The government has unveiled plans to borrow against future fuel levy collections by securitising an additional Ksh5 per litre from the Road Maintenance Levy Fund (RMLF) to raise funds for ongoing and stalled road projects.
The decision, aimed at easing the growing cash crunch in the roads sector, which has seen Kenya's road infrastructure development plans stall for years, was revealed by Transport Cabinet Secretary Davis Chirchir when he appeared to address discrepancies in RMLF allocations and delays in disbursement before a parliamentary committee on Wednesday.
Appearing before the National Assembly’s Transport and Infrastructure Committee, Chirchir told lawmakers that the securitisation plan is intended to supplement exchequer allocations and sustain road construction without stalling projects across the country.
Once approved, the measure will raise the total portion of the levy tied to borrowing from Ksh7 to Ksh12 per litre, effectively allowing the government to access funds upfront and repay the loans using future fuel levy collections.
“The government intends to securitise another Ksh5 per litre of fuel to boost road construction, building on the success of the earlier Ksh7 per litre securitisation programme,” said Chirchir.
What It Means
Under the securitisation model, part of the fuel levy will serve as collateral for bonds or loans issued through the Kenya Roads Board (KRB), enabling the state to unlock billions of shillings immediately instead of waiting for yearly fuel levy collections.
To achieve this, the Ministry plans to redirect allocations from the Roads Annuity Fund, the Emergency Roads allocation, and the share assigned to Fuel Levy Agents to create an additional Ksh5 per litre room for borrowing.
The funds raised will go toward settling pending bills and restarting stalled road projects across the country.
The government had earlier securitised Ksh7 per litre to raise Ksh175 billion, of which Ksh104 billion was advanced through a bridge facility to pay contractors.
By expanding the securitisation, the state hopes to close a financing gap estimated at Ksh890 billion for contracted works currently underway, according to Chirchir.
Parliamentary Approval
Meanwhile, to enable the Kenya Kwanza administration to achieve the plans, Chirchir called on Parliament to support the additional securitisation plan, saying it was critical to bridge the funding gap and ensure that contractors return to abandoned road projects.
Even so, the Committee chairperson, George Kariuki, is expected to table a comprehensive report on the ministry’s recommendations for parliamentary review.
