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Economy

Roads agency builds Sh20bn fund for new toll roads plan

A billboard erected by Kenha on February 10, 2016 along the Southern Bypass near the Langata road overpass indicating the putting up of a Toll Station on the highway. PHOTO | SALATON NJAU
A billboard erected by Kenha on February 10, 2016 along the Southern Bypass near the Langata road overpass indicating the putting up of a Toll Station on the highway. PHOTO | SALATON NJAU 

The Roads Annuity Fund created two years ago to provide capital for the development and maintenance of new roads has accumulated Sh20 billion.

The director of the Treasury’s public private partnerships (PPPs) unit, Stanley Kamau, said on Tuesday the fund — set up from the fuel levy charged on motorists — will be used to attract private investors in joint ventures to build and maintain new roads.

Data from Kenya Roads Board show that the government collected Sh51 billion fuel levy in the year to June 2016 compared to Sh32.1 billion it received in 2014/15 financial year.

The amount was Sh18.9 billion more last year following an increase in fuel levy by Sh3 per litre, indicating the heavy burden that taxpayers continue to shoulder to maintain roads.

On Tuesday Mr Kamau signalled that the government would soon implement a controversial road tolling programme that will see the State introduce charges on some major roads under the public-private sector partnership.

He disclosed that the tolling policy has now been approved by the Cabinet with only “a few additional steps” required to prepare for implementation.

“One of the remaining steps is to extend the consultation to the public and convey to them the benefits of these projects” said Mr Kamau.

Under the planned build operate transfer-toll model, a major shift from the traditional road development financing models such as the engineering, procurement and construction (EPC) model, where the government would invite bids from private players and meet all procurement costs, the developer will construct and maintain the road and thereafter recover the construction costs by collecting toll proceeds.

Under the plan private players will be enlisted to build roads and levy charges to recover their costs and some return on their investment.

Infrastructure ministry officials said last November under the plan user fees would be introduced on Thika Road, the Southern Bypass, the Nairobi-Mombasa highway, the second Nyali Bridge and the Nairobi-Nakuru-Mau Summit highway.

Human and consumer rights groups have slammed the plan saying since motorists pay normal taxes and the fuel levy, compelling them to pay a toll for road use, this would amount to the government engaging in multiple taxation.

Lack of introduction of toll-free alternatives by Kenya for those who do not want to pay as is global practice has heightened opposition to the plan.

Tolling of roads has — in countries where it is in use — raised weighty human rights, equity and fairness issues that have been canvassed in courts of law, causing long delays in execution.

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