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RFA considers road tolls and new levies to close funding gaps

2018-11-21  Edgar Brandt

RFA considers road tolls and new levies to close funding gaps

WINDHOEK - The Road Fund Administration (RFA) has cautioned that closing of funding gaps along with initiating other revenue solutions will be required in both the medium and long-term in order to meet targets set out in the fifth National Development Plan, Harambee Prosperity Plan and Vision 2030. RFA’s chief executive officer, Ali Ipinge, yesterday made these remarks during the RFA’s 18th Annual Business Plan Consultation in Windhoek where it was revealed that the entity plans to inject about N$13 billion into the domestic economy over the next five years. Of this amount about 80 percent, or some N$10 billion, is earmarked for projects and programmes in the road sector.

“The RFA is aware and fully committed to the agenda of effective preservation and rehabilitation of the national road network as well as the urban roads and streets. However, we have to fund all these activities within the ambit of the revenue envelope of the current road user charges (RUCS) and in line with adopted RFA ‘user-pay principle,’” said Ipinge. 
He continued that revenue solutions for the RFA will include, but will not be limited to, rebasing the RUCS tariffs (as the current baseline is already 18 years old), possible introduction of tolling and the introduction of new levies as the globe is moving towards electric cars for the future which will indeed displace fuel levy as a revenue source. Although still in its development stages, the RFA is embarking on various initiatives and studies aimed at advancing collection techniques to enhance its revenue base.

The RFA’s Annual Business Plan Consultation takes the inputs and recommendations from stakeholders in the roads sector to help it plan better and to jointly find common solutions to challenges facing the sector, specifically on matters relating to roads maintenance and rehabilitation at national, regional and local authority level. 

At the same event, RFA Board Chairman, Penda Ithindi, noted that the proposed business plan for the next five years was formulated against a backdrop of a subdued economic environment. Such an environment, he said, presents tightness in the revenue prospects and expenditure outlays. 

“It calls on all of us to realise greater operational efficiency, keep our overhead costs mean and lean and unleash the cutting edge of information communication technology, innovation and research and development. Going forward, it is our business intention to strengthen the fund liquidity position and financial buffers so as to shore up its capacity to respond to unforeseen circumstances and service its obligations,” said Ithindi. 

He further noted that the intent is to review the RFA Act in the coming year and that stakeholder consultation will be at the centre of such an exercise. This, said Ithindi, would be for the purpose of bringing the policy provisions in line with latest developments in the sector and road funding frameworks.

“To achieve some of these policy objectives, the road sector will have to initiate and implement innovative strategies and instruments. As much as the RFA might explore alternative revenue streams, the call is on the implementing agencies to introduce vigorous planning techniques and project management instruments drawn from best practises,” Ithindi stated.  
For the 2017/2018 financial year a total of N$2.37 billion in revenue was generated through RUCS compared to N$2.21 billion in the 2016/2017 financial year. Ipinge pointed out that this resulted in a steady year-on-year growth of seven percent or a net dollar increase of N$154 million. 

“On the downside however, the RFA fell short of reaching the budget target by one percent, largely due to the sluggish economic environment which impacted all the road user charges. The RFA invested over N$2.2 billion in the preservation and development of the road network, of which 76 percent (about N$1.7 billion) was allocated to the Roads Authority for the preservation and maintenance of the national road network as well their administrative expenditures which include the management of GRN-funded roads capital projects, NaTIS operations as well as road management systems, and 24 percent was allocated to other approved authorities (local authorities and regional councils); traffic law enforcement and road safety programmes; and the RFA administrative expenditures,” said Ithindi while highlighting the last financial year’s performance. 

2018-11-21  Edgar Brandt

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