NAIROBI, Kenya – The recent government decision to raise the Road Maintenance Levy by Sh7 has ignited widespread anger among fuel consumers, with Public Service Vehicle (PSV) operators threatening protests.
The move comes despite the Energy and Petroleum Regulatory Authority (EPRA) slightly lowering fuel prices in its July 14 review, which many argue is insufficient in light of global price declines.
Despite EPRA’s reduction of petrol prices by Sh1, diesel by Sh1.50, and kerosene by Sh1.30, consumers in Nairobi are still paying Sh188.84 for a liter of petrol, Sh171.60 for diesel, and Sh161.75 for kerosene.
The price cuts were overshadowed by the Ministry of Transport’s decision to raise the Road Maintenance Levy from Sh18 to Sh25 per liter of petrol and diesel, effectively neutralizing the potential savings.
Global oil prices have fallen by 6% over the past four weeks, with the Central Bank reporting that Murban Oil prices declined from $88.64 per barrel in early June to $83.28 per barrel.
Despite this decline, the levy increase has prevented Kenyan consumers from benefiting fully from lower global oil prices.
The announcement has sparked outrage among the public and industry stakeholders.
On Friday, PSV operators issued a seven-day strike notice, demanding the immediate scrapping of the levy.
The Motorists Association of Kenya (MAK) condemned the hike as illegal and called for structural reforms to improve transparency and accountability in the sector.
“We, the undersigned, reject the illegal increase of the road maintenance levy,” Peter Murima, chairperson of MAK, stated.
He argued that the increase would generate an additional Sh140 million daily for the government, labeling it an “illegal levy.”
Oil and gas expert David Maundu criticized the government for denying Kenyans the opportunity to benefit from what could have been the cheapest fuel prices in over a year.
“Global fuel prices have been tanking and are expected to hit a two-year low in August. It is bad for the government to ignore public input which could have seen a liter of petrol retail close to Sh180,” Maundu said.
A senior official at the Kenya Association of Manufacturers (KAM) expressed concerns about the impact on production costs, noting that the levy denies manufacturers the competitive advantage of cheaper fuel enjoyed by their global counterparts.
Investment and economics analyst Stellar Swakei has called for the public participation report on the Road Maintenance Levy to be made public, highlighting the disparity between public input and government actions.
The Ministry of Transport has defended the increase, citing the need to support the maintenance of the country’s extensive road network.
The ministry aims to generate over Sh115 billion by June next year from the increased levy.
They argue that the levy has remained at Sh18 per liter since 2016, despite significant economic changes such as inflation and exchange rate fluctuations.
According to the ministry, the inflationary environment and the depreciation of the Kenyan shilling have impacted the cost of construction materials used in road maintenance.
They anticipate that the new levy rate will increase annual collections from Sh80 billion to Sh115 billion, which is slightly lower than an earlier proposal to set the levy at Sh28 per liter.
The Road Sector Investment Programme (RSIP) 2018-2022 highlights a maintenance backlog of Sh727 billion, up from Sh445 billion in 2018.
The annual requirement for road maintenance averages Sh157 billion, necessitating the increased levy.
