Treasury on the spot Over Controversial Plan to Raise Road Levy » Capital News

NAIROBI, Kenya, Jun 5 – The National Treasury is facing sharp criticism from Parliament over a secretive plan to raise the Road Maintenance Levy by an additional Sh5 per litre of fuel to back a controversial securitisation deal, a move lawmakers say bypasses legal and legislative oversight.

Appearing before the Public Debt and Budget Committee, Treasury Principal Secretary Dr. Chris Kiptoo was pressed to explain how the Ministry intends to increase the levy from Sh25 to Sh30 without parliamentary approval.

Legislators accused the Treasury of circumventing the law in a bid to securitise fuel tax revenues to finance road construction and offset ballooning pending bills.

The committee was informed that the proposed increment is part of a broader plan to package future revenues into a Special Purpose Vehicle (SPV) under a “true-sale” securitisation model a financing structure that would allow the government to receive upfront funding by selling future levy proceeds to investors.

“This is a constitutional overstep.The Treasury has no legal authority to reallocate or securitise public levies without express parliamentary sanction. This is a blatant violation of the Public Finance Management Act,”said Baringo North MP John Makilap.

Kiptoo defended the securitisation strategy as a stopgap measure to revive stalled infrastructure projects and settle long-standing contractor claims, he conceded that Parliament had yet to formally approve the move.

“We sought Cabinet approval to securitise the levy in order to unlock liquidity for contractors,” Kiptoo told the committee.

“The proposal includes raising the levy to Sh30 per litre with Sh12 ring-fenced but we are still subject to parliamentary processes.”

MPs, however, rejected the explanation, accusing the Treasury of treating Parliament as an afterthought and converting funds already appropriated for specific road agencies including KeRRA and KenHA into a debt servicing mechanism.

“You cannot securitise funds already earmarked for development without Parliament’s knowledge,” said Kinangop MP Zachari Kwenya.

“This turns an essential development fund into a financial liability, and that’s not just irregular it’s reckless.”

The committee raised alarm over a reported Sh270 billion securitisation deal allegedly signed with undisclosed financial institutions.

Lawmakers demanded full disclosure of the terms, interest rates, and participating entities warning that the arrangement could further compound debt burden.

Lawrence Kibet, Director of Public Investments and Portfolio Management at the Treasury, was asked to provide legal documentation and financial details of the SPV arrangement. MPs also questioned who would bear responsibility if the Kenya Roads Board the statutory body overseeing the levy were unable to honour its commitments.

“The core issue is legality.Securitising a public levy without parliamentary oversight sets a dangerous precedent and undermines constitutional accountability,”said Kandara MP Chege Njuguna.

With over Sh800 billion in pending road contracts and mounting concern over Kenya’s public debt trajectory, the committee urged caution.

Lawmakers warned that the lack of transparency in debt-backed financing models like securitisation could push the country toward a financial crisis.

The committee has directed the Treasury to return with a comprehensive report outlining the legal framework, financial terms, and institutional approvals surrounding the deal. It also issued a strong warning against implementing any increase in the road levy without a formal amendment to the relevant statutes.

“This is not just about numbers it’s about integrity in public finance.If we fail to assert the law here, we risk normalizing fiscal mismanagement and endangering Kenya’s economic future,”said Wajir East MP Aden Daudi.