Road Fund’s liquidity woes threaten road maintenance
Malata: the Fund is still not receiving fuel levies
The Roads Fund Administration RFA has sounded an alarm over its worsening financial situation, warning that the lack of funds could have dire consequences for road maintenance and rehabilitation projects in Malawi.
In a letter dated November 29, 2024, addressed to the Roads Authority (RA), it has disclosed that its current balance stands at 151.2 billion kwacha, with no inflow of fuel levies.
RFA says the situation has left the institution unable to pay contractors or fund operational expenses.
Stewart Malata, Chief Executive Officer of the RFA, expressed concerns about the impact of the financial crisis.
“The Fund is still not receiving fuel levies, and the ongoing liquidity crunch is putting tremendous financial pressure on contractors and the RA,” he wrote.
Malata also highlighted that the lack of resources has prevented the awarding of 2024/25 maintenance works, further compounding the backlog of road projects.
Malata emphasized the urgency of addressing the issue before the rainy season begins.
“The risk of failure to undertake emergency and critical works is extremely high. The opportune time for maintenance works is now, and failure to act will result in further deterioration of the road network,” he said.
The RFA cautioned the RA against making additional commitments under the current circumstances, particularly concerning contracts from the 2022/23 financial year that remain unfunded.
“Such commitments further strain the limited resources and place contractors in a precarious financial position. The resources for these contracts are part of the long-standing levy arrears, whose actual receipt remains unknown,” Malata noted.
The liquidity crisis has forced the RFA to cancel some critical capital expenditure and operational activities as a temporary measure.
However, Malata stressed that this alone would not resolve the issue and called for collaborative action.
“We urge the RA to engage relevant authorities to address this situation comprehensively. The road network is in dire need of maintenance, and further delays will only escalate repair costs,” he said.
Meanwhile, RA is yet to respond to the questionnaire we submitted to them.
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