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Uganda Airlines ‘exiting’ deal with Dubai firm over airport fuel fiasco

Latest03pix (1)Ugandan Airline A fuelling saga has led to a four-way faceoff between Uganda Airlines, its supplier MixJet

Sat, 17 Jul 2021 Source: theeastafrican.co.ke

Uganda Airlines is considering cancelling the contract with its fuel supplier, Dubai-based MixJet Flight Support, after two incidents in which the carrier’s flights were delayed at the Julius Nyerere International Airport in Dar es Salaam due to late delivery of fuel.

The airline weathered a public relations storm on July 12, after a passenger on flight UR321 from Dar es Salaam to Entebbe shared online that the flight had been delayed because it had not paid for fuel.

The flight’s departure was delayed by one hour, 45 minutes, allegedly because Total, which is subcontracted to fuel the Ugandan carrier on behalf of MixJet, scrambled to find fuel, following the exhaustion of its own suppliers at the airport.

The claim went viral and generated heated debate, with many assuming that the aircraft had run out of fuel while airborne. However, the airline refuted these reports, saying that before departure, “it is standard practise to ensure that the aircraft has enough fuel for its intended destination and enough fuel reserves to an alternative airport if the need arises due to bad weather or any other unforeseen circumstances that could prevent a landing.”

Bageya Waiswa, Permanent Secretary in the Ministry of Works and Transport, downplayed the crisis, saying it had been blown out of proportion. The airline was on solid footing, he said and is preparing to launch long-haul services once the Covid-related travel restrictions are lifted.

The fuelling saga has led to a four-way faceoff between Uganda Airlines, its supplier MixJet, and subcontractors that operate the fuel farms at all of Tanzania’s gateways. According to sources at the airline, this was the second time the carrier, which pays for its fuel in advance, was being subjected to such embarrassment. The airline’s services from Dar were first delayed on May 13, again due to late delivery of fuel.

Uganda Airlines signed a contract for global fuelling with MixJet, which then subcontracts other suppliers on the ground to deliver the service on its behalf. Total is the subcontractor that is supposed to fuel the carrier at Entebbe and Dar es Salaam airports. The contract requires Uganda Airlines to pay for all its fuel stock a month in advance. The airline says it paid for supplies for July on June 26.

The EastAfrican has learnt that the events leading to the hold-up started when Total, which acts on behalf of MixJet but is also dependent on another company that operates the hydrants and fuel storage facilities at Dar, Zanzibar and Kilimanjaro airports, ran out of reserves.

“As our agent, MixJet should be able to notify us well in advance of such disruptions,” said Uganda Airlines adding, “During such incidents, Total, the Mixjet subcontracted service provider in Dar, becomes non-responsive and is not reachable on phone leaving the ground teams stranded and having to liaise with Mixjet, based in the Middle East, on email which further prolongs the delays.”

MixJet was not available for comment.

Uganda Airlines is uncomfortable with a clause in the contract that requires it to make advance payments for fuel, because it exposes it to possible financial loss, in the event of default by MixJet. The airline said advance payments need to be backed up by a bank guarantee to mitigate the risk of any loss accrued.

The airline has now sought authority from its shareholders to exit the contract with MixJet and engage directly with suppliers to secure what they say are better and more favourable payment terms for fuel.

“Notice is given for termination of contract with Mixjet and a new competitive and transparent procurement process is initiated to cater for the services currently provided for in the MixJet contract,” the airline said.

The fuel dispute comes against a backdrop of reduced services as the airline grapples with the downturn in business imposed by Covid-19 restrictions with daily flights to Dar es Salaam, Nairobi and Juba reduced to one. Planned flights to London, Dubai, India and China have also been put on hold either because countries are banning travellers from Uganda and vice-versa.

The airline has also been operating without a board following its suspension together with senior managers in late April. More managers, including the commercial director, procurement manager, two pilots and a human resource officer were also sent on a three-month suspension in mid-May.

According to Mr Bageya, who issued the suspension letters, there was discontent and a dispute with the way the airline was being managed.

“The appointing authority decided that they should be sent on suspension for three months so that an audit of the airline could be conducted. We hope that at the end of the three months, some of them will be able to come back,” he said.

Source: theeastafrican.co.ke