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Economy

Why tolling is the way to go in Kenya infrastructure modernisation plan

Infrastructure principal secretary John Mosonik. PHOTO | FILE
Infrastructure principal secretary John Mosonik. PHOTO | FILE 

The government plans to re-introduce toll charges (user fees) on major roads towards the end of next year, arguing that the current tax collections are insufficient for road maintenance and expansion.

The tolling system was phased out in the 1980s and replaced with road maintenance levy that is charged at the fuel pump.

The idea of re-introducing the road user fee while retaining the fuel levy has been sharply criticised as amounting double taxation since motorists already pay Sh18 for every litre of petrol and diesel which goes towards road maintenance.

Five roads have been earmarked for tolling, including Thika Road, the Southern Bypass, the Nairobi-Mombasa highway, the second Nyali Bridge and the Nairobi-Nakuru-Mau Summit highway.

The government plans to implement the tolling in partnership with private investors who will finance the expansion and maintenance of the roads and later charge user fees to recoup their investment and make a profit.

The Business Daily had a chat with Infrastructure principal secretary John Mosonik on the issue:

Why do you want to introduce toll charges on major roads?

The main reason is to generate cash needed to modernise our roads faster even with shortfalls in our budget.

This year, our budgetary allocation for all infrastructure projects is about Sh140 billion against an annual demand of Sh400 billion.

With this in mind, notice that only 14,000 kilometres or eight per cent of our total road network is tarmacked since independence (in 1963). (Kenya’s road network is 161,000 km).

Cash shortfall has been a major impediment over the years. This has now prompted us to explore various aspects of financing to accelerate development of new roads and upgrade of existing ones.

The government in July raised the fuel levy by Sh6 to Sh18 per litre of petrol and diesel to address the cash shortfall in roads upgrade. Is the additional toll fee justified?

First, the fuel levy is strictly for road maintenance. It does not generate new capital for development of new roads. In any case, even if we were to put it to this use, it would not be enough. 

The total revenue coming from the fuel levy is only Sh50 billion per year, far below the Sh400 billion needed.

If we maintain the status quo, then we are not going to expand our roads in future and this will ultimately slow down our activity and cool growth.

Remember our neighbours are increasingly becoming bullish on infrastructure spending and as East Africa’s largest economy, we cannot afford to stand by and watch.

You have indicated that the tolling will start next year on Thika Road and Southern Bypass ahead of other earmarked roads that are set for expansion before their tolling kicks in.

But Thika Road and the bypass are taxpayer-funded and are not set for expansion. Isn’t this double pay on Kenyans?

Notice that Thika Superhighway, which was completed four years ago, is already flooded with cars, so we need to plan for the future.

We have to think ahead and that is why we are bringing private investors on board to make funds and expertise available for future upgrade and expansion.

Thika Road will certainly be expanded in future. We also plan to extend the tolls on Thika Road past Kenol up to Isiolo.

In the short term, however, the contract for Thika Road will involve minor additional works like putting up the remaining footbridges, maintenance and management to ensure traffic flows freely.

Remember we are not the only country doing this. South Africa and Nigeria have tolling while our neighbour Uganda is moving towards it on the Kampala-Jinja road. Tolling is actually the best avenue through which we can expand our network faster and keep it in top-notch condition.

In 2014, Sinhydro Joint Venture was awarded a Sh1.1 billion contract to maintain Thika Road for two years. What’s its scorecard two years on?

It was a performance-based contract and the company has done a fairly good job, as you can see the road is in good condition. But we now plan to scale this up with the tolling.

What do motorists stand to gain from tolling?

On a personal level, motorists will spend less time on the roads and the ride will be comfortable.  For instance, it currently takes about four hours on the Nairobi-Nakuru highway.

This is set to drop to one and a half hours once we complete expanding it into multiple lanes. Shorter travel time means fuel saving.

The creation of toll roads will also decongest toll-free alternatives, making it a win-win for users of either of the stretches. With this, we expect increased activity and lower transport costs that should cascade down to consumers, boost demand and further spur production.

Will the roads under tolling be allocated cash from the fuel levy again?

Roads under tolling will not be allocated funds for maintenance from the fuel levy. Thika Road, for instance, has been receiving Sh500 million per year from the proceeds of fuel levy for maintenance but this will be cut off when tolling kicks in. These funds will now be channelled to maintenance of other roads.

How far are you with drafting the tolling policy?

Discussion on the draft policy has been finalised and we expect it to be ready within the next three or four months. You know without the policy, the tolling plan cannot take effect.

The investors we plan to work with should demonstrate their capability to handle the contracts, financially and technically.

We will invite bids for the same next year. We expect the new road projects to have toll fees for 30 years as the private investors operate them to recover their investments before handing over to the State.

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