NAIROBI, Kenya – The National Treasury is planning to securitize part of the road maintenance fuel levy in a bid to raise quick capital for stalled infrastructure projects, amid intensifying budget constraints and growing scrutiny from Parliament.
Appearing before the National Assembly’s Public Debt and Privatization Committee on Wednesday, Treasury Principal Secretary Chris Kiptoo said the government will channel up to 50 per cent of the Road Maintenance Levy Fund (RMLF) collections into a note issuance programme.
The arrangement involves selling a share of future revenues to investors in exchange for upfront funding, a model known as securitisation.
Kiptoo said proceeds from the scheme will help settle maturing obligations owed to road agencies to keep ongoing construction works on track.
“The proceeds of this securitisation shall be applied to settle maturing obligations of the road maintenance agencies as they fall due,” Kiptoo told the committee.
According to the PS, the Kenya Roads Board (KRB) will continue managing the securitisation through the sale of Sh5 per litre from the fuel levy to Oak Assetco SPV Ltd—a special purpose vehicle (SPV) created for the programme.
The SPV, he noted, operates under terms similar to a previous Sh175 billion facility arranged by the Eastern and Southern African Trade and Development Bank (TDB).
Under the current fuel levy of Sh12 per litre, the Treasury expects to raise Sh175 billion from Sh7, and an additional Sh125 billion from the extra Sh5 allocation—both targeting critical road infrastructure financing.
MPs Question Legality of Expanded Levy Use
But lawmakers pushed back, questioning the legality and transparency of the expanded levy framework.
Wajir East MP Aden Daud raised concerns over what he termed an arbitrary increase of the RMLF from the Sh7 per litre initially approved by Parliament.
“Why did you increase the RMLF by an extra Sh5 beyond what Parliament approved?” he asked.
Baringo North MP Joseph Makilap went further, demanding disclosure on borrowing terms under the existing Sh7 allocation, the institutions involved, and the interest rates charged.
In response, Lawrence Kibet, Director-General for Public Investment and Portfolio Management at the Treasury, defended the scheme, citing provisions in the Kenya Roads Board Act that empower the Board to implement financing strategies, including securitisation.
“Under the securitisation arrangements, public funds are pooled and transferred to a special purpose vehicle. The SPV issues asset-backed securities to investors, with payment derived from the cash flows of the transferred assets,” Kibet explained, adding that the government bears no repayment risk under the arrangement.
Securitisation to Extend Beyond Roads
Beyond roadworks, the Treasury is also considering expanding securitisation to other funds, including the Higher Education Loans Board (HELB), Hustler Fund, and Youth and Women Enterprise Funds, as part of a broader effort to ease the country’s debt burden.
“For the government of Kenya to reduce its debt burden and realise its development agenda, it will need solutions that help raise capital,” Kiptoo said.
He added that the government, alongside the Central Bank of Kenya and the Capital Markets Authority, is exploring market-based instruments to tap into diaspora remittances by securitising future inflows.
In a related reform, the Treasury is also rolling out a Single Treasury Account (STA), beginning in the 2025/26 financial year.
The phased implementation will cover ministries and agencies, then county governments, and later state corporations and SAGAs.
The STA aims to improve transparency, reduce borrowing costs, and consolidate fragmented public finances.
Despite the ambitious plans, the Treasury is yet to provide a breakdown of specific road projects expected to benefit from the securitised funds.
Kiptoo and his team are expected to return to Parliament next week with further details on the financing plan.
