MEPs want back tolls on roads and bridges

economy

MEPs want back tolls on roads and bridges


Ongoing construction of the Nairobi Expressway along the Uhuru Highway. PHOTO | DIANA NGILA | NMG

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Summary

  • The National Assembly’s Delegated Legislation Committee last week approved the 2021 Public Finance Management (National Road Toll Fund) Regulations and urged all MPs to pass the proposed legislation.
  • The Public Finance Management (National Roads Toll Fund) Regulations 2021 aim to establish the National Roads Toll Fund.
  • The Act authorizes the Secretary of Transportation to declare any road or portion thereof, including a bridge or tunnel on a public road, a toll road.

Motorists will pay tolls on both new and existing roads if MPs pass legislation paving the way for the introduction of tolls on major roads, bridges and tunnels.

The National Assembly’s Delegated Legislation Committee last week approved the 2021 Public Finance Management (National Road Toll Fund) Regulations and urged all MPs to pass the proposed legislation.

The Public Finance Management (National Roads Toll Fund) Regulations 2021 aim to establish the National Roads Toll Fund.

The regulations establishing the National Roads Toll Fund aim to implement the Public Roads Toll Act, Cap 407, which regulates the collection of tolls on major national highways.

The Act authorizes the Secretary of Transportation to declare any road or portion thereof, including a bridge or tunnel on a public road, a toll road.

The Ministry of Finance told Parliament that the toll will be collected on roads where there is heavy traffic to achieve reasonable tolls such as Thika Road and Jogoo Road.

Previously, it had been expected that the state would introduce tolls on infrastructure built with private investment.

The government had initiated several Public Private Partnership (PPP) projects to build roads, power plants and housing. There was no value.

PPPs have been touted as a valuable way to finance new roads, airports, seaports, railroads and power plants across Africa, a continent grappling with creaky infrastructure.

“The decision on whether and how a road will be subject to a toll will be independent of decisions on how that road will be financed, built, operated and maintained,” the Treasury Department told Parliament.

“This means that both new (greenfield) and existing roads (brownfield) can be subject to toll schemes, always provided that these are both economically and financially feasible and that their social and environmental impacts are proven to be sustainable,” the Treasury added

The regulations set the course for the introduction of fees in the new fiscal year from July 1 on federal roads and motorways.

The list of highways where motorists may soon have to pay includes Nairobi-Nakuru, Nairobi-Mombasa, Nairobi-Thika and Nairobi’s Southern Bypass.

In Nairobi, streets such as Jogoo, Lang’ata and Ngong could be targeted.

If introduced, the new charges, which amount to a new tax tier, will mean that motorists will pay tolls in addition to fuel levies, even though roads are funded from tax revenues. Instead of tolls, road maintenance and fuel taxes were also introduced.

Road pricing was originally introduced in Kenya in the late 1980s but was abolished in the mid 1990s in favor of the Roads Maintenance Levy to eliminate corruption at tollbooths. The tax is currently Sh 18 per liter for petrol and diesel.

Road tolls were conceived in developed countries as a form of taxation that would allow governments to recoup the cost of building and maintaining roads given the huge increase in vehicle numbers.

The system allows a private entity that has built a road to collect a fee to recoup its investment before eventually turning the highway over to the state.

Kenya has started construction of a double-decker road linking Jomo Kenyatta International Airport to the Nairobi-Nakuru highway, with private investment from Chinese firm China Road and Bridge Construction (CRBC).

According to the Kenya National Highways Authority (KeNHA), the project will be funded under the public-private partnership (PPP) model.

Motorists using the road that connects Mlolongo to the Nairobi-Nakuru highway via Jomo Kenyatta International Airport (JKIA) pay between Sh100 and Sh1,550, depending on the size of the car and the distance travelled.

Rates are based on the dollar trading at Sh103.79 and are revised on the basis of inflation and the shilling to dollar rate which is currently at Sh114.13.

This means that the toll fee is based on dollars and protects the Chinese operator from exchange rate losses.

The Chinese company is expected to make an estimated profit of Sh106.8 billion over the 27 years that it owns the double-decker road.

The special toll fund is used to finance the maintenance of the highways and the repayment of other roads built by private contractors, but does not generate enough funds to repay the investors due to the small number of users.

However, the fee, also known as a usage fee, has faced many hurdles in the past, including demands that the government provide alternative routes for those unable to pay or those unwilling to use the new roads.

Kenya is keen to keep up the pace of spending on new infrastructure with funds from private lenders while reducing borrowing and the budget deficit.

Alongside the Nairobi Expressway, the Rironi-Nakuru-Mau Summit route will soon become a reality after the government finalized a PPP with the French consortium of companies to build the 233 km motorway at a cost of ATS 160 billion.

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