Chinese and Ugandan officials on Monday denied reports that China is preparing to take control of Uganda’s Entebbe International Airport after the Ugandan government defaults on Chinese Belt and Road Initiative (BRI) loans.
China to take over Uganda’s Entebbe International Airport for default on debt repayment.
China has rejected Uganda's request to re-negotiate toxic clauses in the $200m loan picked six years ago for the Airport expansion.
The Airport is the only Intl Airport in the country. pic.twitter.com/EXkYwFBG6y
— Tanzania Updates (@TanzaniaUpdates) November 26, 2021
Entebbe is Uganda’s only international airport. The facility became famous around the globe in 1976 when Israeli commandos rescued hundreds of passengers from an airliner seized by Palestinian terrorists and diverted to Entebbe.
Several African media sources reported last week that Ugandan officials were frantically attempting to renegotiate “toxic clauses” in a huge 2015 loan from a Chinese bank that would allow the Chinese government to seize the airport, and possibly other Ugandan sovereign assets, in the event of a default. Similar clauses have been discovered in loans to other developing nations made under China’s BRI infrastructure initiative.
According to last week’s reports, a team of Ugandan officials flew to Beijing in a last-ditch effort to renegotiate the loan, but their plea was refused by China’s Export-Import Bank. Some of Uganda’s big BRI projects have been delayed due to the coronavirus pandemic and other factors and Ugandan officials have publicly resisted China’s demands to offer oil and mineral assets as collateral for further loans to finish the work.
Some of last week’s reports claimed China has already quietly taken control of the Entebbe airport and other national assets. The Ugandan government was said to be in turmoil behind the scenes, as officials blamed each other for recklessly waiving sovereign immunity to use irreplaceable property like the Entebbe airport as loan collateral.
The Chinese embassy in Uganda rejected these reports on Sunday, while Chinese state media dismissed them as “malicious speculation” intended to drive a wedge between China and its BRI client states.
“No project in Africa has ever been ‘seized’ by China because it could not repay its loan. On the contrary, China firmly supports and is willing to continue to make efforts to improve Africa’s capacity for independent development,” said a spokesman for the Chinese embassy.
“China-Uganda cooperation always adheres to the principles of openness, transparency, equality and mutual benefit. All loan agreements, including the Entebbe Airport reconstruction and expansion project, are voluntarily signed by both parties through dialogue and negotiation. There are no hidden terms and no political conditions are attached,” the spokesman insisted.
Ugandan officials also denied the reports and said there was no immediate risk of default on the country’s Belt and Road loans.
“It is not true that Uganda is going to lose Entebbe International Airport in any way whatsoever. This is not the first time that this allegation is coming up. Uganda is not about to default in honoring the loan obligation. We are still within a grace period of seven years and during that period we have been paying interest,” the Uganda Civil Aviation Authority told Voice of America News (VOA) on Monday.
VOA noted, however, that African journalists have seen documents showing Uganda did attempt to re-negotiate a $200 million loan taken from China to expand the Entebbe airport, and Chinese bank officials rejected the request.
One clause in the loan reportedly requires the Uganda Civil Aviation Authority to put all of its revenues into an escrow account that cannot be accessed without permission from Beijing. Another clause gives China’s Export-Import Bank oversight power over the Entebbe airport’s monthly operating budget, and the power to inspect various Ugandan government accounts at will, including the Civil Aviation Authority. This could be the source of reports that China has taken effective control of the Ugandan airport.
At a press conference on Monday, Chinese Foreign Ministry spokesman Wang Wenbin insisted Beijing sees Uganda as an “important cooperative partner in Africa” and has no intention of seizing its sovereign assets.
“The so-called allegation that China’s financial institution will seize and take over Uganda’s project and assets is nothing but ill-intentioned speculation that has no factual grounds. In fact, not a single China-Africa cooperation project has been ‘taken over’ or ‘confiscated’ by China due to debt problems,” Wang said.
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