Uganda risks losing Entebbe International Airport and other government assets to China over a loan it secured in 2015.

This is after the lenders in China declined to renegotiate toxic clauses in the agreement when $207 million was given to the country to expand the Entebbe International airport

On 17 November 2015, the Uganda government, represented by the finance ministry and the Civil Aviation Authority at the time, signed an agreement with the Export-Import Bank of China (Exim Bank) to borrow U$207 million at two percent 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’ its most prominent airport.

The Uganda Civil Aviation Authority 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 loans’ 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.

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

The phase one project that commenced on 10 May 2016, was expected to have been completed on 9 May 2021 but was extended to 5 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.