Collections from the Road Maintenance Levy (RML) jumped by an estimated Sh29.3 billion to Sh90.54 billion in the nine months to March this year, as the government reaped big following the controversial increment of the levy to Sh25 per litre.
This is based on official data which shows that consumption of diesel and petrol rose to 3.62 billion litres in the period, from 3.39 billion litres in the same period last year when collections stood at Sh61.18 billion.
The levy is charged at the rate of Sh25 for every litre of diesel and petrol.
The rise follows the contentious increment of the levy from Sh18 per litre last July even after the then Transport Cabinet Secretary Kipchumba Murkomen promised Kenyans that the hike would be delayed until fuel prices fall.
The Sh7 per litre increase was to drive collections with the Kenya Roads Board (KRB) arguing that it needed more funds from the levy to maintain the vastly growing road network.
The entity is the custodian of collections from the levy.
The higher rate of RML has since July last year denied consumers price cuts at the pump, with the State being forced to occasionally subsidise prices in a bid to ease the impact of the Sh25 levy per litre.
“Kenyans have told us that, yes, you need money but make sure you do not raise fuel at the pump. We shall think how to do this because we are paid to think,” said Mr Murkomen in July last year during public hearings for proposals to raise the levy.
However, the ministry went ahead and raised the levy after Mr Murkomen reneged on his promise and opted to back KRB’s push for more collections.
The KRB had pushed for an even higher rate of Sh34 per litre of diesel and petrol because the funding gap for the vast road network was expanding rapidly.
“To address the funding shortfall, it is proposed that the RMLF rate be revised upwards effective July 2024. Based on the annual maintenance requirement of Sh157 billion, the ideal fuel levy rate ought to be set at Sh34/ litre,” KRB said in its push for the higher rate.
Consumption data from the Energy and Petroleum Regulatory Authority (Epra) shows that demand for diesel in the nine months to March this year rose to two billion litres from 1.91 billion litres in the same period last year.
This translated to RML collections estimated at Sh50.12 billion from Sh34.39 billion.
Demand for petrol rose to 1.62 billion litres in the nine months to March this year from 1.48 billion litres last year, pushing RML collections to Sh40.42 billion from Sh26.78 billion.
The government applied a subsidy of Sh3.35 and Sh2.50 per litre of petrol and diesel, respectively last July in a bid to prevent pump prices from skyrocketing due to the higher levy.
The subsidy was applied despite the drop in landed costs of petrol and diesel.
A litre of petrol and diesel retailed at Sh188.84 and Sh171.60, respectively in Nairobi last July when the new levy rate kicked in.
In the absence of the subsidy, fuel prices would have jumped at least by Sh8 per litre on account of the new rate alone. Costly fuel would have triggered inflation and stoked public outrage over the high cost of living.
A petitioner went to court last August seeking stay orders of the new levy on grounds that the Ministry of Transport and Roads failed to consider public feedback. The lawsuit was later dropped.
The increased collections now shift focus to the KRB and the implementing agencies on whether this (higher collections) will translate to a better road network.
KRB distributes billions of shillings to the Kenya National Highways Authority, Kenya Rural Roads Authority, Kenya Urban Roads Authority, the Kenya Wildlife Service and county governments to build, rehabilitate and maintain roads.
The road network under the five entities stood at 239,122 kilometres last year, a 4.1 percent jump from 161,451 km in 2016, according to data from the KRB.
The board holds that the network expansion, coupled with inflation has made it nearly impossible to ensure quality roads without increasing the funding pool.
However, motorists have decried the poor state of roads in most parts of the country, including Nairobi, putting to question the push for increased RML collections.
