Electric vehicles a threat to road funding
Worrying trend
The rise in electric vehicles may pose a threat to the funding required for road projects.
Finance minister Ipumbu Shiimi says the advance of electric vehicles may threaten the funding required to build and maintain new roads. Shiimi made the remarks at the recently concluded road sector policy conference, and said it was time to have a conversation around identifying new funding mechanisms as more electric vehicles are being designed going forward.
“One of the ways we are funding our roads is fuel levies, but we also know that cars are becoming more efficient and consuming less fuel, and it has an impact on our funding model, so how do we solve that problem?” he said while delivering his keynote address.
Turning his attention to technocrats in the road sector, Shiimi said while there is still a low number of electric vehicles in Namibia, it is time to have serious deliberations around their rise and how it could impact the road sector.
“We also know that the future is electric. You may say they are not in Namibia, we only see a few on the roads, but with any new technology, there is always a tipping point. Once you reach that tipping point, things will accelerate and when that takes off, it means we are no longer going to use fuel, then we have no funding,” he said.
Increase required
Meanwhile, the Road Fund Administration (RFA), which funds road construction projects, last year stated it required an increase in the road user charge to carry out its mandate.
The RFA’s executive for programme management, policy and advice Namene Kalili last November said the company is experiencing underfunding, which is expected to negatively impact national road networks. He noted that the RFA is expected to experience a N$3.6 billion funding gap during the current financial year, and a N$15 billion funding gap over the five-year business plan, running from April to March 2029. The RFA was established to manage the road fund and the road user charging system with the purpose of securing and allocating sufficient funding to realise a safe and efficient roads sector in the country.
Thus, to tackle the challenges, it is proposing adjustments going forward. The proposals include a N$1 per litre increase in the fuel levy, 20% increase in mass distance charges, cross-border charges and abnormal load fees, while it needs a 10% increase in road carrier permits, New Era reported.