The Road Fund Administration (RFA) received Policy support from the government in 2022 to engage stakeholders on the introduction of tolling in Namibia. As a result of the prevailing economic climate, coupled with high-interest rates and inflation, the RFA has decided to defer the planned stakeholder and public consultations on the implementation of the tolling of roads in Namibia until further notice.
The Case for Tolling
The RFA commissioned two feasibility studies on tolling, which concluded that tolling is economically and practically feasible in Namibia. Road authorities and agencies worldwide are under financial pressure to maintain ageing road networks with rapidly diminishing resources. As road conditions deteriorate, vehicle operating costs rise due to faster
vehicle wear and tear (damage to tyres, suspension, shocks, etc.) and increased travel time. These hidden costs raise vehicle maintenance and overall transportation costs for the economy, costing the road user time and money. A new model that accurately captures road usage based on the ‘user-pay’ principle is required. It assesses appropriate road user fees based on the distance travelled, the quality of the road used and the vehicle mass. Tolling is one such funding model. 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. The feasibility study found that 21 roads can 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 that tolled roads are better maintained, resulting in more jobs, economic opportunities and lower vehicle operating costs. According to additional econometric analysis, tolling would add N$1.7 billion to the Namibian economy, increasing GDP growth by 0.4 percent annually. This will be accomplished by creating new jobs, lower vehicle operating costs and the effects of toll infrastructure investment.
Decreasing Fuel Demand
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 will 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. Currently, the fuel levy contributes about 54% to RFA revenue streams, and an over-reliance on the fuel levy for road maintenance is not feasible in the long run.
The revenue collected from the current road user charges is insufficient to fund the needs for road network maintenance. The total funding needs for the current financial year 2023/2024 are N$4.2 billion, resulting in a funding gap of 22% of the allocated budget.
The RFA, therefore, wishes to inform the public of the deferment of its proposed roads tolling programme in Namibia until further notice.
The Office the Chief Executive Officer, Road Fund Administration (RFA), Private Bag 13372, Windhoek, Namibia