Sh7 fuel levy used to pay contractors, not raise prices – Treasury CS John Mbadi

Treasury CS John Mbadi before the National Assembly’s Committee on Delegated Legislation at Bunge Towers, Nairobi on July 16, 2025. (Photo: National Assembly)

By Maureen Kinyanjui
Thursday, July 17, 2025

CS John Mbadi stressed that the decision was deliberate and well thought out, countering claims that the additional charges had increased fuel prices. He also insisted the core levy of Sh18 remains intact and continues to be directed toward general road maintenance.

The National Treasury has defended the securitisation of part of the Road Maintenance Levy, with Cabinet Secretary John Mbadi maintaining that the additional Sh7 charged on every litre of fuel was used to unlock a Sh175 billion loan meant to revive stalled road projects across the country.

Speaking in Nairobi during the release of a petroleum sector report, Mbadi said the move was lawful and intended to clear pending debts owed to road contractors who had abandoned projects due to non-payment. He said the arrangement had already raised more than Sh60 billion, allowing many contractors to return to work.

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“The levy was initially at Sh18 per litre. This was raised to Sh25. We spent the additional Sh7 to secure a Sh175 billion loan to help us clear some pending bills, especially in the road construction sector,” Mbadi said.

Mbadi stressed that the decision was deliberate and well thought out, countering claims that the additional charges had increased fuel prices. He also insisted the core levy of Sh18 remains intact and continues to be directed toward general road maintenance.

“We had a choice, either continue pouring that money into murram roads that are swept away every rainy season, or use it to revive major road projects. Contractors had downed their tools because we owed them about Sh130 billion,” Mbadi stated.

He added that once combined with the regular annual infrastructure budget of Sh57 billion, the total amount would be enough to settle all certified contractor debts in under three years.

“In the current fiscal year, if we use even half of that and add it to our regular allocation, we will have about Sh120 billion, enough to settle outstanding bills. If we do the same next year, all ongoing road works will be completed,” he said.

Mbadi dismissed claims made by Kiharu MP Ndindi Nyoro that the plan lacked transparency and had bypassed Parliament. Without naming him directly, Mbadi accused critics of misleading the public and protecting corrupt interests that had for years profited from exaggerated road construction costs.

“There is nothing, nothing at all secret about securitisation. Everybody knows it. Where does he live if he does not know we were securitising this money? We will continue doing it, and we have no apologies to make,” he said.

He further revealed that the government was considering securing even more funds by adding Sh5 more to the current levy, noting that this would help eliminate wasteful short-term repairs and deal a blow to corruption in road projects.

“We have a proposal to get an additional Sh5 from the kitty to add on Sh7 to secure more funding to pay pending bills and ensure those roads are well maintained, away from seasonal repairs that have proved wasteful and an avenue for corruption,” he said.

Mbadi expressed concern over inflated costs in the construction of gravel roads, accusing some contractors of making excessive profits.

“It is absurd when a kilometre of murram road costs Sh10 million. Contractors make about 40 per cent in profits. The money is paid immediately,” he said.

He was confident that the new financing model would help the government complete all ongoing projects and permanently address long-standing challenges in the roads sector.