Museveni Mortgages Airport To The Chinese
26 November 2021
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By A Correspondent- The Ugandan government has failed to reverse a loan agreement with the Chinese, which had repayment conditions of attaching its only airport.

Reports say President Yoweri Museveni recently sent a delegation to Beijing hoping to renegotiate the toxic clauses. Still, the officials came back empty-handed as China would not allow the original deal’s terms to be varied.

On17 November 2015, the Uganda government, represented by the finance ministry and the Civil Aviation Authority at the time, 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.

It has now emerged that the deal signed with the Chinese lenders virtually means Uganda “surrendered” it’s most prominent airport. 

The Uganda Civil Aviation Authority (UCAA) says 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.

It also emerged that China has rejected pleas by Uganda to renegotiate the toxic clauses of the 2015 loan, leaving Ugandan President Yoweri 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.

In desperation, Uganda in March sent a delegation to Beijing hoping to renegotiate the toxic clauses, but the officials came back empty-handed as China would not allow the terms of the original deal to be varied.

Last week, Uganda’s Finance Minister Matia Kasaija apologized to parliament for the “mishandling of the $207 million loan” from the China Exim Bank to expand Entebbe International Airport.

“I apologize that we shouldn’t have accepted some of the clauses,” Kasaija told members of the committee in response to the question 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.

Three weeks ago, Uganda Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises raised concern over terms of the loan acquired to upgrade and expand Entebbe International Airport.

Committee members led by chairperson Joel Ssenyonyi demanded the Minister for Finance, Planning and Economic Development Maria Kasaija, to explain whether due diligence had been made prior to government signing the agreement with the Chinese bank.

Ssenyonyi asked the finance minister to explain at what stage the due diligence had been done on the loan financing terms presented by China Exim Bank, noting that they were not in favour of the tax payer.

“It is right to understand how China has done this. But then, how has Uganda always done its loan agreements? This would have provided a meeting point between the two parties,” said Ssenyonyi.

A Legal Adviser at the finance ministry told the committee that they reviewed the agreement, especially on the waiver of immunity and added that some conditions could not be negotiated.

“The President on his trip to China, raised this as one of the challenges that China ought to address in our agreement,” Apio told the committee.

Progress of works at the airport has reached 75.2 per cent, with two runways having reached overall completion of 100 per cent.

The phase one project that commenced on 10 May 2016, was expected to have been completed by 09 May 2021. It was extended to 05 December 2022.

Built-in 1972, Entebbe International Airport is Uganda’s only international airport and handles over 1,9 million passengers per year. Its seizure by China would greatly dent Museveni’s legacy and expose him to election defeat.

Museveni, who came to power on the back of an armed uprising in 1986, has defied the political laws of gravity which have felled other long-serving leaders in the region.

The 77-year-old’s has managed to maintain his grip on power through a mixture of encouraging a personality cult, employing patronage, compromising independent institutions and sidelining opponents.

During the last election a year ago when he addressed the issue of stepping down, he asked: “How can I go out of a banana plantation I have planted that has started bearing fruits?”

-Online