The government has revealed plans to securitise an additional Ksh5.0 per litre from the Road Maintenance Levy, bringing the total securitised amount to Ksh12.0 per litre.
The Road Maintenance Levy is a fuel tax of Ksh25 per litre collected by the Kenya Revenue Authority (KRA). It funds road maintenance and development through the Road Maintenance Levy Fund (RMLF).
The fund is managed by the Kenya Roads Board (KRB) and distributed to various road agencies, with recent allocations also going to county governments for specific road maintenance projects.
Appearing before the National Assembly’s Departmental Committee on Transport and Infrastructure on Wednesday, November 5, to deliberate on the revised RMLF ceilings for the Financial Year 2025/26, Roads and Transport Cabinet Secretary Davis Chirchir confirmed that the Cabinet had given its approval for the additional securitisation.
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According to details presented to the committee, the Ministry of Roads and Transport indicated that the government currently faces Ksh890 billion in outstanding obligations for already contracted road works.
The Cabinet’s approval for further securitisation was driven by a need to address the substantial funding shortfall, given that annual government allocations for road projects average Ksh55.0 billion.
Structure of the additional Ksh5.0/litre securitisation of the Road Maintenance Levy
The additional Ksh5.0 per litre to be securitised will be drawn from existing allocations within the Road Maintenance Levy framework. Ksh1.50/litre will be sourced from a reduction in allocations to the Roads Annuity Fund, down from the previous Ksh3.0/litre, while Ksh1.0/litre will come from the KRB allocation.
The remaining Ksh2.50/litre will be deducted from the shareable revenue allocated to fuel levy agents, as provided for in the existing legal framework that governs the Ksh15.0/litre fuel levy distribution.
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The government had earlier securitised Ksh7.0 per litre from the levy to raise Ksh175.0 billion for the settlement of pending bills in the roads sector as of December 30, 2024.
To expedite payments, KRB obtained a bridge financing facility ahead of the issuance of a bond. The facility raised Ksh104.0 billion, which has been used to clear approximately 80 per cent of the pending bills by December 31, 2024.
Progress on the initial Ksh7.0/litre securitisation
Among the key agencies, the Kenya Rural Roads Authority (KeRRA) and the Kenya National Highways Authority (KeNHA) accounted for the largest portions of settled amounts, at Ksh51.16 billion and Ksh44.23 billion respectively.
The Kenya Urban Roads Authority (KURA) on the other hand accounted for Ksh8.66 billion of the total payments. The government also reported that most contractors affected by delayed payments agreed to waive 35 per cent of accrued interest, amounting to Ksh7.5 billion of the Ksh22.0 billion total in delayed interest charges.
As of the latest update, 664 contracts have had their principal payments and interest arrears fully cleared, out of the 875 contracts initially identified — representing 75 per cent of settled obligations.
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