Workers at a road construction site in Kwale. FILE PHOTO | NMG
The Kenyan road sector has been grappling with huge infrastructure funding deficits which calls for innovative ways to bridge the gap currently standing at approximately Sh600 billion.
Currently, the Kenya Roads Board (KRB) fully depends on collections from Roads Maintenance Levy Fund (RMLF) charged at Sh18 per litre of petrol and diesel and transit tolls to maintain over 164,000 kilometres of the road network.
Monies collected from fuel levy are not sufficient to meet the needs of the network and with rising fuel prices and impact of the shift to electric vehicles, the fund is not expected to expand further.
So the amendment of the Finance Act, 2022 could not have come at a better time. The Act has introduced a number of changes aimed at raising additional revenues as well to align the tax legislation to the government development priorities.
This new development allows the KRB to grow its funds even as it explores other financing options for infrastructural development.
The amendment to the Kenya Roads Board Act, 1999 through the Finance Act, 2022 provides for allocation of 50 percent of the KRB Fund to maintenance and 50 percent towards securing additional funds through options such as bonds to bridge the funding gap in the road sector.
This means that 50 percent may be set aside by the board as security for borrowing funds necessary to finance maintenance, development and rehabilitation of roads.
Previously, the Act had not provided for funds to be set aside for the purposes of obtaining additional funding for roads. Further to this development, the National Assembly has approved the Kenya Roads Board (General) Rules, 2022.
The object of these rules shall be to facilitate and enforce the co-ordination of road maintenance, rehabilitation and development and ensure accountability, efficiency, transparency and effective application and utilisation of the KRB Fund.
The rules have, among others, detailed the duties of the board and the road agencies as well as functions of other requirements such as the submission and revision of annual roads programme, road inventory and condition survey, disbursement programme, sanctions and penalties.