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COSASE Summons Finance Minister Kasaija over Entebbe Airport Chinese Debt

Attorney General Kiryowa Kiwanuka explained to the committee that there are definitely consequences if Uganda does not meet its contractual obligation, and that he had advised the Ministry of Finance against continued re-negotiation of the contract, saying although it is not the best contract, it is not a bad one either.
Joel Ssenyonyi, the Chairperson of Parliament's Committee on Commissions, Statutory Authorities and State Enterprises (COSASE).

Audio 3

 

   

  Parliament’s committee on Commissions, Statutory Authorities and State Enterprises (COSASE) has issued summons to the Minister of Finance, Matia Kasaija after he snubbed a meeting in which he had been invited to regarding the Entebbe International Airport loan.          

Minister Kasaija was expected today to explain to legislators the progress of the government’s re-negotiations of the USD 200 million loan (equivalent to over700 billion Shillings) lent to Uganda by China to expand Entebbe International Airport.            

Joel Ssenyonyi, the Committee Chairperson says that Minister Kasaija was expected to return today following his earlier interface with the committee where he reported efforts of re-negotiating the terms of the Entebbe Airport Agreement between the Government and the Export-Import Bank of China.          

“There are issues with the terms of this agreement and the Minister conceded as much and the government has been making efforts to try and re-negotiate with the Chinese but all those efforts have really fallen flat," Ssenyonyi told journalists in part. "So, today we invited the Minister to come and give us an update…the Minister has not shown up, perhaps because he does not have the answers that we require.” 

He explained that his committee has now decided to summon the Minister, requiring him to appear before them without fail so that parliament gets to the bottom of the matter.          

//Cue in: “because as a…,'//        

Cue out:…take the Airport.”//        

Ssenyonyi said that the Minister of Finance is the one who signed the agreement on behalf of Uganda and that he is a key witness in their inquiry and needs to provide updates to the committee.      

//Cue in: “the Minister of…'//        

Cue out:…people of Uganda.”//      

He warned the Minister to ensure that he does not snub the summons saying that failure to respond to them, the committee would involve the police to fetch him.      

//Cue in: “we have been…//      

Cue out:…Minister shows up.”//          

On Wednesday, Attorney General, Kiryowa Kiwanuka, told the committee that Uganda is able to fulfill its duties and contractual obligations in the Entebbe Airport Agreement between the Government and the Export-Import Bank of China. This was in regard to the reported takeover of Entebbe International Airport by China.        

Media reports have of recent indicated that Uganda is set to lose its only International Airport to China over the USD200 million loan acquired for the expansion of the Airport in 2015.              The concerns follow contentious clauses in the agreement including the requirement for Uganda Civil Aviation Authority (UCCA) to seek China’s approval for its budget and strategic plans under the escrow account management.  The account is managed by the lender.          

Another clause indicates that disputes between the two parties will have to be resolved by the China International Economic and Trade Arbitration Commission in China putting Uganda at a disadvantage.            

However, the Attorney General told the MPs that there was no need to worry about the contract adding that the obligations in the Entebbe Airport contract are capable of performing.          

“Contracts in our view are bad when you put out obligations which are impossible of performance. The obligation in this contract is all capable of performance. We are happy with the escrow account because you have many eyes, the lender, the auditor and the borrower, this takes away the ability to misuse this money,” Kiryowa said.          

He further explained that there are definitely consequences if Uganda does not meet its contractual obligation, informing the Committee that he had advised the Ministry of Finance against continued re-negotiation of the contract, saying although it is not the best contract, it is not a bad one either.          

He said the escrow account is for good reason since there will not be any form of corruption and that the lender sees the sources of income from the current airport collections as the main way to recover the loan.        

According to Kiryowa, the talk of a takeover of the airport is false, wrong, and inconceivable since Uganda has not yet started paying the loan but is still in the grace period.          

“This contract was signed on 31st March 2015, with a grace period of seven years, the first repayment date is 1st April 2022. Government cannot be in default during the grace period,” Kiryowa said.      

On the arbitration process that reportedly favors China, Kiryowa said if Uganda’s rights are violated in the contract, Uganda can defend itself in any part of the world and it doesn’t matter if it is in China.        

However, COSASE said that it is a matter of concern that before Uganda Civil Aviation Authority (CAA) uses money in the escrow account, they have to get clearance from China. The MPs say that although this is an obligation now, it seems like China is entering into Uganda’s governance by approving funds in the escrow account.              ####################