Outspoken Member of Parliament, Olo Fiti Vaai, has blasted Prime Minister Tuilaepa Sa’ilele Malielegaoi’s government for its “failure” to pay Virgin Australia US$4.02million (T$9.2m) in jet fuel excise rebates.
Virgin Australia has been "actively pursuing" the payment from the government since April 2015.
Speaking to the Samoa Observer, Olo said the government’s failure is embarrassing. He said the government should honour its obligations because this failure will again end up being carried by taxpayers.
“Now Virgin Australia is asking the government to fork out $9 million, who will pay for this?" he said.
“We will, which is sad. And yet this is a government mistake and of course the low income people will have to fork out for the money.”
The M.P. expressed his disappointment.
He said Prime Minister Tuilaepa should ensure this money is paid immediately.
The demand for payment was made in a letter to Prime Minister Tuilaepa leaked to the Samoa Observer. Dated 29 May 2017, the letter is written by John Borghetti, the Chief Executive Officer of Virgin Australia.
It is in response to the notification from Prime Minister Tuilaepa, dated 12 May 2017, that Cabinet had decided not to re-new the Joint Venture between the government, Virgin Australia and owning entity Grey Investment Group.
“I would like to bring to your attention that Virgin Australia intends to continue to pursue the US$4m in jet fuel excise rebates, which is currently owed by the Samoan Government to the VSAM JV,” Mr. Borghetti writes.
“I understand that the Special Negotiating Team is aware of this issue. Virgin Australia has been actively pursuing the repayment of these monies since April 2015, as noted in the attached letter to the Ministry of Revenue.”
The letter Mr. Borgetti is referring to was written by Geoff Smith, Virgin Australia’s Chief Financial Officer to the head of the Ministry of Revenue, Avalisa Viali-Fautua'alii on 22 February 2017.
“We write to you in relation to Virgin Samoa’s entitlement to claim a refund for excise paid on jet fuel purchased from Petroleum Products Supplies Ltd (P.P.S.) - the agent appointed by the Government of Samoa to undertake jet fuel distribution at Faleolo International Airport,” Mr. Smith’s letter reads.
“All payments made by Virgin Samoa to PPS for jet fuel until 30 June 2016 included an amount of excise at the rate of 0.28 Samoan Tala (SAT) per litre."
“Article 24 of the Convention on International Civil Aviation, to which Samoa is a signatory, provides that jet fuel for international air services shall be exempt from customs duty, inspection fees or similar national or local duties and charges."
“This position is re-enforced in Article 13 of the Samoa-Australia Air Services Agreement, which provides that fuels shall be exempt from customs duties, excise duties, inspection fees and other national duties and charges.”
According to Mr. Smith, Virgin Samoa initially contacted the Ministry of Revenue in April 2015 seeking advice regarding the process and requirements involved with claiming a refund of excise paid on jet fuel.
“Despite numerous follow up communications we were provided with insufficient information and guidance to allow us to commence our claim,” Mr. Smith’s letter continues.
Back to olo, the furious M.P. told the Samoa Observer he will be looking into this.
“I have to get to the bottom of this and I have said more than once that having the joint venture was a big mistake to begin with, now what?
“The government didn't follow through with deals and signed agreements made with this Airline and this is the end result, we end up paying for the mistake.”
Olo suggested for the government to reconsider other development projects but save the money to purchase Samoa their own airplane.
He’s referring to negotiations between Fiji Airways and Polynesian Airlines.
“Why are even looking at working with another Airline, why can’t Samoa consider purchasing their own Airplane?” said Olo.
He said if the government is really keen on saving money they should invest in their own Airplane.
Efforts to get a comment from the Ministry of Revenue, Avalisa Viali-Fautua'alii have been unsuccessful.
Emails sent to her last week have not been responded to.
The Samoa Observer visited her office twice.
The first time, the Samoa Observer was told the “C.E.O was too busy.”
Yesterday, according to her secretary “she’s out sick today [yesterday].”