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Chinese Firm That Financed SGR To Take Over Uganda's Airport After They Defaulted To Repay Loan

The Exim Bank of China is on a high road towards acquiring Uganda's only International Airport, Entebbe. The airport which was built in 1972 is at the mercy of the Chinese after the Ugandan government defaultted paying a loan that was meant to upgrade the airport.

It all started on 17th November 2015 when Museveni's government sought the help of the Chinese Exim Bank to facelift the airport. The company agreed to give Uganda a 207 million dollar loan to finance the refurbishment. The loan had a 20year maturity period and a grace period of seven years.

However, the Ugandan government has realized that the clauses in the agreement papers for which they signed the collateral impose that they surrender their airport to the Chinese bank should they default payment or fail to honour the terms.

With this in mind officials from the Uganda Civil Aviation Authority travelled to China to renegotiate the terms of the loan and remove the clauses that attached government assets as collateral. To their surprise, the Beijing company refused to compromise the agreement.

In circumstances like this, countries usually have international laws to prevent private companies or other states from infringing on their territory and taking over government assets should they default payment. In Uganda's case, however, the Ministry of finance waived the crucial international laws to enable fast and seamless acquisition of the loan.

In addition, Exim Bank also required Uganda Civil Aviation Authority, UCAA to keep their airport revenue in a different account that the firm would have access to. UCAA was to never use this money. Uganda failed to honour this clause of the agreement making China stop injecting funds to the airport contractor.

Exim Bank has also made a firm presence in Kenya by financing the Standard Gauge Railway.

Content created and supplied by: NewsArena (via Opera News )

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