Dubai firm threatens legal action against Uganda Airlines over Shs37b fuel debt
What you need to know:
- The contractor also warned that in the event that legal action is taken responsibility would rest “solely with Uganda Airlines’ management, as the situation is critical and requires immediate action.”
Dubai-based MixJet Flight Support has given Uganda Airlines a 48-hour ultimatum to pay at least $6 million of the $10 million (about Shs37 billion) the national carrier owes the fuel contractor.
The Airlines had reportedly committed to first pay $2 million as part of the ongoing efforts to address the outstanding debt.
However, the contractor is yet to receive the funds which cover only a quarter of the debt.
“Without an additional payment of $4 million, we will be unable to settle critical dues...,” a source at MixJet said before adding that the delay in payment is affecting their ability to maintain services for their other clients.
This publication understands MixJet wrote to Uganda Airlines Chief Executive Officer, Ms Jenifer Bamuturaki on November 1, 2024 requesting an immediate payment of at least $6 million within 48 hours, failure of which would leave the contractor with no option but to halt all services and “pursue legal avenues to recover the owed balance.”
The contractor also warned that in the event that legal action is taken responsibility would rest “solely with Uganda Airlines’ management, as the situation is critical and requires immediate action.”
Uganda Airlines signed a contract for global fueling with MixJet, which then subcontracts other suppliers on the ground to deliver the service on its behalf.
Although the contract requires that MixJet should receive priority, a source at the Uganda Airlines said management has been making advance payments to other suppliers in four locations.
The said suppliers charge higher rates than those quoted by MixJet, according to our source who argued that the practice not only strains Uganda Airlines cash flow but also suggests a lack of fair treatment “and may constitute a breach of contract by diverting business from MixJet without valid justification.”
Another source at the national carrier who’s not authorized to speak to the media said the delayed payment jeopardizes the continuation of Uganda Airlines flights to Dubai and Mumbai for November.
In a statement, the airline said the delay in payment is derived from its insistence on paying based on fuel uplifts and tech logs, not just the supplier's invoices.
"Over time, the Airline has received some inflated fuel invoices, high market prices, erroneously billed and over-invoiced, and consistent threats to withdraw services without due warning to the detriment of our operations," the November 4 statement said in part.
Since its inception, the airline says it has contracted MIXJET to supply fuel.
"From July 2019 to July 2024, the airline said it had made payments to MIXJET valued at $140m. The amount due to MIXJET is approximately $8m and not $10m as claimed..... While the Airline appreciates the credit facilities offered by the supplier, it finds it unacceptable that the supplier would drag it to mainstream media to protest standard financial management practices. The Airline will reconcile every invoice and, after satisfying itself, pay the supplier within a reasonable time. The Airline assures the public, especially its guests, that its operations will continue unabated," the statement added.