Mozambique Proposes Fuel Tax Hike to Fund Road Maintenance
Government seeks to align fuel levies with regional standards to restore deteriorating national road networks.
1Proposed Tax Adjustments
The Mozambican government plans to increase fuel taxes to 15 cents per liter for both gasoline and diesel. Minister Joao Matlombe presented this proposal to parliament, aiming to align domestic rates with the Southern African Development Community average. The plan includes a new mechanism to index future tax updates to inflation.
2Financial Impact Projections
The revision is expected to increase costs by 2.92 meticais per liter for gasoline and 6.36 meticais for diesel. These changes are designed to boost annual revenue for the Road Fund to 20.857 billion meticais. This funding shift aims to secure sustainable resources for the country's critical transport infrastructure and maintenance programs.
3Infrastructure Deterioration Trends
Mozambique faces a significant decline in road quality, with paved roads in good or fair condition dropping from 91% in 2015 to under 60% by 2025. Unpaved roads saw a similar decline, falling from 70% to 45%. Routine maintenance coverage reached only 40% of the classified network as of the year 2020.
4Funding Allocation Reforms
The government intends to increase the allocation of fuel tax revenue to the Road Fund to 90%. This follows a controversial adjustment in 2025 that had previously reduced the fund's share from 70% to 40%. Officials argue this legislative correction is essential to restore the financial viability of national road maintenance efforts.
5Climate Change Vulnerability
Extreme weather events, particularly cyclones, have severely damaged the road network. Cyclone Freddy in 2023 caused damages estimated at 18.384 billion meticais, affecting 13,886 kilometers of roads and 47 bridges. This single event cost nearly three times the annual maintenance budget, highlighting the extreme financial pressure placed on the national infrastructure system.
6Emergency Reserve Proposal
Over the last five years, funds secured for climate-related repairs covered less than 10% of total needs. Consequently, the government is proposing the creation of a dedicated climate emergency reserve account. This mechanism would allow for rapid disaster response without diverting funds away from the essential, ongoing regular road maintenance programs.
7Operational Maintenance Goals
The additional revenue is projected to finance the maintenance of over 10,932 kilometers of roads. Furthermore, the government aims to guarantee 330 kilometers of periodic maintenance annually. A specific annual allocation of four billion meticais will be ring-fenced for rural road programs to improve connectivity in the country's most isolated agricultural regions.
8Strategic Regional Alignment
By raising taxes to the 15-cent threshold, Mozambique seeks to match regional standards within the SADC bloc. While fuel prices were already increased in May due to Middle East energy market volatility, the government maintains that current infrastructure funding levels are insufficient to prevent further systemic decay of the national road network.
Original article: RTP Notícias — Mozambique Proposes Fuel Tax Hike to Fund Road Maintenance