N1/N2 Winelands Toll Project

12 January 2016

Cullinan & Associates are delighted to have successfully represented the City of Cape Town in opposing the proposed tolling of the N1 and N2 highways by SANRAL.

The Western Cape High Court set aside the Transport Minister’s decision to permit SANRAL to declare the N1 and N2 Highways as toll roads and found that the SANRAL Board had not authorised the declaration of those roads as toll roads. The court found that the public participation process conducted by SANRAL prior to declaring the toll roads was wholly inadequate and didn’t give the public a fair opportunity to participate in the decision-making process. For example, SANRAL did not disclose to the public what upgrading the roads would cost or that the toll fees were likely to be almost three times higher than the rates charged in Gauteng. The Court also found that SANRAL had not complied with the SANRAL Act in several respects.

One of the reasons why the City opposed the tolling of the N1 and N2 was because it would have a disproportionately severe impact on poor communities in the Western Cape which already struggle to access jobs, services and opportunities in the City’s central districts. In Mitchells Plain 80.7% of households have an income of less than R6400 per month, in Khayelitsha the percentage is 58.7% % and in the Northern Planning District it is 42.4%. More than half of those households are already spending more than 30% of monthly household income on transport costs and would not be able to afford the tolls.

The judgement means that if SANRAL wish to toll these highways in future it must conduct a new public participation process, and re-apply to the Transport Minister for permission to toll the N1 and N2.  Even if SANRAL decides to restart this process it will have to convince the Transport Minister that it is socially and financially viable to toll the N1 and N2.  The many expert reports which the City filed during the case showed that the total costs of the project as a private toll scheme would be in the region of R54.7 billion (2010) .Additionally, if the Transport Minister sanctioned toll tariffs in line with the toll tariffs charged in 2013 in Gauteng, SANRAL will be liable to reimburse the concessionaire in an amount of R29.2 billion (2010 real values excluding VAT).in accordance with a contractual obligation in the draft concession contract. It is therefore highly likely that if the project proceeded in line with the proposed concession contract, SANRAL would have had to be bailed out by the Treasury once again.  The tolling would also have significant negative impacts on the Western Cape economy, particularly on sectors like agriculture which have no option but to use these roads to get their produce to market.

SANRAL has been granted leave to appeal the judgement.  The City will oppose the appeal and has also been granted to cross appeal on certain issues.




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