1 / 28

CHALLENGES & VISION OF RFA

CHALLENGES & VISION OF RFA. PURPOSE. To highlight the challenges & constraints faced by Road Fund Administration (RFA) in executing its mandate To share RFA Vision with esteemed RFA stakeholders. WHAT IS RFA?.

emlyn
Download Presentation

CHALLENGES & VISION OF RFA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHALLENGES & VISION OF RFA

  2. PURPOSE • To highlight the challenges & constraints faced by Road Fund Administration (RFA) in executing its mandate • To share RFA Vision with esteemed RFA stakeholders

  3. WHAT IS RFA? • White Paper on Transport Policy endorsed the principles of road user charges (RUCs) for Namibia • Road Fund Administration was created by RFA Act (Act No. 18 of 1999) • RFA operations commenced in 2000

  4. WHAT IS RFA MANDATE? • To Manage the Road User Charging (RUC) system to provide a safe and economically efficient road sector for the benefit of all road users • Road user charge(RUC) is the system that provides for an independent regulation of road funding in accordance with economic efficiency criteria & full cost recovery from road users

  5. HOW DOES THIS HAPPEN RFA: • collects the road user charges, • procures loans from financial market, • funds the maintenance, the rehabilitation & the construction of economically efficient roads

  6. PURPOSE OF RUCs • RUCs: • Promote economic efficiency & efficient utilization of resources • Avoid unfairly impact on road/rail competition • Be acceptable to affected parties • Recover fully all economically justifiable future road provision & maintenance programme • Provide for charges on foreign-based operators subject to certain principles

  7. SPECIFIC RFA MANDATE • The Act stipulates that RFA should: • determine the amount of funding for the road projects & programmes • determine the manner in which such amount shall be allocated • determine and impose the types of road user charges

  8. RUC FEES • Licence Fees – 21.12% • Cross Border Charges (CBC) – 3.24% • Fuel (Road) Levy – 63.18% • Mass Distance Charges (MDC) – 12.24% • Abnormal Load Charges (ALC) – 0.22%

  9. WHAT IS THE FUNDING PROCESS • Roads Authority (RA) submits a 5-year Business Plan based on a Medium-to-Long-term Roads Master Plan • Local Authorities also submit their ‘traffic-related maintenance’ budgets to RFA • The RFA compiles a 5-year Business Plan based on the FUNDING REQUIREMENTS (not based on available funds)

  10. LOANS • In 2003, RFA acquired N$650 mil loan from local market in consultation with the MoF • Loan acquired at 13% coupon rate - N$84.5 mil to be paid to investors annually • RFA assumed sustainable fuel levy increases to establish a sinking fund to redeem the loan by 21st November 2010 • January 2007 - sinking fund amounted to N$55 million (N$5.1 million interest)

  11. LOANS (cont’d) • RFA did not get sustainable fuel levy increases & cash flow has become precarious • RFA was forced to restructure the 10 Loan Stock in 2006 • Restructuring allows RFA to repay N$350 mil by 2010 & N$330 mil by 2016

  12. LOANS (cont’d) • RFA10 Loan Stock co-funded rehabilitation projects which GRN committed to before RA & RFA were established • The are: Okahandja- Otjiwarongo Road; Mururani - Rundu Road; & Windhoek – Aris Road (construction/rehabilitation)

  13. LICENCE FEES • RFA10 Loan Stock co-funded rehabilitation projects which GRN committed to before RA & RFA were established • These fees increased by 15% over the last 5-year Business Plan; • License fees make up about 20% of RFA revenue.

  14. CROSS BORDER CHARGES • Cross Border Charges (CBCs) are levied on all foreign-registered vehicles entering Namibia; • CBCs represent about 3% of total RFA revenue.

  15. FUEL (ROAD) LEVY • Fuel levies are collected by oil companies & paid to RFA monthly; • April 2000, RFA got 68 cents/litre (petrol) & 60 cents/litre (diesel) by MME; • June 2006, 5 cents increased fuel levy to 82 cents/litre & December 2006, 6 cents increased to 88 cents/litre

  16. FUEL (ROAD) LEVY cont’d • About 70% of RFA revenue comes from fuel levies; • However, fuel levy increases are not consistent & they are determined by MME

  17. FUNDING ALLOCATION • Due to shortfalls in funds, funding will target maintenance only in future • Loan funding requires a guarantee from MoF

  18. Current RFA Financial Position • All revenues collected are immediately paid out to RA & others • No surplus funds are kept for contingencies

  19. EXPECTED REVENUE • Between 2007 & 2011, RFA expects to collect N$4,663,615,000 from RUCs: • Fuel levy – N$2,6 bil • License Fees – N$1,2 bil • CBCs – N$249,8 mil • MDCs – N$579,3 mil • Abnormal Load Charges – N$12 mil

  20. EXPECTED REVENUE(N$’000)

  21. ASSUMPTION ON REVENUE • RFA funding will only be sufficient if: • Supply of funds equals demand • Insufficient supply is supplemented by external funding, i.e. grants, appropriation from GRN, guaranteed loans, etc • Toll roads implementation • RUCs are at cost-recovery level

  22. RFA & RA ADMIN BUDGETS • RFA Administration budget is 1.73% of total budget (N$13.9 mil of N$805 mil) • RA Administration budget is 12% of total budget (N$96.3 mil of N$805 mil)

  23. CHALLENGES • Most trunk roads are at the end of their life span & need rehabilitation • Construction of new roads will increase maintenance burden on RFA funding • Construction of roads with donor funds w/out after-care provision exerts maintenance burden on RFA funding • Poor supervision of roads construction quality will increase maintenance burden on RFA

  24. CHALLENGES (cont’d) • RFA is expected to provide adequate funds to Approved Authorities (RA & local authorities) • However, increase in RUCs is not substantial & fuel levy increase is not consistent • RFA marginally increased the RUC – 15% per annum in the last 5-year Business Plan • RFA unable to provide adequate funds given the above structural limitations

  25. REFLECTIONS • Nothing noble or noteworthy on earth was ever done without VISION. • VISION makes the unseen visible & the unknown possible. • VISION is the source of personal & corporate discipline. • Your VISION determines your destiny.

  26. RECOMMENDATIONS • RFA should be fully empowered to comply with its Act in determining cost-recovery RUCs • RA spending patterns on the road network should match the available resources • If these expectations are not feasible, GRN should appropriate funds to RFA to address the funding gap (same way as in Air Namibia’s case)

  27. RECOMMENDATIONS (cont’d) • GRN should capitalise RFA to put its funding position on solid foundation • New roads should not be built if maintenance funds are not available • All road users should commit adequate resources to the road network to achieve VISION 2030

  28. CONCLUSION RFA strives for Safety on our roads; RFA strives for Efficiency in the utilisation of scarce resources; RFA strives for Equity in the collection of road fees

More Related