Ruto Wins as High Court Upholds Railway Development Levy for SGR Expansion
President William Ruto has received a significant legal victory after the High Court upheld the constitutionality of the Railway Development Levy, clearing the way for the government to continue using the fund to support the extension of the Standard Gauge Railway (SGR) to Malaba.
In a ruling delivered on Friday, July 17, Justice Gregory Mutai found that the Railway Development Levy was lawfully enacted, affirming the legality of the government’s key infrastructure funding mechanism.
The judge ruled that the levy, charged at 2 per cent of the value of imported goods, was properly enacted under Kenyan law.
The levy is collected by the Kenya Revenue Authority before imported cargo is cleared and applies to goods entering Kenya through sea, air and land entry points.
Each year, the levy generates between Ksh36.8 billion and Ksh50 billion, providing one of the government’s most important sources of funding for railway infrastructure.
The Railway Development Levy was introduced to finance the construction, operation and maintenance of the Standard Gauge Railway and other national railway projects aimed at lowering regional freight transport costs.
Under the Miscellaneous Fees and Levies (Amendment) Act, revenue collected from the levy is deposited into the Railway Development Levy Fund, ensuring the money is dedicated exclusively to railway development.
The ruling represents a major boost for the Ruto administration, which has been seeking sustainable financing options for large infrastructure projects while balancing the country’s growing public debt obligations.
The decision also allows the government to continue leveraging up to 90 per cent of the fund’s future revenues as collateral to secure financing for railway projects under the amended law.
The government is currently pursuing a 15-year infrastructure bond valued at between Ksh387 billion and Ksh390 billion to finance the Naivasha-Kisumu-Malaba section of the Standard Gauge Railway.
The ambitious railway extension is expected to be completed between June and August 2027.
In addition, the Railway Development Levy is expected to serve as security alongside the Air Passenger Service Levy under a Ksh541 billion multi-levy securitisation programme designed to finance major transport infrastructure across the country.
According to official budget estimates, the National Treasury expects the Railway Development Levy to generate Ksh48.5 billion during the financial year ending June 2027.
However, the court also found fault with the government’s previous use of the levy to finance the Nairobi Commuter Rail project before Parliament amended the law.
Justice Mutai ruled that this earlier use of the fund was unconstitutional.
He directed the government to conduct a fresh, transparent and competitive tender for the continuation of the works within 90 days.
While the judgment reinforces the government’s legal authority to continue collecting and deploying the Railway Development Levy for railway expansion, it also underscores the need for strict compliance with procurement laws and parliamentary approval when public infrastructure funds are redirected to new projects.
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