The Minister of Works and Transport, Gen Katumba Wamala has defended the $200 million (710 billion shillings) loan agreement that Uganda signed with the Exim Bank of China for expansion of Entebbe International Airport.
Public debate has still been raging along claims that the Government of Uganda mortgaged the airport for the loan.
The debate is centred around certain clauses that are termed as “unfair” to Uganda, and thus expose the Airport to a takeover by China.
For example, despite Uganda being a sovereign country, the agreement was signed based on the Chinese Legal Regime with all litigation meant to be settled in China.
In the agreement, an Escrow Account was created in Stanbic Bank as a holding account, and guarantees that Uganda will pay back the loan.
Although Uganda has so far deposited 4.9 billion shillings, the rights on this account are entirely in the control of the Exim Bank of China.
Speaking to reporters in Kampala on Thursday, Gen Katumba defended the agreement, particularly the Escrow Account, and assured Ugandans that the Airport will not be taken by China.
“When you talk about Escrow Account, it’s like you go to the Bank and say, I want to get a loan; my employer will pay the loan. The Bank can decide and say, yes I agree, but I want a minimum deposit on your account to maintain that deposit so that the Bank is sure that you are going to service your loan. That is the Escrow Account,” Katumba said.
“What the agreement is saying, put some money on that account; in the event that there is any delay in payment, there is somewhere we can pick the money. It is not that put money there, and whatever you put there, I takeaway. Otherwise, the 4.9 billion which is there, would not be there,” he added.
However, Katumba’s remarks are contrary to the remarks made by the Minister of Finance, Matia Kasaija who on October 28, 2021 expressed fear over some unfair clauses in the agreement especially on the Escrow Account.
“The Chinese Bank (Exim Bank) has to continue controlling that account (Escrow Account); I don’t think that is good really,” Kasaija told reporters after meeting with the Parliamentary Committee on Commission Statutory Authorities and State Enterprises (COSASE) on October 28, 2021.
Kasaija had, in the meeting with COSASE members admitted that the some terms of the agreement were unfair to Uganda.
It has been reported that Uganda sent an 11-member delegation to Beijing to plead with Exim Bank to renegotiate the “toxic clauses” now impugned by Kampala.
The joint team from the Works, Foreign Affairs, and Finance ministries, as well as UCAA and Attorney General’s Chambers, was led by Dr Chrispus Kiyonga, Uganda’s Ambassador to China.
“In the meeting, the four Exim Bank executives reportedly rejected any amendments to clauses of the signed Financing Agreement, and made it clear to the Ugandan executives that any attempts to make alterations would set a bad precedent. In addition, the Chinese told their guests that they saw no cause to warrant the amendment.”
Meanwhile, Katumba said that in the agreement, the loan has a grace period of 7 years, adding that it has not yet expired.
“This loan has a grace period of 7 years. The grace period has not expired. It has a repayment period of 20 years. We have not even started on that period. So, where does the taking of the Airport come from? The Airport is going nowhere,” Katumba said.
The expansion of the Airport will see the building of a new passenger terminal, cargo centre and fuel centre.
