Uganda may have to hand over Entebbe Airport to China

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

Committee members led by chairperson, Hon Joel Ssenyonyi, on Thursday, 28 October 2021, tasked the Minister for Finance, Planning and Economic Development, Hon Maria Kasaija, to explain whether due diligence had been made prior to government signing the agreement with the Export-Import Bank of China (Exim Bank).

On Tuesday, 17 November 2015, government represented by the finance ministry and the Civil Aviation Authority at the time, signed an agreement with China Exim Bank to borrow U$200 million at two per cent upon disbursement; with a maturity period of 20 years including a seven-year grace period.

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.

Hon Jessica Ababiku (NRM, Adjumani District) asked the minister to furnish the committee with the checklist used in verifying factors approving that feasibility of the loan agreement for Uganda.

“We want to know what interests of Uganda were put forward to the China Exim bank while negotiating this loan,” Ababiku said.

Minister Kasaija acknowledged that due diligence was done but refrained from giving details, preferring to have his technical staff to answer.

Mr Juvenal Muhumuza, an Assistant Commissioner at the finance ministry said the due diligence on the loan agreement had been done, owing to the fact that Uganda has previously benefited from a number of loans provided by the China Exim Bank.

“They have given us four other loans so we were sure of their terms. We also looked at the terms of the agreement through the negotiations we had done with the bank; so we did carry about due diligence,” added Muhumuza.

Ms Molly Apio, 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 17/35 and 12/30 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.