NOTHING TO WORRY ABOUT! AG Kiryowa Kiwanuka Defends Loan Agreement Putting Entebbe Airport at Risk of Takeover by China

The Attorney General, Kiryowa Kiwanuka, has told Parliament that Uganda is able to fulfill its duties and contractual obligations in the US$ 200m Entebbe Airport Agreement between the Government and the Export-Import Bank of China.

Kiwanuka was on Tuesday, 1 December 2021 appearing before the Committee on Commissions Statutory Authorities and State Enterprises (COSASE) over the reported takeover of Entebbe International Airport by China.

Social media and some mainstream media outlets have been awash with information indicating that Uganda is set to lose its only International Airport to China over the loan of US$ 200m 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.

Now as the Attorney General appeared before the committee as Government’s legal advisor, he told the MPs that there is 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.

The Attorney General went on to explain that there are definitely consequences if Uganda does not meet its contractual obligation. He informed 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 the good since there will not be any form of corruption. Kiryowa adds 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 31^st March 2015, with a grace period of seven years, the first repayment date is 1^st 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.

Committee Chair Joel Ssenyonyi said it is a matter of concern that before Uganda Civil Aviation Authority uses money in the escrow account, they have to get clearance from China. He says that although this is an obligation now, it seems like China is entering into Uganda’s governance by approving funds in the escrow account.

Honourable Elijah Okupa (INDP, Kasilo County) who had raised the matter during plenary wondered why the Minister of Finance said that Uganda had signed a bad contract and yet the Attorney General was saying the contract was not bad.

“The Minister of Finance, Matia Kasaija, said that they are trying to re-negotiate the contract, which is a bad one; in fact they have gone [to China] two or three times but you are now saying the contract is not that bad. Who should we now believe?” Okupa asked.

Hon Bashir Kazibwe (NUP, Kawempe South) inquired if there was anything that the Attorney General could have done better in regards to the contract but Kiryowa said that looking at the circumstances and the negotiations, the contract is okay.

REPORT: PARLIAMENT OF UGANDA