Kenya, July 20 -- A new report has exposed that Kenya's government quietly securitised Sh7 from every litre of fuel to raise Sh175 billion, borrowing against future fuel levy taxes without parliamentary approval, triggering widespread outrage over hidden debt.
According to Kiharu MP Ndindi Nyoro, this off-book loan, used to clear pending bills for over 580 stalled road projects, bypasses legal oversight and burdens taxpayers with higher fuel prices.
The move, defended by Roads and Transport Cabinet Secretary Davis Chirchir as a transparent and debt-free financing model, has raised concerns about fiscal sovereignty and accountability.
The securitisation, orchestrated through a Special Purpose Vehicle (SPV) under the Kenya Roads Board (KRB), involves selling rights to a portion of the Road Maintenance Levy Fund (RMLF), specifically Sh7 of the Sh25 per litre fuel levy, to raise immediate funds.
Chirchir insists this is not new debt, as the SPV independently raises cash to pay contractors, with no liability reverting to KRB.
The funds aim to revive infrastructure projects inherited from the Uhuru Kenyatta administration, like the Kaptimbor-Airstrip in Baringo County.
However, critics argue this locks future administrations into repaying obligations through fuel levies, effectively creating a hidden debt not reflected in official records.
Ndindi Nyoro, a vocal critic, alleges the government introduced the Sh7 levy in 2024 when global oil prices were declining, preventing Kenyans from benefiting from lower pump prices.
"This is an illegal debt. It's not in the national debt book, and Parliament was never consulted," Nyoro stated, warning that such secrecy threatens Kenya's financial sovereignty.
He questioned the lenders' identities, interest rates, and long-term budget impacts, estimating the loan could accrue Sh100 billion in interest over seven years.
Transparency International and Flywheel Advisory echoed these concerns, flagging the lack of transparency as a potential enabler of illicit financial flows.
Kenyans have criticised the government for increasing fuel costs, with super petrol now at Sh186.31, diesel at Sh171.58, and kerosene at Sh156.58 in Nairobi, while global oil prices remain stable.
The Energy and Petroleum Regulatory Authority (EPRA) attributes recent hikes to landed costs and international fluctuations, but Nyoro disputes this, arguing that excessive taxation is the real driver.
Netizens highlight public demand for a national audit and clarity on the Sh175 billion loan's terms.
Treasury Cabinet Secretary John Mbadi defended the securitisation, asserting it was legally approved by the National Treasury and the Attorney General's office.
"There's nothing secret about this," Mbadi said, emphasising its role in clearing contractor debts to boost infrastructure. However, the lack of parliamentary scrutiny has fuelled accusations of fiscal irresponsibility, especially as Kenya grapples with a 7.5% GDP budget deficit post-IMF programme in April 2025.
The Council of Governors has also challenged the RMLF's use, citing a court order freezing Sh10.5 billion in county road funds, further complicating the controversy.
The securitisation saga underscores broader issues of Kenya's tax burden, with fuel taxes accounting for up to 38% of pump prices, among the highest in the region.
The Kenya Revenue Authority (KRA) collected Sh164.03 billion in fuel taxes from July to December 2024, despite a 5% drop in consumption due to record-high prices.
Critics argue that using future levies as collateral risks future budgets and could lead to securitising other taxes like VAT or PAYE. As public pressure mounts, calls for a transparent fiscal policy and sustainable financing grow louder, with Google Trends showing spikes in searches for "Kenya hidden fuel levy debt" and "Sh175 billion road bond concerns."
This financial manoeuvre, while innovative, raises ethical questions about bypassing democratic oversight. The government's reliance on fuel levies, a regressive tax impacting low-income Kenyans most, has intensified scrutiny of its economic strategy.
With road projects resuming, the administration touts economic benefits, but the hidden costs of this loan may linger, shaping Kenya's fiscal landscape for years.
Published by HT Digital Content Services with permission from Bana Kenya.