr Nazir Alli last week, informing him of the same, but have since been instructed that we must only engage through their lawyers. Werksmans has also refused to answer any of our questions. This incessant need to converse with civil society entities via law firms, for a response to straight-forward questions, is indicative of an arrogant belief that they have carte blanche to waste tax payer’s funds at will.

OUTA highlights that SANRAL is in fact attempting to question and bury a position paper, which references credible reports on the cost of road construction around the world, and which is therefore an opinion and position (ours), on an issue which has been highlighted umpteen times in the past. If SANRAL want to question the empirical evidence of the international reports we referenced, it is for them to verify this with the writers of those case studies, which we have referenced in our report. We believe the case studies are credible and have gravitas in the international road construction industry.

The fact that SANRAL couldn’t find one of the reports which we had referenced, doesn’t mean to say that report is non-existent. We would not be that stupid to reference a non-existent report which SANRAL is making out that we did.  A simple deeper research into the site, would have revealed that the publisher had moved the report to another part of the site.  We found it quite easily and will let them have it if they so desire.

All the reports we have referenced are public knowledge and credible. When we publish an update to our report (which we intend to do), we will insert the new links to the report they failed to find. We will also reference new and additional information which we have discovered, as a result of a deeper search for more information to further substantiate our claims, which came to the fore following SANRAL’s questions. In essence, we need to thank SANRAL for challenging us on our position paper, which we believe will strengthen our position even further.

SANRAL have tried to vilify our report based on information which they say is incorrect. They start out by asking where we obtained the number of "185 km" for the GFIP project from, and try to discredit our entire report, based on a result of their own numbers.  At the end of this media release, we have provided the public and the media with a number of references to the figure of 185 km's, most of which references SANRAL's own web site and publications.

Furthermore, we have since accessed presentations given by SANRAL’s own management, which references the Gauteng Freeway Improvement Project, and the 15 work packages after the tenders were announced, as being for 185 km. In recent years, we have noticed that SANRAL has mentioned a very slight increase in the length of GFIP, first to 195 km then later to 201 km, but these numbers were quoted after the project was completed. So, we stick to our number, as they themselves have referenced on numerous occasions, and to which the costs have been attributed to.  Their change in this scope by an extra 16km needs to be spelt out by them, not us.

In another part of their attempt to discredit our paper, SANRAL says we got the figures wrong by 100,000%. Our response is thus: Not so SANRAL, you have got your facts wrong.  “Honestly, does  SANRAL seriously think we would misquote a cost in error to the tune of 100,000%,” says Wayne Duvenage, OUTA’s Chairperson. “SANRAL should know better than to try and make an outrageous claim of this nature, before looking a little deeper into their grossly erroneous assertion.”

For the record OUTA was not wrong in their reference to €0.52 Million. While the Netherlands Delft report does make reference to €0.52 “Billion” on page 33, which SANRAL has pointed out in an attempt to discredit a part of the report, it turns out that OUTA was correct to amend what is clearly a typo on the Delft Report.  Furthermore, we did not just assume it was a typo, in that further on this this same report, the number is correctly referenced in page 39 in Table 7 as not being in €Billions, but rather, as hundreds of thousands of Euros, which equated to the correct figure quoted by OUTA.

OUTA will point out the error to the European report writers and clarify this in our revised report, thereby maintaining our claim in reference to this report, has in fact been correct.  Had  SANRAL applied their minds, they would quickly realised that it is virtually impossible for a road to cost €0.52 Billion per road kilometer (ie R,4.7 billion per road kilometer at the applicable exchange rate). This simple exercise would have got them to realise (as we did) that the reference to “Billions” the Delft report was wrong and OUTA’s reference was indeed correct.

In SANRAL’s questions (via Werksmans), they also questioned OUTA saying “On what basis is it ascertained that international pricing should be used as a benchmark to determine the cost of infrastructure developments…”. The problem with SANRAL’s inwardly focussed approach by questions of this nature, is they insinuate therein that they don’t need to - or that it is not necessary to - conduct international benchmarking exercises. Yet the grounds for the use of international benchmarking are actually mandated by the SANRAL Act, Chapter 3 (Functions, powers and responsibilities of Agency), Section 26 (m) and (s), states the following:

“In addition to the Agency’s main powers and functions under section 25, the Agency is competent

(m) to undertake or conduct any research, investigations or inquiries and collect any information in connection with roads, whether in the Republic or elsewhere;

(s) to liaise and exchange information, knowledge and expertise with the official bodies or authorities entrusted with control over roads of a national or international character in other countries, and to participate in the conferences, seminars and workshops of those bodies or authorities and in the activities of any multinational or international association of those bodies or authorities;

OUTA therefore asks once again, as was done in its position paper, why does it cost SANRAL so much more to build roads in South Africa, than it does for other parts of the world to do so.  Our comparisons were not outlandish or unreasonable and, as we stipulated several times in our report, our comparisons gave SANRAL the benefit of comparing the Gauteng project, which was largely a resurfacing of existing roads, to that of construction of new roads, which is substantially more expensive to build.  This position paper also did not cite only ONE, but rather used eleven credible case studies which compares hundreds of roads.  Additionally, we maintain that the purpose of international benchmarking is to ensure that SANRAL and other state owned entities, do not get hoodwinked by a local collusive industries, as has been proved by the Competition Commission in this case. Benchmarking gives them ammunition to question the prices.

Duvenage adds, “It is too easy for Mr Alli to say ‘We went to a public tender process, those were the prices that we got from the industry.’ This atrocious statement implies that he or SANRAL has no ability to challenge, question or research possible collusive pricing. We expect our State Owned Entities to question and challenge their suppliers and not to simply adopt an attitude of “well, that’s the price we got, so that’s the price we took.” This is outrageous and another reason why benchmarking is necessary.

In answer to Mr Alli’s question ‘Did we overpay, or didn’t we overpay’, OUTA remains of the sincere belief that society, through SANRAL, has substantially overpaid for the GFIP project. In preparing our responses to SANRAL’s 420 questions (which they unreasonably expected us to respond to in two weeks), we have conducted further and deeper research into this question and in our soon to be released second and Updated Publication of the position paper, we will add further substantiation to our position, opinions and claims on this matter.

OUTA is not an organization that makes claims or takes a position on serious matters of this nature, in a willy-nilly fashion, which SANRAL is trying to imply. We are also not seeking to make this country ungovernable or inciting the public to break the law as they have stated.  We are merely empowering the public to stand their ground on the e-toll decision which we maintain has been introduced unlawfully for a number of reasons, and which we will defend in court during the forthcoming summons process about to unfold. Furthermore, we take umbrage when a state owned entity allows unnecessary and excessive pricing to take place under their noses, whilst believing it does not have to benchmark, as it’s own act (and other government laws and guidelines), requires of them.

List of references to SANRAL’s 185 km comments  of the GFIP construction for phase 1:


https://pmg-assets.s3-website-eu-west-1.amazonaws.com/docs/120309supportingnote.pdf  (Paragraph 8 refers to 185km)

https://www.nra.co.za/live/content.php?Session_ID=a35ba711c44e9eb2560b3100a2dec490&Item_ID=260 (paragraph 2 refers to 185km)

https://www.nra.co.za/live/content.php?Session_ID=4e09fb0c868b1cd6ac6477435dbccac2&Category_ID=201 (Paragraph 1 refers to 185km over a total of 15 work packages)

https://conferences.sun.ac.za/index.php/cie/cie-42/paper/viewFile/121/90 (Academic paper, paragraph 1.1 referencing 185km)

For a sound clip, click here

OUTA is a proudly South African civil action organisation, that is purely crowd funded. Our work is supported by ordinary citizens who are passionate about holding government accountable and ensuring our taxes are used to the benefit of all South Africans.