Sanral: R1.094 Billion Irregular Expenditure Surges In 2025/26

• Sanral's irregular expenditure surged by 100% to R1.094 billion in the 2025/26 financial year.
• The R1.094 billion includes R696.754 million from prior years and R373.218 million from newly identified contracts.
• Sanral is implementing supply chain reforms, conducting corruption investigations, and focusing on consequence management.
• The agency aims to clear a R3.9 billion legacy irregular expenditure balance and has requested National Treasury condonation for some amounts.
• Operational performance was impacted by a court ruling that set aside Sanral's routine road maintenance panel.

Sanral is now focusing on accelerating the assessment, investigation, the implementation of consequence management and board corrective action and punitive actions.

The South African National Roads Agency (Sanral) reported a significant surge in irregular expenditure, reaching R1.094 billion for its financial year ending March 2026. This figure represents a 100% increase compared to the previous financial year. The disclosure was made by Sanral's acting CEO, Lehlohonolo Memeza, during a presentation to parliament’s portfolio committee on transport.

This substantial amount includes irregular expenditure initially incurred in the 2024/25 financial year but only confirmed in the 2025/26 period. While Sanral recorded zero fruitless and wasteful expenditure for the 2025/26 financial year, its operational efficiency faced challenges. The agency awarded only 39 tenders against a target of 250, and its spending on road infrastructure reached only 59% of its 73% target.

Sanral's Chief Financial Officer, Nozipho Makukule, provided a detailed breakdown of the R1.094 billion. A sum of R24.32 million, or 2.2%, is attributed to confirmed contracts from the 2024/25 financial year. A larger portion, R696.754 million (63.7%), was incurred and confirmed in the 2024/25 financial year, stemming from matters under assessment in prior years. The remaining R373.218 million, representing 34.1% of the total, relates to newly identified contracts confirmed within the 2025/26 financial year.

In response to the escalating figures, Sanral has initiated several reforms within its supply chain management. These measures include assigning senior personnel to committees tasked with overseeing the appointment of high-risk projects and removing consultants from the procurement process. The agency also confirmed that nearly all cases requiring corruption investigations were actively underway by March 31, 2026.

Sanral's leadership is committed to rigorous consequence management, holding weekly meetings with Loss Control Committees (LCCs) to ensure relevant departments, such as Human Resources, implement necessary actions within the financial year. Legal processes are also pursued where appropriate. The agency is also conducting proactive assurance on high-risk tenders to mitigate future irregularities.

CFO Makukule highlighted that the first two categories of irregular expenditure, collectively accounting for 66% of the total, are associated with historical matters. Sanral is now focusing on accelerating the assessment, investigation, implementation of consequence management, and board corrective and punitive actions. The agency is also processing matters for condonation or write-offs, aiming to clear an opening balance of R3.9 billion from the prior year within two months or less. Makukule noted that cases for approximately half of this amount have already been concluded, with consequence management implemented, and a condonation request submitted to National Treasury for feedback. Some transactions are still awaiting board delegation.

Beyond financial irregularities, Sanral also faced operational hurdles. The agency achieved 25,024km of routine road maintenance (RRM) against a target of 26,214km, reaching 95.5% of its goal. This shortfall was attributed to challenges with the RRM panel appointed by Sanral, which was subsequently challenged in court and set aside. This legal intervention, specifically a High Court ruling in Pretoria in July, impacted the agency's ability to meet its maintenance targets.

Acting CEO Memeza emphasized the agency's commitment to preventing new irregular expenditure while simultaneously accelerating the resolution of long-standing legacy contracts. The focus on improving the speed at which these matters are resolved is crucial to avoid perpetual audit reports citing historical issues.

The significant increase in Sanral's irregular expenditure, coupled with its stated commitment to consequence management and clearing legacy issues, underscores a heightened focus on financial accountability within South African state-owned entities. The detailed breakdown of irregular expenditure, distinguishing between newly identified issues and historical matters, indicates an effort to both address past failings and prevent future occurrences. The agency's proactive assurance on high-risk tenders and the involvement of senior personnel in procurement oversight signal a more stringent approach to public procurement irregularities.

This development highlights the ongoing scrutiny of public procurement processes in South Africa. The challenges faced by Sanral, including court interventions regarding procurement panels and the slow pace of tender awards, reflect broader systemic issues. The agency's efforts to seek National Treasury condonation for certain expenditures and to implement robust consequence management frameworks demonstrate a recognition of the need for improved governance and compliance. The resolution of the R3.9 billion legacy balance and the prevention of new irregular expenditure will be key indicators of Sanral's success in reforming its financial management practices.

This development signals heightened scrutiny and potential enforcement actions regarding public procurement and financial management within South African state-owned entities. Lawyers and compliance officers advising clients engaged with Sanral or similar public bodies should review their compliance frameworks, particularly concerning procurement processes and financial reporting, to mitigate risks associated with increased oversight and Sanral's stated focus on consequence management and resolving legacy issues.

Source: Original reporting via Moneyweb