The South African National Roads Agency Limited (Sanral) on July 22 signed a R7-billion loan agreement with multilateral development bank the New Development Bank (NDB) to support the agency’s various toll portfolio projects in the country.

The funds would be used for road infrastructure projects, with key road works including upgrading the country’s national roads, widening carriageways, building extra lanes and other aspects related to road infrastructure, Sanral board member Mahesh Fakir informed, speaking at the signing, which was held at the NDB’s regional offices in Sandton.

Key projects to be funded through the loan include the N3 Paradise Valley to Marianhill Toll Plaza, the N3 Marianhill Toll Plaza to Key Ridge, the N1 Zandkraal to Scottland and the N1 Scottland to Winburg South project, he outlined.  

These four projects represent over R12.7-billion in investment. Sanral highlights that over R3.8-billion of this is reserved for small, medium-sized and microenterprises and targeted enterprises, and almost R1-billion for labour-driven economic inclusion.

The projects are expected to create about 6 600 job opportunities for the surrounding local communities.

The projects are also expected to engender logistical, safety and mobility enhancements for these trade routes in the country.

The loan would become effective as soon as the conditions precedent, standard for a transaction of this nature, were met, Sanral CEO Reginald Demana explained.

Demana explained to Engineering News that the toll portfolio is funded primarily by the revenue Sanral collects from toll fees, as well as borrowings that it raises from entities like the NDB, and the bond market. This portfolio is not funded by the National Treasury and is separate from the non-toll portfolio, he added.

Demana pointed out that more funds are still required for the projects, to meet the entity’s borrowing limit of R16.5-billion, as approved by National Treasury.

To fill this gap, Sanral would be seeking funds from domestic institutions, bond investors, banks and other development finance institutions, Demana said, adding that there was also potential for the NDB to participate further.   

NDB CFO and VP Monale Ratsoma highlighted that the financing is offered in local currency and asserted that this would provide the necessary cushioning against currency fluctuations.

He also pointed out that the bank would provide support to Sanral during the implementation of the projects, including monitoring aspects like quality and environmental, social and governance requirements.

The loan is a materialisation of a discussion that started in 2019 but was never finalised, Demana noted.