Kenyans should brace themselves for even higher fuel prices in the coming days if a new proposal to increase road maintenance tax is approved.
The Kenya Roads Board (KRB) wants to raise the road maintenance levy by Sh5 to account for inflation in the cost of road construction materials.
The tax, known colloquially as the road maintenance levy fund (RMLF), is collected at the fuel pump and is currently set at Sh18 per litre of petrol and diesel, with Sh3 going to the annuity fund and the rest going to road maintenance, rehabilitation, and development.
If the proposal is approved, motorists will pay Sh23 per litre of fuel at the pump, increasing the overall cost of the commodity.
Recommend and advocate for a review of the RMLF rate… Increase in RMLF rate by Sh5, according to KRB’s work plan for the period 2023-2027, arguing that while the price of petrol and diesel has been rising since 2020, the amount charged as fuel levy has remained constant at Sh18 per litre despite increased demand for better roads.
The KRB proposes that the changes take effect in 2025.
The Kenya Roads Board Fund (KRBF), which is primarily funded by the RMLF and transit tolls, maintains the country’s road network.
The Kenya National Highways Authority (Kenha), Kenya Urban Roads Authority (Kura), Kenya Rural Roads Authority (Kerra), Kenya Wildlife Services (KWS), and county governments all contribute to the KRBF.
KRB spent Sh309.74 billion on road maintenance, rehabilitation, and development programmes from 2018 to 2022, excluding the Road Annuity Fund.
Kenha received Sh128.37 billion, Kerra (84.95 billion), Kura (Sh35.24 billion), KWS (Sh31.36 billion), county governments (Sh26.69 billion), and the Transport Cabinet Secretary received Sh31.36 billion.
The cost of maintaining roads has risen significantly, according to KRB, due to higher fuel prices and the cost of key road construction materials such as tar and bitumen, and is expected to impact the cost of periodic road maintenance by road agencies in the 2023/24 fiscal year, which began on July 1.
According to KRB data, the cost of Kenha’s periodic maintenance per kilometre is expected to rise from Sh3.94 million to Sh6.06 million in the current fiscal year.
KRB noted in a summary of its 2023/24 annual public roads programme that there has been an increase in periodic maintenance costs of about 35% due to the uptake of roads with failed payments and an increase in the price of construction materials, primarily due to the rise in fuel prices.
Kenha is expected to spend Sh1 billion on the routine maintenance of 166 kilometres of paved road surfaces. Meanwhile, the agency’s routine maintenance and spot improvements will cost three times as much, or Sh3.1 billion, and will cover 717.3 kilometres of road.
The majority of Kena’s road maintenance budget of Sh14.4 billion will be handled through performance-based contracting, in which most risks are transferred to the contractor. In the current fiscal year, KRB has allocated Kenha Sh33.6 billion for road construction.
Kerra, for its part, has been allocated Sh25.6 billion for road works, including Sh18.7 billion for routine maintenance and spot improvement. Kerra’s road maintenance budget is slightly higher than the Sh17.9 billion set aside for the same works last year.
Meanwhile, Kura has been allocated a budget of Sh12 billion, of which Sh8.7 billion will be used for road maintenance intervention measures on 2,821 kilometres of planned road. The intervention measures are expected to include the construction of pedestrian walkways.
The KWS has been allocated Sh802.7 million for road works, including Sh621.5 million for routine maintenance of 2,554.8 kilometres of road.
KRB said it aims to raise Sh150 billion from capital markets and other creditors to fund road maintenance programmes, despite threats of lower RMLF collections as more people switch to electric vehicles.
The Board anticipates a future reduction in fuel levy collections due to the accelerated transition to e-mobility, the effect of global climatic change, and the gradual transition from traditional use of fossil fuels to green energy, according to KRB.
The Board is currently conducting a study on the economic impact of electric mobility on the sustainability of the Road Maintenance Levy Fund, which will inform the Board on the sustainability of the fuel levy as the only major source of financing road maintenance, rehabilitation, and development and recommend other sustainable financing options based on the changing operational environment, it added.
