Data Center
Transition from a fuel tax to a green road user fee
Monday 19 June 2023
Trucks drive along the Meritini-Magongo road in Mombasa which is in poor condition as motorists call on the government to take action in this photo taken May 31, 2023. Image | Kevin Odette | NMG
Electric mobility is gaining global prominence as a strategy to mitigate greenhouse gas emissions, improve air quality and reduce dependence on fossil fuels.
The Paris Declaration on Electric Mobility and Climate Change and the Call to Action requires partners to make a decisive effort towards the electrification of sustainable transport – including having at least 20 percent of all road vehicles electrified by 2030.
Transport contributes a significant amount to current global energy-related greenhouse gas emissions and is estimated to grow faster than any other energy end-use sector.
Closer to home, President William Ruto actively advocates for this transition and has been assertive in accelerating the integration of sustainable alternatives during the transition from fossil fuels to renewable energy.
The government has also demonstrated its commitment by aligning with global initiatives to address climate change such as signing the COP26 agreement and formulating strategies to effectively reduce greenhouse gas emissions.
According to the National Strategy for Energy Efficiency and Conservation (2020), Kenya’s goal over the five years to 2025 is to expand the percentage of electric vehicle imports from zero percent to five percent of the total vehicles imported into Kenya each year.
Despite these efforts, Kenya’s electric mobility sector is still in its infancy with the total number of electric vehicles estimated at 671.
Energy sector stakeholders are actively implementing the infrastructure required to accommodate the growing number of electric vehicles.
With this new standard, the fuel tax is the main source of funding for road maintenance and may face a decline as Kenyans move to more energy efficient vehicles.
For the Kenya Roads Authority (KRB), this presents significant challenges and opportunities. Since the enactment of the Road Maintenance Tax Act in 1993, the state has relied heavily on funds generated from the fuel tax for road maintenance.
Over the past five years, the council has managed to raise Sh405 billion, 99 per cent of which is fuel tax revenue.
This significant funding has facilitated the maintenance of 206,267 kilometers of roads. Looking at the next plan period 2023-2027, the council has set a more ambitious target of raising Sh512 billion for the maintenance of 220,000 km of roads which represents an increase of 26 per cent.
This will ensure that our roads receive adequate maintenance to provide optimum levels of service.
So how does KRB ensure the sustainability of the road network? In the recently launched 2023-2027 Five-Year Strategic Plan, we have identified alternative funding sources that align with the new future of e-mobility.
KRB will engage in strategic discussions with government, relevant stakeholders and experts to devise innovative solutions that will enable adaptation to the changing landscape to ensure roads remain safe, efficient and well-maintained.
One of the things we’re thinking about is moving from a fuel tax to a smart road user charge that includes both petrol-powered vehicles and hybrid and electric vehicles.
This approach will ensure that all road users contribute their fair share to road maintenance.
To further bridge the funding gap, the council will raise Sh150 billion through infrastructure bonds.
Through the effective use of these funds, KRB aims to increase the road network in good and fair condition from 70 percent in 2023 to 84 percent at the end of 2027.
To achieve this, the Board will expand its supervisory capacity and deploy auditors in the regions to ensure robust monitoring and evaluation of the implementation of road works by our road agencies thus ensuring value for money.
We will continue to demand more accountability for every shilling allocated from road user fees to ensure our road infrastructure is optimal.
As we face the emerging reality of e-mobility, KRB is strongly dedicated to adopting proactive measures to address the potential impacts of road maintenance sustainability.
We will prioritize developing strategic partnerships with key stakeholders in the government and energy sectors to ensure we are ready to face challenges.
In addition, we will continue to explore diverse sources of financing to ensure the long-term sustainability of road infrastructure for the benefit of taxpayers.
The writer is the Managing Director of the Kenya Roads Board.