The Road Fund Administration (RFA) has announced that it will need N$13 billion for road infrastructure projects to meet targets contained in its five-year business plan, which will be launched in April 2018.
The RFA funds road projects in the country by collecting money through various road user charges, including fuel levies, vehicle licence fees, entry fees, mass distance and abnormal load charges.
The business plan will also be funded by an expected loan of about N$492 million from the KfW of Germany.
The feasibility of executing the Business Plan is based on the first tranche of the KfW loan as disbursed in April 2018 to the amount of N$246 million and the second and final tranche of the KfW loan as disbursed in April 2019 to the amount of N$246 million.
CEO, Ali Ipinge, said this week that the new business plan will be launched on the backdrop of sluggish economic conditions currently facing the country.
“It is no secret that the current economic climate in the country has resulted in a slowdown in overall infrastructure spending by our Government. We as RFA are also not immune to the impacts of Namibia’s economic recession and resulting budget cuts in Government spending which affect our operations,” he said.
Ipinge said under these circumstances, the collection of sufficient or optimum funding has been a challenge and will continue to be so in the foreseeable future resulting in the backlog of maintenance of the national road network.
“This is a critical aspect that the sector should discuss and address, with a view to meet the targets of NDP5 and HPP.”
For the previous financial year, 2016/17, the RFA collected approximately N$2,2 billion, Ipinge said.
Related expenditure or investment made in the road infrastructure sector for the same period amounted to N$1,92 billion.
“The growth trend reflects a 5,7 percent increase in revenue from the previous corresponding period for the financial year 2015/16,” he said.
The RFA CEO said in terms of the major road maintenance programme, a total of 412km road sections have been re-gravelled in the 2017 financial year at an investment of N$162 million. In addition, 409 km of road sections have been treated with resurfacing activities to the tune of N$210 million.
The RFA also funds some road projects initiated by local authorities and regional councils. In the 2018/2019 financial year, the total proposed budgetary allocation stands at N$117 million compared to that in the 2017/18 financial year of N$85 million, which reflects an upward increase of some 39 percent. RFA chairperson, Penda Ithindi, said the slowdown in the economy has caused new motor vehicle sales to stagnate and the motor vehicle population is estimated to grow by a mere one percent over the 2018 and 2019 period, and that fuel consumption, more so for petrol, is expected to slowdown.
“As a consequence, fund revenue outlook will remain subdued over the medium-term. In this environment, potential increases in road user charges should be carefully set so that we do not impose a heavy burden on industry. Business plan expenditure should remain closely aligned to the revenue outlook. This environment calls for us to vigorously prioritise,” Ithindi said.
The RFA said up to N$318 million additional cash injection was deployed in 2017 to help the cost of urgent funding needs in the road sector.
“In addition to supporting Government funded projects, the total spending in excess of N$2,3 billion from the fund, of which 81 percent was for project funding, has contributed to the upkeep of road infrastructure and supported domestic economic activity in the sector and related sector linkages.”
One of the projects funded is the Windhoek-Okahandja dual carriageway.