RFA shelves plan for toll roads

The Road Fund Administration (RFA) has shelved plans to introduce tollgates along the country’s highways.

RFA chief executive officer Ali Ipinge in a statement on Tuesday said there is a funding gap of 22% of the allocated budget.

“The revenue collected from the current road user charges is insufficient to fund the needs of road network maintenance.

“The total funding needs for the 2023/24 financial year are N$4,2 billion, resulting in a funding gap of 22% of the allocated budget,” he said.

The RFA has commissioned two feasibility studies on tolling, which found it is economically and practically feasible in Namibia.

“The feasibility study found that 21 roads could fund N$5,8 billion in capital and maintenance expenditure over five years, possibly generating N$7,5 billion in additional revenue to subsidise roadworks across the entire network.

“Empirical research shows tolled roads are better maintained, resulting in more jobs, economic opportunities, and lower vehicle operating costs,” he said.

Ipinge said an additional econometric analysis revealed that tolling would add N$1,7 billion to the Namibian economy, increasing gross domestic product growth by 0,4% annually.
“This would be accomplished by creating new jobs, lower vehicle operating costs, and the effects of toll infrastructure investment.

“As a result, the RFA looked into the viability of introducing road tolls as an additional revenue stream to maintain the N$101 billion national road network,” he said.

Ipinge said due to the proliferation of electric and fuel-efficient vehicles over the last 15 years, vehicle fuel demand has fallen by 2% per year.

“This trend will continue as the world phases out gasoline and diesel-powered vehicles, which would result in regular funding gaps for maintenance, and a systematic deterioration of the road infrastructure.

“Fuel-powered vehicles and associated fuel demand will eventually phase out, rendering the current road maintenance funding model unsustainable,” he said.

Currently, the fuel levy contributes about 54% to the RFA’s revenue streams, and an over-reliance on this for road maintenance is not feasible in the long run, he said.

Ipinge said as a result of the prevailing economic climate, coupled with high interest rates and inflation, the RFA has decided to defer planned stakeholder and public consultations on the implementation of the tolling of roads in Namibia until further notice.

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