Fuel tax collections from motorists grew sharply by nearly Sh40 billion in the financial year ended June 30, 2025, as a result of a Sh7 per litre increase in the Road Maintenance Levy (RML) that came into effect last July.

New data released by the Kenya Revenue Authority (KRA) shows that the agency collected Sh119.66 billion from the levy in the period under review, a 49.2 percent increase compared to Sh80.2 billion raised in the previous year.

The spike in collections was not only driven by the higher levy rate, but also by a 13 percent rise in the consumption of petrol and diesel.

The government had revised the RML upwards from Sh18 to Sh25 per litre following concerns by the Kenya Roads Board (KRB) over inadequate funding for the country’s growing road infrastructure.

KRA noted the shift in a statement, saying, “Road Maintenance Levy grew to Sh119.66 billion. The growth in RML is attributed to an increase in the applicable rates from Sh18 per litre to Sh25 per litre.”

The higher levy, however, limited the benefits of global fuel price drops for consumers, forcing the government to occasionally step in and offer pump price subsidies to cushion the public from the full impact of the tax increase.

Last month, the National Treasury informed Parliament that Cabinet had given the green light to KRB to use part of the RML proceeds to compensate investors expected to purchase the Sh300 billion road bonds, which are intended to clear outstanding payments in the roads sector.

Under the plan, Sh12 out of the Sh25 collected per litre will be directed to investor compensation. Of this, Sh7 will repay a Sh175 billion bond dedicated to settling pending bills, while another Sh5 will go towards a Sh125 billion bond to address current and upcoming obligations to contractors.

The board plans to float the first Sh175 billion bond before the end of this year. Initially, KRB had projected that the Sh7 per litre increment would raise annual collections to Sh122 billion, up from an average of Sh80 billion previously.

Funds raised through RML are distributed to agencies such as the Kenya National Highways Authority, Kenya Rural Roads Authority, Kenya Urban Roads Authority, Kenya Wildlife Service, and county governments to support road construction, repair, and maintenance.

The total road network managed by these bodies grew to 239,122 kilometres last year, reflecting a 4.1 percent increase from 161,451 kilometres recorded in 2016.