Agency eyes alternative funding amid Sh600b budget hole

Thursday, August 4th, 2022 06:34 | By

Kenya Roads  Board  (KRB) is considering new ways to secure additional funds to bridge the funding gap in the road sector of about Sh600 billion. This is despite registering growth in fuel levy collection, its main source of income.

The board, which is mandated to maintain, develop and rehabilitate Kenya road networks, is stuck in a funding hole of Sh600 billion, way below Sh87.4 billion it collected in the 2021/2022 fiscal year that ended last June.

The collection was mainly from transit tolls and Road Maintenance Levy Fund (RMLF) collected by Kenya Revenue Authority (KRA). RMLF registered about Sh400 million growth on the back of a spike in global oil prices and high inflation.

“Our goal now is to review the financing options available and raise funds in this financial year to ensure that both road development and maintenance projects receive adequate funding in order to sustain the growth momentum in our network,” KRB Director General Rashid Mohamed said in a statement.

National Assembly Transport Committee chair David Pkosing had in May disclosed plans to leverage half of the proceeds of fuel levy collection to float infrastructure bonds as part of financing alternatives.  In 2019, Parliament okayed use of KRB levy collections to support bonds but there has been delays due to lack of legal framework and pressures to minimize the country’s debt stock.

 Finance Act

Kenya Revenue Authority collects RMLF on behalf of the roads board at a rate of Sh18 per litre of petrol and diesel for road construction and rehabilitation. The Finance Act 2022 amended the KRB Act 1999 to provide for allocation of 50 per cent of the levy fund to maintenance and 50 per cent towards securing additional funding for road networks.

Mohamed said KRB is developing the Road Sector Investment Programme (RSIP) III for 2023-2028 period to determine development and maintenance priorities and funding requirements for the road network. 

The board will also continue to monitor the Annual Public Roads Programme (APRP) through technical compliance, financial and performance audits.

In the 2021/22 year, a total of 53,490 kilometres was maintained including 18,406km of National Highways half of which was placed under performance-based maintenance.                                    – Herald Aloo

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