Can road levy on fuel maintain Thika highway?

 By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

05 May 2013

Debate on the proposal to introduce tolls on the Thika Highway is centred on one key policy question: since motorists are already paying road maintenance levy on fuel, wouldn’t collection of toll fees be tantamount to double taxation? While the policy makers sort that one out, a second question must be tackled: is the money collected through the fuel levy enough to maintain our roads properly – zero potholes, lighting, signage etc?

Before proceeding, it must be noted that, while road tolls can be a good idea for ensuring that the maintenance funds are allocated proportionately to the roads according to usage, the logistics of collecting the money are horrendous! It requires a large number of personnel and capital investment booths and offices. In comparison, the fuel levy needs just one guy sitting with a flow meter at Kenya Pipeline Company’s pump number one in Mombasa!

How much money are we talking about anyway? The levy is Sh9 per litre. Therefore, all we need to know is the volume consumed per year and voila, the answer pops up!

Data from the Petroleum Institute of East Africa shows the following sales volumes for 2012: 897 million litres of super petrol; 1.883 billion litres of diesel; and 14 million litres of regular petrol. This makes a total of 2.794 billion litres of fuel.

At Sh9 per litre, the total collection of road maintenance levy for 2012 should come to about Sh25 billion (simple 9 x 2.794 billion). Now this is not an audit, but I thought it would be interesting to compare that figure to the actual collection for the same period. Unfortunately, that information is not readily available; not at the ministry of roads, nor the Kenya Roads Board websites.

Nevertheless, I did get some disbursement data from the Kenya Roads Board. In the seven months July 2011 and January 2012, a total Sh15.5 billion was disbursed to various road maintenance agencies. Since this sum included collections from international transit tolls and agricultural cess funds, I conclude that it is in fairly good agreement with my expectation of about Sh25 billion.

Is this money enough to maintain the roads?

Last week, we saw that the estimated cost of maintaining the Thika Highway is about Sh1.9 billion per year. Can the fuel consumed by all the vehicles on this highway raise this money through the road maintenance levy?

We estimated that about 40 million vehicles use the highway each year and each travels about 28km out of the 41km total distance – not every one goes the full length! Now what is the average consumption of these vehicles?

Some will do 15km/L while others will struggle to reach 5km/L. Therefore, 10km/L may be a good estimate. Thus on the 28km journey, each vehicle consumes just 2.8L of fuel – on average.

Thus the levy collected per vehicle is about Sh71 (Sh9 x 2.5L). But there are 40 million vehicles; so the total annual collection for this highway is approximately Sh2.8 billion (Sh71 x 40 million vehicles).

Therefore, the answer is yes: the fuel levy is enough to maintain the highway. All that is needed is a proper allocation based on usage.