How shall we collect road maintenance levy from electric vehicles?

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

17 September 2023

 

During the recently concluded Africa Climate Summit, there was a lot of excitement about the electric vehicles (EVs) that are set to be assembled in Kenya. Even after the increment in the price of electricity three months ago, the energy cost of an electric car remains far below that of a petrol or diesel one.

 The newly unveiled vehicle has a 17kWh battery that can drive for about 200km. At the current price of about Sh32 per kWh, this works to a total of Sh544 to go 200km. In other words, it costs just Sh2.72 per km. An equivalent petrol-powered car, say, the 650cc Suzuki Alto runs for about 30km on a litre of petrol. At current prices, this is Sh211 for 30km; or Sh7.03 per kilometre.

Nevertheless, there is one issue that we must start thinking about as the world moves closer to fully electrifying motor vehicle. How are we going to get money to maintain the roads? Currently, Kenyans pay Sh18 per litre of fuel for the Road Maintenance Levy of Fuel (RMLF) which comes to a total of about Sh80 billion annually. Where will this money come from?

I see three sources: [1] collect it at the EV charging station, [2] charge an annual road licence fee on EVs, and [3] put an upfront levy on the cost of the vehicle

The main challenge of the first option is that most EVs can be charged at home. So, collection of the charging levy becomes impossible. Unless we put on the over all cost of electricity. Kenya consumes about 13 billion kWh of electricity per year. To collect Sh80B roads maintenance funds from this would mean adding about Sh6 per kWh on all consumers of electricity whether or not they are using it to charge cars.

The second option requires an estimate on the volume of fuel a typical car consumes in one year. Over the last two years, I have consumed 2,805 litres, that is, about 1,400L per year. Therefore, at Sh18 per litre, I contribute about Sh25,000 annually to the RMLF. This is would be the typical amount to be paid by users EVs.

Alternatively, this amount can be collected upfront when the vehicle is purchased. To do that, we need to estimate the typical lifespan of the EV. If it is, say, 20 years, then we charge a flat Sh500,000 at the point of first purchase on all EVs regardless of size.

 
     
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