The Ugandan government is on the verge of losing its major
airport to China for failing to repay a loan.
The government has failed to reverse a loan agreement with
the Chinese which had repayment conditions of attaching its only airport.
Entebbe International Airport and other Ugandan assets were
attached and agreed to be taken over by Chinese lenders upon arbitration of the
loan.
According reports, President Yoweri Museveni had sent a delegation to Beijing hoping to renegotiate the toxic clauses.
The visit was unsuccessful as China authorities refused to
allow any alteration in the original terms of the deal.
The Uganda government, represented by the finance ministry
and the Civil Aviation Authority at the time,
had on 17 November 2015, signed an agreement with Export-Import Bank of
China (Exim Bank) to borrow U$207 million at two per cent upon disbursement;
with a maturity period of 20 years including a seven-year grace period.
The deal signed with the Chinese lenders virtually means Uganda
“surrendered” its most prominent airport to China.
The Uganda Civil Aviation Authority (UCAA) said some
provisions in the Financing Agreement expose Entebbe International Airport and
other Ugandan assets to be attached and taken over by Chinese lenders upon
arbitration in Beijing.
The rejection of Uganda’s plea to renegotiate the toxic
clauses of the 2015 loan has left Museveni’s administration in limbo.
According to the Daily Monitor of Uganda, the Ugandan
government waived international immunity in the agreements it signed to secure
the loans, exposing Entebbe International Airport to take over without
international protection.
Last week, Uganda’s Finance Minister Matia Kasaija
apologised to parliament for the “mishandling of the $207 million loan” from
the China Exim Bank to expand Entebbe International Airport.
“I apologise that we shouldn’t have accepted some of the
clauses,” Kasaija told members of the committee in response to questions asked
by the legislators.
There were also questions over the interest rate that was
set by the China Exim Bank for the funds placed in an off-shore Standard Bank
account that was used as collateral for the project.
Built in 1972, Entebbe International Airport handles over
1,9 million passengers per year.
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