There was no announcement. But up it went and they have been collecting the money. The effective date was July this year—making motorists as well as other petrol and diesel users to cough more for roads than at any other point in the country’s history.
The Nation has learnt that the Roads Fund Administration (RFA)—since the beginning of the government financial year in July 2015—has been silently collecting more than double the road maintenance levy on petrol and diesel.
According to an official brief we have seen, which outlines four reform areas RFA is set to implement, the levy rate on petrol went up from K37 ($0.06) per litre to K60.34 ($0.09), representing an increase of 63.1 percent.
The levy on diesel, on the other hand, went up from K32 ($0.05) per litre to K74.82 ($0.12), a jump of 133 percent.
Treasury spokesperson Nations Msowoya last evening said Ministry of Finance was not aware of the levy increases. He referred the matter to RFA.
We could not get a response from RFA on Monday, although they promised to revert to The Nation “in due course”.
The revision came nearly seven months after the European Union (EU)—one of the major financiers in the roads sector—late last year asked the Malawi Government to take effective steps to increase funding for maintenance of the roads infrastructure in the country.
During the opening of the Sixth Joint Sector Review Meeting in Lilongwe last December, EU head of delegation Marchel Gerrmann noted with concern a 37 percent drop in the allocation for road infrastructure in the previous financial year.
Minister of Transport and Public Works Francis Kasaila conceded the reduced funding at the time, explaining that the dollar value of the road maintenance levy continued to dwindle in the face of the depreciating kwacha.
Malawi introduced road maintenance levy in the petroleum price build-up to create a basket of funds for construction of new roads and maintenance of existing roads. Under the arrangement, motorists pay for road maintenance through every litre they buy from the pump.
However, under the reforms RFA is set to implement, the agency plans to introduce extra sources of revenue in form of road toll fees and roads fund bonds.
RFA also wants to automate payment systems and introduce an automated fuel levy adjustment system in form of a percentage.
On the road tolls, RFA says the objective is to diversify and provide an alternative source of raising revenue for the roads fund apart from the fuel levy and international transit fees from foreign registered trucks.
The document says the roads fund bonds, on the other hand, seeks to raise financing from the market and use the resources for specific projects, especially in periodic maintenance.
Reads the document in part: “Instead of routine works such as spot repairs and pothole patching, our implementing agent, the Roads Authority [RA], would identify specific roads where specific road maintenance works would be carried out such as road widening of shoulders and resurfacing.”
RFA says it is already in discussions with financial institutions and also currently waiting for the RA to undertake the procurement process.
The Fund also says the objective of having fuel levy as a percentage of fuel price and not an absolute figure is to ensure that when the price changes, automatically the fuel levy changes accordingly.
In an earlier interview with The Nation, RFA procurement and public relations officer Masauko Mngwaluko said 20 toll gates are set to be erected on some of the major tarmac roads in the country. The projection, he said, is that about K7 billion in extra non-tax revenue would be raised.
Currently, RFA raises about K15 billion annually from the road levy it collects from every litre of petrol and diesel through the Malawi Energy Regulatory Authority (Mera) and the international transit fees charged on foreign-registered trucks using Malawi’s road network.
Roads are the main mode of transport in Malawi, handling over 70 percent of internal freight and 99 percent of passenger traffic, according to RA.
The sub-sector also handles more than 90 percent of international freight and passenger traffic; signalling its criticality to the transport sector and the economy. n