CS Chirchir grilled over Sh10.52 billion fuel levy funds delay, new securitisation plan
Chirchir confirmed that the Cabinet had approved the additional securitisation to supplement exchequer allocations, noting that the government currently faces Sh890 billion in outstanding obligations for contracted road works.
Members of Parliament have put Transport Cabinet Secretary Davis Chirchir on the spot for delaying the disbursement of Sh10.52 billion in fuel levy funds, leaving constituency road projects at risk of stalling due to funding gaps.
Appearing before the National Assembly’s Departmental Committee on Transport and Infrastructure, Chirchir explained that the funds had been withheld partly in compliance with a High Court order and that the ministry has already released a portion, with the remaining Sh3.156 billion scheduled for disbursement by the end of the week.
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“The Ministry has since released part of these funds, leaving a balance of Sh3.156 billion still owed to both Kenya Rural Roads Authority (KeRRA) and Kenya Urban Roads Authority (KURA),” he told the committee.
He emphasised that the delay had not affected ongoing road projects and that the government plans to securitise an additional Sh5 per litre from the fuel levy to support continued construction works.
The Road Maintenance Levy, a Sh25 per litre tax collected by the Kenya Revenue Authority, funds road maintenance and development through the Road Maintenance Levy Fund (RMLF).
Managed by the Kenya Roads Board, the fund distributes resources to road agencies and increasingly, to county governments for targeted road projects.
Chirchir confirmed that the Cabinet had approved the additional securitisation to supplement exchequer allocations, noting that the government currently faces Sh890 billion in outstanding obligations for contracted road works.
“The government intends to securitise another Sh5 per litre of fuel to boost road construction, building on the success of the earlier Sh7 per litre securitisation programme,” he said.
The additional Sh5 per litre will be drawn from existing allocations: Sh1.50 per litre from a reduction in the Roads Annuity Fund, Sh1.0 per litre from the Kenya Roads Board allocation and Sh2.50 per litre from shareable revenue allocated to fuel levy agents under the existing legal framework.
The CS also provided an update on the initial Sh7 per litre securitisation, which raised Sh175 billion to settle pending bills by December 31, 2024. A bridge financing facility of Sh104 billion enabled the government to clear about 80 per cent of outstanding payments.
KeRRA and KeNHA received Sh51.16 billion and Sh44.23 billion, respectively, while KURA received Sh8.66 billion. Most affected contractors agreed to waive Sh7.5 billion in accrued interest from a total of Sh22 billion. Overall, 664 contracts out of 875 have had principal and interest arrears fully settled, representing 75 per cent of obligations.
The committee, chaired by Ndia MP George Kariuki, was acting on directives from the National Assembly Speaker Moses Wetang’ula, following concerns raised by Mandera North MP Abdullahi Bashir over discrepancies in KeRRA’s revised RMLF ceiling and delays in disbursements.
Chirchir acknowledged that an internal KeRRA communication contained erroneous figures, which have since been corrected.
“The true position is that the constituency proportionate allocation will be Sh52,106,315 and not the earlier internally communicated Sh36,645,793.02,” he said.
He explained that prior to securitisation, the allocation stood at Sh62,403,939, with a 17 per cent reduction applied after the adjustment.
Committee chair George Kariuki said a detailed report on the Ministry’s clarifications and the proposed securitisation will be tabled in Parliament for further consideration.
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