Chinese loans start to weigh on as Uganda watches airport foreclosure

Kampala, November 28 (UNI) Uganda, an East African country, is considering the seizure by China of its only international airport, in addition to other state assets, following the delay in reimbursement of a $ 200 million loan to Beijing, media reported.

The $ 207 million loan was taken out by Yoweri Museveni’s government in 2015 for the expansion of Entebbe International Airport. He had a seven-year grace period which has now expired.

According to the Ugandan newspaper Daily Monitor, China has rejected a request to renegotiate the “toxic clauses” of the $ 200 million loan taken out six years ago.

It states that “Some of the adverse provisions of the loan agreement that Uganda signed with the EXIM Bank of China on March 31, 2015, if not changed, expose Uganda’s sovereign assets to foreclosure. and the takeover in arbitral awards in Beijing. “

Eleven Ugandan officials had traveled to Beijing to ask the Exim Bank of China to renegotiate the clauses in a bid to save the sovereign assets as attachments.

“Our investigations revealed that any proceedings against the assets of the Uganda Civil Aviation Authority (UCAA) by the lender would not be protected by sovereign immunity since the Ugandan government, in the 2015 agreement , lifted immunity on airport assets, “the Daily Monitor, a Ugandan Daily, reported.

During the meeting, four Exim Bank of China executives noted that any change to the clause “would set a bad precedent in the future.”

Prior to the trip to Beijing, Exim Bank suspended funding and cited breach of loan agreement after UCAA failed to implement some of the clauses, which were not favorable to Uganda .

One of those clauses required the UCAA to open an escrow account that would contain the revenues of the Civil Aviation Authority and not use the money accumulated in the account.

Exim Bank realized that the terms of the loan agreement were not being implemented and, as a result, froze the Chinese entrepreneur’s cash flow.

Ugandan Civil Aviation Authority officials called 13 clauses of the agreement “unfair and eroding Uganda’s sovereignty.”

Ugandan Finance Minister Matia Kasaija last week apologized to parliament for “mismanaging the $ 207 million loan” from China Exim Bank to expand Entebbe International Airport.

Progress at the airport, built in 1972, has reached 75.2 percent, with two runways reaching 100 percent overall completion.

Entebbe International Airport is Uganda’s only international airport and handles over 1.9 million passengers per year. Its seizure by China would significantly erode the legacy of Museveni, 77, who came to power following an armed uprising in 1986, and expose him to electoral defeat.

Ugandan Finance Minister Matia Kasaija told MPs that “at the time in 2015 they viewed China’s loan offer as the” best possible alternative and jumped on it “, an admission that sheds light on how whose countries are entering what academics and critics call Beijing’s debt trap. “

According to the Daily Monitor, “a number of countries, including some in Africa, have had to relinquish domestic assets for direct control of China after failing to repay hastily signed commercial loans or without proper oversight, such as as the financing agreement to finance the new terminal, freight and fuel center works’ at Entebbe International Airport.

He cites the Port of Hambantota in Sri Lanka which the country leased to China for 99 years after failing to repay the loan. He says “that in September 2018, Zambia also lost Kenneth Kaunda International Airport to China due to debt gone bad. Chinese lenders already controlled the country’s public broadcasting company, ZNBC.

Meanwhile, other over-indebted African states are studying the fine print of their loan deals with China as they prepare to travel to Dakar, Senegal, where the 2021 summit of the Forum on China-Africa Cooperation ( FOCAC) will be held on November 29. -30, amid stinging economic and social challenges fueled by the Covid-19 crisis.

UNI / IA

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