The State has adopted a new law in the finance act 2022 allowing it to use half of the proceeds of a tax on fuel imports to secure loans for the maintenance, development, and rehabilitation of roads in the country.
The newly signed Finance Act 2022 has changed Section 32A of the Kenya Roads Board Act,1999, allowing the Kenya Roads Board (KRB) to set aside half of fuel tax collections through the Road Maintenance Levy Fund (RMLF) to secure loans through options such as bonds to finance road development projects.
“Section 6 of the Kenya Roads Board Act,1999 is amended in sub-section 2 by deleting paragraph c and replacing it with the following new paragraph – manage the funds and allocate monies from the fund in the following manner; 50 percent of the funds shall be allocated in accordance with paragraph (d) and fifty percent of the fund shall be allocated for purposes of section32A (2)” the Finance Act 2022 reads in part.
The changes follow recommendations by the Transport Committee of the National Assembly that the board is allowed to tap the RMLF to help “unlock” the issuance of road bonds.
Kenya’s road sector presently has an estimated funding gap of Sh590 billion for repairing its run-down network, forcing the State to go for options such as bonds to bridge the deficit.
Read also; Government Raises Revenue Limit in New Finance Act.
