The Ugandan government is at the verge of losing its only major airport to China for failing to repay a loan. And this is because, 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 major Ugandan assets were attached to the loan agreement; and were to be taken over by Chinese lenders upon the defaulting of the loan repayment.
According reports, President Yoweri Museveni had initially sent a delegation to Beijing in China hoping to renegotiate the toxic clauses but to no avail. As the visit was unsuccessful as the Chinese authorities refused to allow any alteration in the original terms of agreement of the loan deal.
The Ugandan 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 $207 million US dollars at two per cent upon disbursement; with a maturity period of 20 years including a seven-year grace period.
China is Set to take over the airport
The Loan agreement 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 be taken over without international protection.
Uganda’s Finance Minister Matia Kasaija apologised to parliament last week 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.
The Entebbe International Airport was built in 1972 and handles over 1. 9 million passengers per year.