Vietnam Air Petrol has threatened to suspend fuel supply to Jetstar Pacific, saying the low-cost carrier has failed to repay its debts.

In its ultimatum dated May 17, the fuel supplier, also known as Vinapco, said it had demanded payments from Jetstar Pacific many times but the carrier had not responded.

As of Friday, the debts had mounted to VND173 billion (US$8.35 million), which Vinapco said could compromise its balance sheet. As a result, the company has requested the authorities to allow it to suspend sales to Jetstar Pacific until the carrier fulfills its debt obligations.

News website VnExpress cited a Jetstar Pacific official as saying on Friday that his company was going through a restructuring process. The airline had requested a payment extension until June and it had been approved by Vinapco already, he said.

However, a source from Vinapco said the fuel company has not agreed to any extension. Vinapco itself has had to borrow money from banks to import fuel and Jetstar’s late payment was hurting its business, the source said.

This is not the first time Vinapco, an affiliate of state carrier Vietnam Airlines, and Jetstar Pacific have been caught up in a dispute.

In April 2008, Vinapco cut off supplies to Jetstar as the two sides were arguing over a price increase. It caused a delay that grounded 30 flights with some 5,000 passengers. The authorities then ordered Vinapco to resume supply, and later fined it VND3.4 billion ($164,250) for abusing its monopoly position.

The fuel company protested the ruling, saying it was not fair. The dispute lasted through the end of last year, until a court in Hanoi rejected an appeal by the fuel company against the fine.

Vinapco is Vietnam’s largest jet fuel supplier. It held a monopoly in the local market until February 2010, when the country’s top oil products importer Petrolimex began selling jet fuel.

Source: Thanh Nien/VNE