Questionable assessment methods used eight years ago, says report
A new economic report has been released calling for the greenfield section of the N2 Wild Coast toll road project to be suspended, arguing that the assessment done eight years ago employs questionable methodology and is out of date.
The South African National Roads Agency (Sanral) has hit back, saying it has reviewed the project and has the go-ahead from the national Treasury.
The new “N2 Wild Coast Toll Road Today” report, commissioned by Sustaining the Wild Coast on behalf of the Umgungundlovu section of the Amadiba community, examined the methodology used in the 2008 assessment and gauged the project in the context of the economic downturn since then.
The greenfield portion of the project runs from Port St Johns over the Umzimvubu River and then, after a short section of existing road, from Lusikisiki to Port Edward.
It is a shorter route than the existing N2 route via Kokstad but transects the globally recognised Pondoland Centre of Endemism, an area boasting unique plant and animal species.
A key source of controversy is two mega-bridges to be built over the Msikaba and Mtentu gorges which underpin community eco-tourism ventures.
Project opponents have called for an alternative focus on upgrading existing road networks.
Funded by Outa (Outlaw Tax Abuse), the report by economists Allen Jorgensen, Professor Gavin Maasdorp and Frank Sturgess says construction of the 85km green field portion should be suspended pending review.
The report says inadequacies in the 2008 assessment mean it should not be relied on to justify multibillion-rand expenditure.
It notes that the project was initiated in the early 2000s as an unsolicited bid with a clear link to a proposed dune-mining venture at Xolobeni.
“The mine would have been dependent on the creation of a more direct route to East London where it had been proposed to construct a major smelter,” the report says.
The assessment “does not correctly apply methodology and quantitative techniques, in several important respects. “It uses the multiplier effect [the increase in final income arising from any new injection of spending] in a manner that exaggerates benefits that would accrue to the Pondoland area and communities.”
The assessment “is not transparent . . . and does not disclose costs and other key financial data either at all [in the case of the bridge construction costs] or in sufficient detail.”
“The flaws need to be corrected . . . in order to establish whether an acceptable result is obtained to support the implementation of the project, with the important caveat that this should be subject to the overriding importance of the environmental and social factors, especially those relating to the mining at Xolobeni.”
The project work already under way should further be suspended in the light of the prevailing economic climate and government’s stated policy of shifting freight traffic from road to rail, it says.
Sanral southern region manager Mbulelo Peterson said the agency had already reviewed the project using current data.
“Sanral’s analysis of this data was shared with Treasury prior to the announcement by Finance Minister Pravin Gordhan that funding has been allocated,” he said.
Peterson said the project was a wise investment while the alternative proposal of investing in the local road network would have a very low economic rate of return due to low traffic volumes, high cost of construction and the purely local growth such an investment would bring.
He said complementary funding would come via tolling. “The new route is shorter and will . . . . boost tourism.”