The government is proposing to reduce the allocation of the Road Annuity Fund, which is funded from money collected from the Road Maintenance Levy.
In the proposed Road Maintenance Levy Amendment Bill, 2026, tabled by Treasury Cabinet Secretary John Mbadi in May 2025, the government aims to reduce the allocation from Ksh3 per litre to Ksh1.50 per litre of fuel.
Currently, the government collects KSh25 for every litre of fuel bought by Kenyans to go towards the Road Maintenance Levy.
Out of this, KSh3 has been going towards the road annuity programme for the construction of roads.
"The Bill amends section 3 of the Road Maintenance Levy Fund to reduce the allocation to annuity fund collections from Ksh3 per litre to Ksh1.50 per litre of fuel," read the amendment bill in part.
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Section 3 reads: "Out of the levy collected under subsection (1) there shall be paid an amount of three shillings per litre of petroleum sold into the Road Annuity Fund established under the Public Finance Management Act (Cap. 412A) to fund the construction of roads under the Road Annuity Programme and similar roads approved by the National Assembly."
The Road Maintenance Levy was introduced through an Act of Parliament in 1993 to fund the development of roads.
The funds are collected by the Kenya Roads Board, which later distributes the funds to other road agencies such as the Kenya National Highways Authority (KeNHA), Kenya Urban Roads Authority (KURA) and Kenya Rural Roads Authority (KeRRA).
Over the years, the government has been increasing the rate of the RML, given the tight fiscal space in the country such as low revenue collections and the push to reduce borrowing,given the current outstanding debt.
For instance, at the beginning of the 2024/2025 Financial Year, the RML was increased from Ksh18 per litre to Ksh25, an increase of Ksh7.
Notably, the government securitised Ksh12 of the RML to get funding from banks to pay contractors for projects that had stalled.
Initially, the government had securitised Ksh 7 to raise Ksh 175 billion, but owing to the need for more funds, the government opted to securitise an additional Ksh 5.
While appearing before the National Assembly's Transport & Infrastructure Committee in November 2025, Transport Cabinet Secretary Davis Chirchir indicated that the additional securitisation would lead to the reduction of the allocation of the road annuity fund by half.
The Kenya Kwanza administration initiated the securitisation of the Road Maintenance Levy (RML) as a strategic intervention to address the massive infrastructure funding shortfalls.
The government’s annual budgetary allocation for road works averages Ksh55 billion, while the current value of outstanding works for already contracted projects stands at Ksh890 billion.
By leveraging the RML through securitisation, the government aims to bridge this significant funding gap and accelerate the completion of stalled projects that would otherwise take years to fund through the budget.
