Murkomen's last Act burdens Kenyans with high pump prices

When former Cabinet Secretary for Transport Kipchumba Murkomen addressed members of the press over the state of roads across the country on June 10, 2024. [Robert Tomno, Standard]

On his last day as cabinet secretary for Transport, Kipchumba Murkomen handed Kenyans a source of pain at the pump - one that will see the cost of essential items remain high or even go up.

Murkomen, who was fired by President William Ruto alongside his other cabinet secretaries on Thursday, had a day earlier gazetted the Road Maintenance Levy Fund (Imposition of Levy) Order 2024.

The gazette notice increased the road levy by 39 per cent to Sh25 from Sh18 per litre of petrol and diesel. It became effective on July 15, when the pump prices for July-August were effected. 

It had the immediate effect of reducing the margin by which fuel prices were reduced, coming down by Sh1 for a litre of super petrol and Sh1.30 per litre of diesel. 

“This Order shall come into effect on the 15th of July, 2024,” read the notice by Murkomen.

The July 10 gazette notice was despite an assurance by Murkomen on July 8, 2024, that the government would not increase the levy, following the public outcry and would instead look for alternative sources of funds to finance road maintenance.

At a public participation forum on Monday, the then CS had told Kenyans that the government had heard their cries and would explore what to do to raise road maintenance funds. “We will explore ways of getting the money needed to maintain the roads without raising the cost of living through an increase in fuel prices,” Murkomen had said. 

The statement by the former CS has been interpreted as the government being mischievous. While the State hiked the levy, it tinkered with the pump price and the immediate impact did not have the effect of a higher pump price.

This was partly on account of the state subsidising retail prices as well as lower landed costs for the petroleum products imported last month.  Kenyans have since protested the increase in the levy.

The Motorists Association of Kenya opposed the hike, noting that the state should drop it and reduce the cost of fuel by Sh7. It said the hike was despite opposition by a majority of Kenyans who had given views during the public participation. The levy had the immediate impact of raising the fraction of taxes on retail prices of fuel. At Sh82.74, taxes and levies now account for 44 per cent of the pump price of super petrol at Sh188.84.

It is the same case with diesel where taxes now account for 40 per cent, at Sh69.61 of the Sh171.60 per litre retail cost.

The Road Maintenance Levy collected at the pump is administered by the Kenya Roads Board (KRB) and shared among the four road agencies – the Kenya National Highways Authority (Kenha), the Kenya Urban Roads Authority (Kura), the Kenya Rural Roads Authority (Kerra) and the Kenya Wildlife Service (KWS) – for the repair of different roads. 

Hiking the road levy was initially recommended as a trade-off for dropping the 2.5 per cent motor vehicle tax that had been proposed in the Finance Bill 2024 that has since been withdrawn.

In proposing a higher levy, KRB noted that the current collections at Sh84 billion per year are not adequate to meet annual road maintenance requirements at Sh150 billion.

It noted that factors such as inflation and devaluation of the shilling have also continued to pile pressure on the funds for road maintenance. “These factors have resulted in a maintenance backlog of Sh724 billion,” said KRB.