Parliament, KRA among state agencies owing Kenya Airways over Sh3 billion

Kenya Airways (KQ) has revealed that various government agencies, including Parliament, the Ministry of Foreign Affairs, and the Kenya Revenue Authority (KRA), owe the airline Sh3.54 billion.

KQ’s CEO Allan Kilavuka disclosed this while addressing the Senate Committee on Roads, Transportation and Public Works on Tuesday.

Kilavuka told senators that KRA owes the national carrier Sh2.7 billion in value added tax (VAT) refunds as of August 2024.

He added that the Ministry of Foreign Affairs has not settled air ticket bills totalling Sh294 million, while the National Assembly has an outstanding debt of Sh242 million.

Other government bodies also owe the airline significant amounts.

The Parliamentary Service Commission is yet to pay Sh191 million, the Parliamentary Joint Services owes Sh30 million, and the Directorate of Immigration Services has not cleared Sh32 million.

"The government should assist us in recovering Sh840 million from these agencies," Kilavuka urged, stressing the need for support in collecting overdue payments.

The airline is also seeking government assistance in repatriating Sh1.4 billion stuck in several countries, including Nigeria, Malawi, Ethiopia, and Burundi, as of September 2024.

Foreign exchange controls

Kilavuka said these funds have been trapped due to foreign exchange controls and other restrictions in these nations.

Despite the challenges, the CEO told the committee chaired by Kiambu Senator Karungo Thangwa that Parliament remains KQ's largest customer.

However, the airline continues to face challenges in receiving timely payments from these government entities.

"While Parliament is our biggest client, we still face delays in payments. To be fair, the National Assembly, Parliamentary Service Commission, and Parliamentary Joint Services are our biggest customers," he said.

Kilavuka provided more details on the Ministry of Foreign Affairs debts, explaining that Sh213 million has been outstanding for less than 90 days, while Sh81 million has been due for over 91 days.

Kitui Senator Enock Wambua questioned why Parliament has not cleared its debts, even though funds have been allocated in the budget for air travel.

In response, Kilavuka called for Parliament to enforce the "fly Kenya policy," developed in 2016. This policy prioritises Kenya Airways for government air travel under the Public Procurement and Asset Disposal Act.

"While KQ qualifies for preferential treatment under this law, compliance is at just 30 per cent due to weak enforcement and higher costs from travel agents," he explained.

Kenya Airways is also exploring new ventures to boost its revenue.

The airline has proposed to the National Treasury the creation of a Special Economic Zone (SEZ) for its infrastructure at the Jomo Kenyatta International Airport (JKIA) and its Pride Centre in Embakasi.

According to Kilavuka, the SEZ status would enable KQ to enter the specialised field of engine repair and overhaul, attracting third-party carriers and boosting its service capabilities.

"To make this venture competitive and commercially viable, SEZ status is essential as it would offer tax benefits and encourage partnerships with KQ," Kilavuka noted, adding that this move could enhance the national carrier's financial standing.