Joining the fray for funds, the South African National Roads Agency Limited (Sanral) on Thursday raised R2-billion through the issuance of listed bonds, as part of its larger programme of placements aimed at raising about R44-billion by 2012, to fund new toll road infrastructure in Gauteng as well as for upgrading and improving existing roads.

Absa Capital and its empowerment partner Vunani Capital, and Rand Merchant Bank (RMB) were appointed as joint-lead arrangers, and said that R24-billion of the total would be raised by May 2010.

The inaugural bond issued by Sanral, under its newly established R10-billion Domestic Medium Term Note (DMTN) programme, would be listed on the Bond Exchange of South Africa on July 15. The programme offered Sanral flexible funding options in the debt capital markets.

“A very strong market appetite for these bonds was evident, with total bids amounting to just over R3-billion,” said Absa Capital head of bonds hybrids and convertibles Jacques Els.

Four bonds were on offer – a five-year inflation linked bond maturing in 2013, and three fixed-rate bonds with 10, 14 and 20 year maturities.

These instruments would be tapped on an ongoing basis, as Sanral needed funding to pay contractors for the construction completed. RMB said that further bonds could be added to the ‘Sanral suite’ over time.

“This level of subscription is indicative of investor interest in Sanral and should bode well for forthcoming bond issues,” said Els, adding that “market demand for high quality parastatal paper remains strong, as was evident by the credit spreads at which the paper placed, despite a tough market environment”.

The Sanral funding was another example of infrastructure funded through bonds. Previous examples included Transnet and the Airports Company of South Africa.

State freight logistics group Transnet in June outlined how it would raise R36,6-billion over the next three years to help fund its R80-billion, five-year capital programme.


Although Sanral had issued bonds to fund its toll roads before, it had never previously done so without a government guarantee, the organisation’s CFO, Inge Mulder, told Engineering News Online.

“National Treasury decided, as a principle decision, that they are not going to issue any further guarantees, so we only had the R6-billion guarantee – that will continue on forever, and that has been fully utilised. So all our future funding will then be on this basis, unless National Treasury changes its minds and gives us the opportunity to get another guarantee of some sort,” she said.

This signalled a change in direction for Sanral, from being a mere agency, structuring public-private partnerships, to becoming more of a roads utility, which would construct, own and operate the roads.

“Going forward we are acquiring a total new business,” she said.

The regulator of the toll-road tariffs would always be the Department of Transport, and Sanral would be the implementer, indicated Mulder.

“The Minister always approves the tariffs and the annual adjustments, which are PPI linked. They always need to be approved by the Minister, and all need to be gazetted by government,” she said.

“It seems like there is still a lot of cash available in the local market, and I am very impressed with the results today,” added Mulder.


The Sanral funds would be used to build a toll road system in Gauteng. The Gauteng Freeway Improvement Programme (GFIP) involved upgrading the N1 to Pretoria, the Johannesburg ring roads, and the R21 from OR Tambo International Airport to Pretoria.

These upgraded roads would be tolled and would be the first roads in South Africa where toll fees would be collected electronically. Tolling would only start in October 2010.

Sanral has already awarded seven contracts for the first phase (125,5 km) of the GFIP, amounting to R11,5-billion. These awards follow the earlier contract for the upgrade of the N1 between the R21 interchange and the Atterbury interchange, east of Pretoria, where construction was under way.

Sanral said it was aware of the impact construction would have on traffic management during the construction period for Phase 1 of the GFIP. “Sanral has developed and put into operation a programme to minimise disruption and maximise road safety around construction areas,” said the agency in a statement on Thursday.

The plan included a notification and information management system, to centralise and coordinate the impact of construction activities on freeways and interchanges, using Sanral’s Freeway Management System and managed by the central Network Management Centre. It would include traffic accommodation; construction information, safety measures and incident management.

The number of lanes kept open during peak hour traffic would be kept the same; clear and visible signage for notification of road works and lane closures would be used; light and heavy-duty tow trucks would be used at key construction sites to minimise disruptions caused by vehicle breakdowns; and strict requirements on safety barriers by construction companies, to protect both motorists and construction personnel would be required.

Construction contractors were bound, in terms of their contracts, to provide daily reports to Sanral on expected works and lane closures by 10:00 on the day prior to the activities, while advance reporting was required for short term contra flow conditions as well as lane closures over weekends.

The Siyaya joint venture (JV) comprising Group Five, Power Construction, Liviero, Bophelong Construction and Umso Construction was awarded two of the road contracts, work package A (18 km) and E (16 km).

The GFI Contractors JV comprising WBHO, Sanyati Construction, Rainbow Construction, Glash Construction, Munasi Civil Contractors and Patula Construction was awarded the contract for work package B (21 km), which consisted of the N1 section 20, between Fourteenth avenue and Buccleuch interchanges.

Work package C (23 km) and work package F (17,6 km) were awarded to the GLMB JV consisting of Aveng (Africa), Moseme Road Construction and Boitshoko Road Surfacing.

The Basil Read JV comprising Basil Read, Roadcrete Africa and Dip Civils was awarded work package D (15 km) and involves the N1 section 21 between the Brakfontein and R21 interchanges and the N1 section 21 between the Atterbury and Proefplaas (N4) interchanges.

The CMC JV comprising CMC di Ravena (SA) and G4 Civils was warded the upgrade of the N12 from the Gilloolys interchange to the R21 (10 km), consisting of the N12 section 19 between the N3 and the R21, as well as works on the N3 section 12 between the N12 and the Modderfontein interchange.