The Kenyan Parliament’s House Committee on Delegated Legislation has recently approved the Road Maintenance Levy Fund (Imposition of Levy) Order, 2024, raising the Road Maintenance Levy Fund rate from Sh18 to Sh25 per litre of petrol and diesel. However, despite initial concerns, government assurances have quelled fears of a resultant hike in fuel prices, which would have added to the financial strain on Kenyans already grappling with high living costs. The legal notice was carefully reviewed by the committee, chaired by Ainabkoi MP Samuel Chepkong’a, who stressed the importance of maintaining stable fuel prices.
“Considering the tough economic times, it would be inconsiderate of us to approve an order that would see a hike in fuel prices,” remarked Chepkong’a. He and vice-chair Robert Gichimu echoed the concerns of many Kenyans, noting that any increase in fuel prices would likely lead to a spike in the cost of food and other essentials, further escalating the country’s already high cost of living.
Assurances from the State Department of Roads
The approval came after significant discussions between the House Committee and officials from the State Department of Roads, led by Principal Secretary Joseph Mbugua. The PS assured committee members that the increase in the levy will not affect the pump prices of petrol and diesel, a reassurance many Kenyans needed amidst rising inflation.
“We are confirming to Kenyans that there will be no increase in the price of fuel. We have measures in place to increase the levy without raising the cost of fuel beyond the current prices,” Mbugua reassured during the proceedings.
Joining PS Mbugua in the discussions were Director Generals Rashid Mohamed (Kenya Roads Board), Silas Kinoti (Kenya Urban Roads Authority), Philemon Kandie (Kenya Rural Roads Authority), and Ndung’u (Kenya National Highway Authority). Together, they provided insights on why the additional revenue was crucial for road infrastructure development and maintenance across Kenya.
Why Increase the Levy?
The Road Maintenance Levy Fund (RMLF) was first set at Sh18 per litre of petrol and diesel in 2016 and has remained at that rate ever since. According to the State Department, the revenue from the levy has stagnated at approximately Sh80 billion annually, which is insufficient to cover the rehabilitation and expansion needs of Kenya’s road network. Meanwhile, the length of the country’s road network has grown significantly, from 161,451 kilometers in 2016 to 239,122 kilometers by 2024. This substantial increase has placed additional pressure on the RMLF, necessitating a higher levy to keep pace with infrastructure needs.
PS Mbugua explained that the collected amount has failed to meet rising road maintenance demands, especially given economic challenges such as inflation and exchange rate fluctuations that have driven up the cost of construction materials, many of which are imported. The Ministry of Transport aims to boost RMLF collections to Sh115 billion annually through the new rate, which would allow for critical road upgrades and maintenance projects across Kenya.
The Ministry also noted that the devaluation of the Kenyan shilling against the US dollar has further increased the cost of road materials, emphasizing the need for additional funding to maintain the quality of Kenya’s expanding road network.
Stakeholder Reactions and Public Concerns
The decision to increase the levy has stirred debate among various stakeholders, who argue that it could violate constitutional principles if it indirectly affects Kenyans’ cost of living. Concerns have been raised that the increased levy might eventually lead to higher prices in other sectors, such as food and public transportation, due to the heavy reliance on the road network for the distribution of goods.
Despite these concerns, the State Department has repeatedly stressed that the increase in RMLF will not affect the pump price, citing that the price control of petroleum products is based on import prices. This regulation, they argue, will shield consumers from any immediate cost increases resulting from the levy adjustment.
A Needed Revenue Boost
With the new RMLF rate, the Ministry of Transport projects a significant increase in revenue, aiming to accumulate over Sh115 billion by mid-2025. This additional funding is seen as essential to adequately support the maintenance of Kenya’s road network, which has suffered due to budget constraints. The Department of Roads has underscored that the stagnation of the RMLF at Sh18 per litre since 2016 has limited its ability to fund crucial infrastructure projects that would enhance transportation and spur economic development.
As inflation and currency depreciation continue to impact Kenya’s economy, many agree that an increase in the road levy fund is a logical step toward preserving infrastructure quality. However, ongoing transparency and monitoring will be critical to ensure that the levy increase benefits Kenyans without adding to their financial burdens.
The recent approval by the House Committee marks a compromise: while revenue for road maintenance is set to increase, fuel prices at the pump will remain unaffected, offering Kenyans some relief during challenging economic times. With adequate oversight, this increase in the Road Maintenance Levy Fund rate could contribute to enhancing Kenya’s road infrastructure while respecting citizens’ financial constraints.
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