China to seize Uganda’s Entebbe airport after loan default? Viral report officially denied

Entebbe International Airport, the only international airport of Uganda | Commons

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New Delhi: Reports in some African news portals this week suggested China could take over the Entebbe International Airport — Uganda’s only international airport — over alleged default on a $200 million loan to expand the airport. However, the African country’s civil aviation regulator and Beijing have both denied the reports. 

The takeover reports referred to certain “toxic clauses” in the loan agreement — signed by the Uganda government with the Export-Import (Exim) Bank of China on 31 March 2015.

“Some of the unfavourable provisions in the loan agreement that Uganda signed with the Export-Import (Exim) Bank of China on March 31, 2015, if not amended, expose Uganda’s sovereign assets to attachments and take-over upon arbitration awards in Beijing,” a report in Uganda’s The Monitor said.

“Our investigations found out that any proceedings against Uganda Civil Aviation Authority (UCAA) assets by the lender would not be protected by sovereign immunity since Uganda government, in the 2015 deal, waived the immunity on airport assets,” it added.

Uganda, the report said, had sent an 11-member delegation to Beijing to renegotiate some of the clauses of the deal with Exim Bank, but failed in their mission.

The team led by Dr Chrispus Kiyonga, Uganda’s Ambassador to China, included members from the Works, Foreign Affairs, and Finance ministries, as well as the UCAA and the Attorney General’s Chambers.

The UCAA spokesperson and China’s director general for African Affairs have dismissed the takeover reports.

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China refused to amend problematic clauses in loan agreement 

According to the report in The Monitor, Exim Bank executives rejected any amendments to clauses of the agreement, adding that they saw no cause to warrant the amendment.

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UCAA officials reportedly flagged up to 13 clauses in the agreement as “unfair” and eroding “the sovereignty of Uganda”. The provisions reportedly include surrendering the approval of UCAA budget, master and strategic plans to Exim Bank in Beijing.

Reports of the alleged Entebbe takeover come amid alarm over what is described as China’s “debt trap” diplomacy — offering loans to developing nations under terms that allow for the takeover of assets in case of default. 

Sri Lanka, for example, was forced to surrender its Hambantota Port on a 99-year lease after it failed to repay the loans taken to build it.

(Edited by Paramita Ghosh)

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