The national airline has revealed that Parliament, the Ministry of Foreign Affairs and the Kenya Revenue Authority (KRA) owe Kenya Airways Sh3.54 billion.
Kenya Airways CEO Allan Kilavuka told the Senate Roads, Transport and Public Works Committee that it is also seeking government assistance in repatriating funds stuck in various jurisdictions including Nigeria, Malawi, Ethiopia and Burundi totaling Sh1.4 billion as of September 2024.
Mr Kilavuka told senators that KRA owes Sh2.7 billion as of August 2024 in Value Added Tax (VAT) refunds.
He said the Ministry of Foreign Affairs owed the national carrier Sh294 million in unpaid air tickets while the National Assembly had not cleared Sh242 million.
The Parliamentary Service Commission (Shs. 191 million), the Parliamentary Joint Services (Shs. 30 million) and the Directorate of Immigration Services (Shs. 32 million) were not paid.
“Government must support us in collecting amounts owed from various state agencies totaling Sh840 million as of September 2024,” Kilavuka told senators.
“The government should support the payment of VAT refunds totaling Sh2.7 billion from August 2024.”
Parliament is KQ’s biggest client, Mr Kilavuka told the committee chaired by Senator Kiambu Karungo Thangwa.
He said other state agencies had debts much older than those of the National Assembly, the Parliamentary Service Commission and the Joint Parliamentary Services.
“We invoiced them but the debt was not paid. To be fair to the National Assembly, the Parliamentary Service Commission and the Joint Parliamentary Services, they are our biggest customers,” Kilavuka said.
“KQ’s current debt that has remained unpaid for less than 90 days, the Ministry of Foreign Affairs owes us Sh213 million, while the debt over 91 days is Sh81 million.”
Kitui Senator Enoch Wambua has demanded to know why Parliament failed to pay the debt owed to Kenya Airways when they were allocating the money in the budget.
Mr Kilavuka asked Parliament to assist in implementing the Kenya Air Policy which was developed in 2016 and aims to prioritize KQ for air travel by government ministries, departments and agencies in line with the Public Procurement and Asset Disposal Act.
“While KQ qualifies for preferential treatment under the law, its compliance rate with the policy is only 30 percent, primarily due to a lack of enforcement mechanism and KQ’s prices often outperforming the profit margins offered by travel agents,” Mr Kilavuka said.
He said the national carrier proposed and wrote to the National Treasury to register a Special Economic Zone (SEZ).
Mr Kilavuka said KQ had applied for SEZ registration for specific activities on its infrastructure at the Jomo Kenyatta International (JKIA) and Pride Center in Embakasi.
“With the above, KQ intends to venture into the specialized field of engine repair and reconditioning. This will not only provide service to our fleet but also to overseas carriers,” said Mr Kilavuka.
“To make the project competitive and commercially viable, a SEZ is essential as it will provide a host of tax benefits and thus attract the required partnership with KQ to set up this facility.”
Mr Kilavuka said the SEZ would be a game changer and the specialized area of engine repair and reconditioning would be the second such facility in East and Central Africa after Ethiopia.
He called on the government to implement the air service agreement for Kenyan airlines to ensure reciprocity.
Mr. Kilavuka said that KQ, for example, operates only 10 weekly flights between Kenya and the Middle East, compared to 29 weekly flights operated by airlines in the Middle East.