The story Originaly Published by The Star Kenya
As Kenyans continue struggling with rising fuel prices, one term has increasingly dominated public discussion — securitisation.
Government officials and economists have repeatedly referenced the concept while explaining why reducing fuel levies may not be as simple as many politicians suggest.
For many ordinary motorists, however, the term remains confusing.
In simple terms, securitisation means using expected future income to access money immediately.
A basic example would be a landlord expecting rental income over several years. Instead of waiting to collect the money month by month, the landlord approaches a financier and uses those future rental payments as security for a large lump-sum payout upfront.
ALSO READ Why the Matatu Strike Was Rational, Not Malicious
The financier provides the cash immediately and later recovers the money gradually from the future rent collections.
The Kenyan government applied the same model using revenue collected from the Road Maintenance Levy Fund (RMLF), commonly referred to as the fuel levy.
Every litre of petrol and diesel sold in Kenya currently attracts a Sh25 Road Maintenance Levy collected by the Kenya Revenue Authority at fuel stations.
Traditionally, the levy has funded road maintenance across the country through agencies including:
- Kenya National Highways Authority
- Kenya Urban Roads Authority
- Kenya Rural Roads Authority
The money supports pothole repairs, drainage works, rehabilitation of damaged roads and other maintenance activities.
Initially, Kenya relied on annual road licence fees before transitioning to the fuel levy system in 1993 after the old model faced enforcement challenges and failed to keep up with the country’s expanding road network.
As infrastructure demands increased and pending contractor bills accumulated, the government sought faster ways to raise large amounts of money without waiting years for levy collections to accumulate.
That is where securitisation came in.
In April 2025, the government securitised Sh7 out of the Sh25 fuel levy to raise approximately Sh175 billion through bonds.
Instead of waiting years to collect the money gradually, the government received the funds upfront and directed them towards stalled road projects and pending contractor payments.
A few months later, in November 2025, Cabinet approved securitisation of an additional Sh5 per litre to raise another Sh120 billion.
Combined, the two deals committed Sh12 out of every Sh25 collected through the fuel levy towards repaying the debt raised through those bonds over a 10-year period.
This effectively means nearly half of the fuel levy is already tied to debt repayment obligations.
As a result, road agencies are left with direct access to only about Sh13 per litre for road maintenance and rehabilitation works.
The issue has now become central to the current fuel price crisis.
Following the latest fuel price adjustments announced by Energy and Petroleum Regulatory Authority on May 14, transport operators across Kenya staged nationwide protests that disrupted movement in several towns and cities.
Matatus, boda boda riders, online taxi operators and cargo transporters protested after Super Petrol prices increased by Sh16.65 per litre while Diesel rose by Sh46.29 per litre.
The protests triggered renewed pressure on government to reduce taxes and levies imposed on fuel.
Among those pushing for intervention are Ndindi Nyoro and James Orengo, who proposed reducing the fuel levy by Sh7 per litre to return it closer to previous levels.
Supporters of the proposal argue that reducing the levy could significantly lower diesel prices and ease the cost of living for millions of Kenyans.
However, critics argue that the situation is no longer straightforward because future fuel levy collections have already been committed through securitisation agreements.
Former Transport Principal Secretary Irungu Nyakera has warned that reducing the levy without restructuring the securitisation agreements could undermine road maintenance funding and affect repayment obligations attached to the bonds.
If another Sh7 is removed from the remaining Sh13 currently available for road maintenance, only about Sh6 per litre would remain for maintaining Kenya’s road network.
That creates a difficult balancing act:
- Lower fuel prices for motorists
- But potentially worsening road conditions nationwide
The government has largely maintained the same position.
Kithure Kindiki has defended retention of the levy, arguing that fuel taxes remain critical for maintaining roads and funding public services.
Meanwhile, John Mbadi has insisted the government cannot simply remove fuel-related taxes without creating broader fiscal pressure.
Government officials also argue that billions have already been spent subsidising fuel prices amid global oil market disruptions linked to instability in the Middle East, which increased shipping, insurance and logistics costs.
Supporters of securitisation say the model allowed Kenya to unlock large sums of money quickly, complete stalled projects and stimulate economic activity without immediately introducing new taxes.
Critics, however, argue the arrangement limits future flexibility because future governments inherit repayment obligations before the revenue is even collected.
Nyoro has gone as far as describing the securitisation model as “auctioning the future of the country.”
As Parliament prepares to debate proposals surrounding the fuel levy, the controversy is expected to remain at the centre of Kenya’s cost-of-living discussion.
For ordinary Kenyans, the biggest question remains simple: why can’t the government just reduce the fuel levy?
The answer lies in securitisation.
A significant portion of tomorrow’s fuel levy revenue has already been spent today, meaning motorists will continue repaying that debt through fuel prices for years to come.
Source Acknowledgement: Adapted and rewritten from reporting originally published by The Star Kenya
