Agency plans new levies in fresh blow to motorists

Motorcylists struggle on a ride along section of the Kasarani Mwiki road on 19th Apriul, 2018. Matatu and bus operators downed their tools to protest the poor state of the road and said they will continue with their strike until the road is repaired. [Photo: Standard]

Motorists should brace themselves for tough times ahead following plans by the Government to impose additional charges on vehicle insurance premiums.

The move, according to the Kenya Roads Board (KRB), is aimed at raising more funds for road maintenance countrywide.

Should the agency’s proposal be implemented, it would be a major hit for the transport industry that is already grappling with recently imposed taxes on petroleum products and an increase in the Road Maintenance Levy.

KRB, which manages funds collected through the fuel levy, said in its annual public roads programme for the 2018/19 financial year published yesterday that the new measures would enable the Government to collect an additional Sh60 billion.

The board expects to collect Sh68.9 billion in the current financial year, but said this falls short of the money needed to undertake road maintenance in the country.

KRB said it needs Sh70 billion per year for road repairs, but this could go up to as much as Sh100 billion to handle backlogs as the funds have always fallen short over the years.

It also needs to set aside Sh11 billion this year for the Road Fund, which was created three years ago to provide capital for construction and maintenance of new roads. It has already accumulated Sh30 billion.

New levies on motor vehicle insurance and annual licences are in addition to public-private partnerships and infrastructure bonds, which the Government has proposed as ways of bridging financing gaps in road maintenance.

“In order to generate additional funds for maintenance, the Government through KRB is considering alternative road maintenance financing mechanisms such as incorporating long-term infrastructure bonds, public-private partnerships, introducing levies on motor vehicle insurance and annual licences, and levies on outdoor advertisements,” said KRB.

“The current estimates indicate that Sh60 billion could be generated from these potential sources.”

This would nearly double the money collected by the agency as well as diversify its sources of income. It currently relies almost exclusively on fuel levy collection, which is expected to bring in Sh68.4 billion this financial year while the balance is expected to come from transit tolls at Sh550 million.

The proposed measures come even as the transport industry and the economy in general grapple with the new fuel taxation regime that started September.