State to audit the impact of electric cars on fuel tax revenue

A man plugs in an electric car for charging

A man  plugs in an electric car at an EV charging station in Nairobi. The push toward electric vehicles for transport has rattled the State amid fears of cuts in fuel tax collections used to finance road maintenance in the country.

Photo credit: File | Nation Media Group

The push toward electric vehicles for transport has rattled the State amid fears of cuts in fuel tax collections used to finance road maintenance in the country.

The State maintains the country’s road network through the Kenya Roads Board Fund (KRBF), which is mainly financed through the proceeds of a Road Maintenance Levy Fund (RMLF) currently charged at Sh18 per litre of petrol and diesel -- as well as transit tolls.

The KRBF is distributed among the road agencies charged with the maintenance including Kenya National Highway Authority (KeNHA), Kenya Urban Roads Authority (Kura), Kenya Rural Roads Authority (KeRRA), and Kenya Wildlife Services (KWS), and the county governments.

The RMLF collections are projected at Sh84 billion for the year ending in June—signifying the impact of the collections on the operations of KeNHA, Kura, KeRRA, KWS, and the counties governments.

Sustainability concern

With the push toward electric cars getting stronger, the State through the Kenya Roads Board (KRB) has now invited an audit on the impact the shift would have on RMLF collections.

KRB Director-General Rashid Mohamed said consultants would undertake a study on the economic impact of electric mobility on the sustainability of the RMLF.

Several private firms and State ones such as the Kenya Electricity Generating Company (KenGen) have stepped up preparations for a shift to e-mobility. KenGen has, for example, already installed an electric vehicle charging station in Nairobi and revealed that it will ship in electric cars to test the station.

Electric bus

Barely two months ago, Kenya rolled out the first electric bus as the shift to e-mobility gathered pace. Kenyan electric vehicle start-up BasiGo introduced a Sh5 million passenger electric bus in March in anticipation of increased demand for environmentally friendly transport.

The 25-seater bus is designed by the world’s largest manufacturer of electric buses BYD Automotive and has a 250-kilometre range with a recharging period of fewer than four hours. Utility firm, Kenya Power said it has enough electricity to charge 50,000 buses and two million motorcycles.

A strong shift toward e-mobility could have an impact on the RMLF collections and hurt operations in the road sector which has an estimated funding gap of Sh590 billion shillings for rehabilitation of the country’s dilapidated network.


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