Double taxation looms in plan to privatise Kenya’s major highways

Motorists will soon start paying user fees on five major highways as Kenya moves to introduce tolling, setting up millions of commuters for double taxation.

Infrastructure ministry officials Monday said plans are underway to introduce user fees on Thika Road, the Southern Bypass, the Nairobi-Mombasa highway, the second Nyali Bridge and the Nairobi-Nakuru-Mau Summit highway.

The move will add a new tax burden on motorists who already pay for the building and maintenance of roads through a levy that is included in petroleum pump prices. 

No toll-free alternatives will be provided for those who do not want to pay as is global practice — setting the stage for battles with human and consumer rights groups.

The Kenya National Highways Authority (KeNHA) director-general, Peter Mundinia, said the charges would be introduced in partnership with private companies to unlock the Sh380 billion that is needed to expand and maintain roads every year.

Under the Public Private Partnership (PPP) model announced Monday, the roads will be handed over to private investors to expand and maintain for 30 years during which they will charge user fees to recoup their investment.

Mr Mundinia defended the move, arguing that fuel levy as currently charged is barely enough for road maintenance and must be backed up by tolling to finance construction of new roads.

“If we want to expand we either go to the private sector [toll] because even if we think of going to development partners, there is a limit to how much we can borrow,” Mr Mundinia said.

Infrastructure Principal Secretary John Mosonik said the amounts chargeable in toll fees have yet to be decided because the policy still needs to be subjected to public scrutiny, Cabinet deliberation and parliamentary approval.

“If you were to tell somebody to pay Sh70 (to use Southern bypass), rather than spending, say Sh200 (on fuel) along Uhuru Highway they will choose the former,” he said.

Double taxation

The Consumer Federation of Kenya (Cofek) through its secretary-general, Stephen Mutoro, said it will oppose the plan as it amounts to double taxation and a breach of the principles of fairness in government policy.

Mr Mutoro said charging user fees on some roads amounts to punishing people whose only crime will be to live or do business in certain parts of the country.

“How do you toll and not be seen to discriminate? You cannot close off a certain road because if I cannot afford the user fee, it means I have to avoid the road. That has got legal and social consequences,” Mr Mutoro said.

(Read: Elevated toll highway not the better option for Nairobi)

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.

It has been successfully argued in many jurisdictions, including France, South Africa, and Columbia, that introducing tolls on major roads without providing viable toll­free alternatives amounts to a breach of citizens’ right to free movement.

It has also been argued that choosing to charge tolls on particular roads while leaving others amounts to discrimination of citizens based merely on where they live.

Kenyans have previously opposed tolling, arguing that they are already paying fuel heavy levy that was only increased this year to stand at Sh18 per litre of petrol or diesel.

About 42 per cent of the pump price on each litre of petrol and diesel currently goes to the State in taxes and the additional tolls are expected to further increase the cost of motoring. The tolls are expected to significantly increase the cost of commuting as public service vehicles pass on the additional charges to passengers in the form of higher fares.

KeNHA gave no timelines for the plan but there are indications that user fees could be introduced on Thika Road and Nairobi’s Southern bypass by end of next year.

The 184km Nairobi-Mau Summit road will be expanded to a dual carriageway from Rironi to the Kisumu turnoff on the Nakuru-Eldoret road.

The project is expected to cost Sh70 billion. Request for Proposals (RFP) for the project was expected to be published in Tuesday’s newspapers.

The 466km Nairobi-Mombasa highway will be similarly expanded in three lots. The total cost for building the new highway and rehabilitating the current one is estimated at Sh235 billion.

The contract for Thika Road involves minor additional works like putting up the remaining footbridges, maintenance and management of the road to ensure traffic flows freely. The contract will be for 10 years.

The second Nyali Bridge connecting Mombasa island and the mainland and the subsequent maintenance are estimated to cost Sh2 billion.

All the projects except Thika Road will have toll fees for 30 years as the private investors recover their investments.

Investor conference

An investor conference where over 300 local and international potential bidders have been invited is planned for Tuesday next week.

KeNHA said in a brief that “the meeting will provide a forum for local vs international, contractor vs financiers to network and form bidding consortia”.

A meeting of potential bidders for the Nairobi-Mau Summit project will be held the following day.

Kefa Seda, the KeNHA special projects manager, said the ministry is looking at three tolling methods.

The first is a manual toll collection system where a motorist stops at the tolling station, pays and moves.

The second is electronic tolling where one stops at the booth, scans a prepaid card and moves on with the journey.

The third method will see tags that can be electronically read placed on vehicles.

The tags are read by electronic devices mounted on gantries that cover the entire road as the vehicle passes underneath.

(Read: Why Macharia put brakes on KeNHA’s new roads toll bid)

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