Insufficient revenue from Chapman’s Peak toll supports termination of contact

The projected and actual traffic numbers. Source:http://www.iolproperty.co.za/roller/news/entry/numbers_do_not_justify_chapmans

 

Some serious questions have arisen after Residents Association of Hout Bay member Keith Fawcett interrogated the Entilini agreement for the Chapman’s Peak Toll Plaza. His findings include a termination condition relating to the required level of revenue collection, which according to available data has not been met.

“Based on available figures, the actual toll revenues are substantially below the ‘Projected Toll Revenues’ as contained in the original Concession Agreement. This could prove that the contract has been breached and should therefore be terminated”, said Fawcett. This claim is supported in correspondence contained in public documents between Entilini and the Director General in Pretoria. In their correspondence, Entilini Concession (Pty) Ltd refers to the required revenue conditions for the system to be viable and the conditions under which a ‘termination of the concession agreement’ would result.

Quoted from correspondence below:

From a PUBLIC DOCUMENT:‘Appeals against Chapman’s Peak Drive Tolling Infrastructure – Additional Information for Public Review: Volume 1 of 2 – August 2007’

Annexure F:

From: Entilini Concession (Pty) Ltd Dated: 08-July-2004

To: Director General , The Department of Environmental Affairs and Tourism, Pretoria

Chapman’s Peak Drive : Determination of Preferred Toll Plaza Positions

“Therefore, if the toll collection system does not ensure collections from such users, then the available revenue can be expected to be 5% below the forecast on which the viability of the project was based.

Analysis of the Financial Model, annexure VII of the Concession Agreement, (not enclosed as it consists of 95 pages) shows that a 5% decrease in the toll revenue would result in immediate default of the Concessionaire’s obligations to the project’s private financiers. The debt service cover ratio which is required to be maintained at 1.28 would fall to 0.98. Default in the required financial ratios would result in termination of the loan agreement and termination of the concession agreement.”

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