No funds available for maintenance of road network as Roads Fund Administration is in serious liquidity situation

* It is failing to pay Roads Authority’s liabilities with its contractors whose outstanding balance is at K151.2 billion

* Advises RA to postpone or cancel some activities just as RFA is doing as a way of managing the situation 

By Duncan Mlanjira

Ahead of this year’s rainy season, the 2024/25 maintenance works have not been awarded to contractors as there are no funds for such projects as the Roads Fund Administration (RFA) is in serious liquidity situation.

A memo to Roads Authority (RA) chief executive officer (CEO) — dated November 29, 2024 and copied to Secretary for Ministry of Transport & Public Works — indicates that the RFA liquidity situation was due to not receiving fuel levies, whose outstanding balance is at K151.2 billion.

Consequently, says the memo by CEO Stewart Malata, the RFA “is unable to settle liabilities” that the Roads Authority has with its contractors — adding: “The liquidity situation is also impacting on the resources for operations of the two institutions as the other sources are far from being enough to adequately provide for operational expenses of the two institutions.”

Malata thus advises the RA to critically manage any further and current commitments in all forms, after taking note that RA has awarded some contracts for the 2022/23 year.

“We wish to mention that such commitments compound the current challenge and further puts the RA’s contractors under financial pressures as these will not be paid on time,” says the memo.

“The resources for such contracts are part of the long-standing levy arrears whose actual receipt, let alone the timing of any such receipt, remains unknown.”

Malata also advises RA that “there is need to manage expenses, without which even payment of salaries will be a challenge” while asking the RA to postpone or cancel some activities just as RFA is canceling “certain equally important caped and operating expenses as a way of managing the situation”.

Malata also reminded the RA that it also made an advice in a previous communication that the RA should engage relevant authorities to advise on the impact “this situation is having on the road conditions”.

In such engagements, the Fund asked the RA to highlight some critical areas that include “the risk of failure to undertake emergency and other critical or urgent works as the opportune time for maintenance works is between now and the onset of the rainy season”.

The engagements are also to highlight that the 2024/25 maintenance works “have not been awarded as there are no funds for such, which has been compounded by the already existing maintenance backlog”.

The RFA takes cognizance that “the road network is in dire need for maintenance and that come the rainy season, there will be more damage to the network”.

At the height of the fuel crisis, it was disclosed that Malawi Energy Regulatory Authority (MERA) owes fuel importers and other suppliers huge sums of money, including honoring its mandate to remit fuel and energy levies.

MERA reported this last month at a meeting it had with the Parliamentary Committee on Natural Resources & Climate Change and the Committee took note that the non-remittance of levies was contributing towards RFA’s and the Ministry of Energy’s struggle to discharge its mandate.

The committee also noted “with concern that the progress of implementation of road projects in the country was stalled” — thus it suggested that MERA should consider adjusting upwards the pump price.

The Committee further found it was not possible for MERA to net-off the levies for the RFA and the rural electrification as they were legal in nature and maintained that MERA is required to remit since failure to do so RFA and Malawi Rural Electrification Project (MAREP) “could be affected if the levies are not remitted as per requirement by law”.

Consumers Association of Malawi (CAMA) also lobbied MERA to strictly follow the mandate of Automatic Pricing Mechanism (APM) on fuel price increases to avoid the commodity’s scarcities — as well as failing to remit to the required supplies and for the levies.

CAMA emphasised that MERA has one of the best mandates through the Energy Regulatory Law, that provides its independence and it provides methodologies that are used transparently to make fuel pump prices.