Guest Contributor | Jul 19, 2017 | 0
Roadworks budget balloons
The Road Fund Administrator’s (RFA) five-year business plan and stakeholder consultations held this week revealed that the administrator of the Road User Charges (RUC) System is expected to increase revenue by N$2.24 billion for its next financial year from the current N$1.97 billion.
The Road Fund Administrator manages the Road Fund into which the Road User Charges are collected. Money from the Road Fund is allocated to projects and programmes to maintain and preserve the national road network through funding allocated to its sister organization, the Road Authority and other approved authorities.
The Road Fund Administration collected close to N$1.8bn during the 2014/15 financial year. According to the CEO of the Road Fund Administration, Ali Ipinge, the actual revenue came out slightly more than budgeted with a 11% increase compared to the prior year.
According to the Chairperson of the RFA Board of Directors, Mr Penda Ithindi, this multi-year budgeting approach provides for up to four years of detailed revenue collection targets. It also provides details on multi-year expenditure proposals by activity, allowing stakeholders and the public to repeatedly scrutinize the proposals four years in advance of the budget year.
“Government had approved the 10% increase of Road User Charging across the board earlier this year. This increase came into effect in May this year which boosted the buoyancy of the Fund revenue in the current year,” he said.
“When assessing the Draft Plan, we should look beyond the budget year and also assess the proposed project pipeline and funding proposals for the entire horizon of the plan so that the subsequent budgets do not carry surprises,” Ithindi explained.
As an Administrator of the Road User Charging System, the Road Fund Administration is duty-bound to consult with the stakeholders, the road users and the payees of the user fees for at least three principle reasons.
The Draft Business Plan contemplates expenditure to slow by about 11% to N$2.26 billion in 2016/17 as some of the projects reach completion.
Over the five-year period, total expenditure is projected to increase at 5.5% on average against the average increase on revenue of 7.4%. According to Ithindi over the next five years, the Road User Charges revenue is projected to grow to N$12.63 billion.
The Road Fund Authority is obligated to consult with its stakeholders community, the road users and the payees of the user fees to take stock of the Fund’s financial position, the future strategic initiatives for Fund growth, projected revenue over the medium-term and related expected spending agreeable with the Fund’s financial strength.
To account for the funding that has been collected and allocated to various uses and raise transparency and accountability of public resources, but more importantly, to solicit the stakeholder input into the funding proposals, the prioritisation of such proposals and the revenue-raising initiatives being contemplated for the new timeline.
“This budgeting proposition is to ensure that we live within our means and that expenditure growth does not significantly outstrip revenue growth in favour of future sustainability,”said Ithindi.
Meanwhile, government has also approved a loan guarantee for the Road Fund Authority to source N$450 million from the KfW, a German government-owned development bank, for the financing of the Windhoek-Okahandja dual roadway.
The loan Agreement to is expected for signature on 23 November. The RFA, in talks with Government, has already paid out N$270 million from its Sinking Fund in 2014 to date, to pre-fund the commencement of the Windhoek-Okahandja project, while the modalities of the KfW loan was being worked out.