Vehicle fees to go up by 90% over five years

CAR and truck fees are to increase by 90 per cent over the next five years to raise funds needed to to keep Namibia’s road network in a good condition.

Vehicle owners are likely to feel the pinch through fuel prices and new charges. The lack of funding has already forced the RFA to borrow N$750 million on the stock market.But a crisis faces the fund next year if key levies are not increased, the RFA said.The Road Fund Administration (RFA) said on inquiry this week that all road user charges will have to be increased by between 10 per cent and 30 per cent in order to reach “the optimum level of funding”.The shock increases began last year with a 15 per cent jump.A similar increase in an assortment of levies was introduced in April and this rate will double to 30 per cent next year.”The unfortunate situation is that road user charges are currently only about 60 per cent of the optimum level,” said Günter Seydack, the Manager for Programme Management, Policy and Advice, who was the acting Chief Executive Officer at the RFA.”Indicatively, calculations made by the RFA show that if all road user charges… would increase by 20 per cent, 30 per cent, 20 per cent, 10 per cent and 10 per cent in the years from 2004 through 2008, then a stable and optimal level of funding could be achieved by 2009.”Road user charges range from licence and registration fees, abnormal load fees, cross-border charges, fuel levies to a “mass-distance” charge, which is expected to be introduced in October.The RFA primary task is to collect money, which it then hands over to the Roads Authority for roadworks.At least 80 per cent of the funding goes to the RA, which is entirely dependent on the RFA.Seydack suggested that the upkeep of Namibian roads faced a funding crisis considering that the RFA relied heavily on fuel levies, which constitutes two-thirds of the income.However, the RFA has little influence in determining its earnings from the fuel levies.These are set by the Ministry of Mines and Energy.Fuel levies, a portion of the petrol and diesel price, pay for other road-related costs, including funds to the Motor Vehicle Accident Fund (MVA) which, according to sources is “practically insolvent” and unable to cover claims.Seydack said “increases in licence and other fees have barely been able to compensate for inflationary increases in the costs of roadworks”.”Unless Government changes its policy on increases of fuel levies, it is anticipated that the Road Fund as from April 2005 will no longer be in a position to fund road rehabilitation and development projects.”Most of the RA’s work is aimed at rehabilitating roads and the construction of most new tarred roads are largely funded by Government.It emerged last year already that the RFA was unable to pay for work the RA commissioned.In some cases, funds had to be diverted from one road to complete another.An RFA director told a presidential inquiry that the budget overrun might have stemmed from the RA’s failure to look for cheaper ways of maintaining roads.But it also emerged that building a tarred [bitumen] road was expensive – from N$1 million to N$4 million a kilometre.Seydack said that keeping roads in a peak condition benefited the road user in the long run – a saving of N$3 dollar for every dollar spent on maintenance.The RFA budget for this year amounts to N$1 billion.Its revenue from 2003 to 2008 was projected at N$4,28 billion, and, together with the Roads Authority, estimated the expenditure at N$4,6 billion.The shortfall will be financed through private borrowing.According to Seydack the “long-term” rises in road user charges is “expected to be below the inflation rate” perhaps two per cent.The lack of funding has already forced the RFA to borrow N$750 million on the stock market.But a crisis faces the fund next year if key levies are not increased, the RFA said.The Road Fund Administration (RFA) said on inquiry this week that all road user charges will have to be increased by between 10 per cent and 30 per cent in order to reach “the optimum level of funding”.The shock increases began last year with a 15 per cent jump.A similar increase in an assortment of levies was introduced in April and this rate will double to 30 per cent next year.”The unfortunate situation is that road user charges are currently only about 60 per cent of the optimum level,” said Günter Seydack, the Manager for Programme Management, Policy and Advice, who was the acting Chief Executive Officer at the RFA.”Indicatively, calculations made by the RFA show that if all road user charges… would increase by 20 per cent, 30 per cent, 20 per cent, 10 per cent and 10 per cent in the years from 2004 through 2008, then a stable and optimal level of funding could be achieved by 2009.”Road user charges range from licence and registration fees, abnormal load fees, cross-border charges, fuel levies to a “mass-distance” charge, which is expected to be introduced in October.The RFA primary task is to collect money, which it then hands over to the Roads Authority for roadworks.At least 80 per cent of the funding goes to the RA, which is entirely dependent on the RFA.Seydack suggested that the upkeep of Namibian roads faced a funding crisis considering that the RFA relied heavily on fuel levies, which constitutes two-thirds of the income.However, the RFA has little influence in determining its earnings from the fuel levies.These are set by the Ministry of Mines and Energy.Fuel levies, a portion of the petrol and diesel price, pay for other road-related costs, including funds to the Motor Vehicle Accident Fund (MVA) which, according to sources is “practically insolvent” and unable to cover claims.Seydack said “increases in licence and other fees have barely been able to compensate for inflationary increases in the costs of roadworks”.”Unless Government changes its policy on increases of fuel levies, it is anticipated that the Road Fund as from April 2005 will no longer be in a position to fund road rehabilitation and development projects.”Most of the RA’s work is aimed at rehabilitating roads and the construction of most new tarred roads are largely funded by Government.It emerged last year already that the RFA was unable to pay for work the RA commissioned.In some cases, funds had to be diverted from one road to complete another.An RFA director told a presidential inquiry that the budget overrun might have stemmed from the RA’s failure to look for cheaper ways of maintaining roads.But it also emerged that building a tarred [bitumen] road was expensive – from N$1 million to N$4 million a kilometre.Seydack said that keeping roads in a peak condition benefited the road user in the long run – a saving of N$3 dollar for every dollar spent on maintenance.The RFA budget for this year amounts to N$1 billion.Its revenue from 2003 to 2008 was projected at N$4,28 billion, and, together with the Roads Authority, estimated the expenditure at N$4,6 billion.The shortfall will be financed through private borrowing.According to Seydack the “long-term” rises in road user charges is “expected to be below the inflation rate” perhaps two per cent.