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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.
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
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
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.
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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.
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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
//Cue in: “we have been…//
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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
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