Renegotiating loan terms slows Entebbe Airport expansion
Ongoing works for the expansion of the passenger terminal building at the departures lounge of Entebbe International Airport. Photo by DOROTHY NAKAWEESI
What you need to know:
Entebbe International Airport’s expansion currently stands at 52 per cent, slightly behind the estimated 55 per cent due to financing challenges. Prosper magazine’s Dorothy Nakaweesi interviewed Dr David Kakuba, the managing director of Civil Aviation Authority on what caused this delay.
Uganda’s cost of ticketing in the region makes this an expensive destination to fly. Why is this so?
Air fares are set by airlines after putting into consideration a combination of factors. In the East African region; fares are determined by market forces of demand and supply. As more players join the market, it is anticipated that enhanced competition may reduce on the fares. On top of Air Tanzania resuming operations recently, Uganda Airlines will also join the market soon. The more air operators on a route, the better for the passengers.
In addition, passengers are advised to plan for their travels in time and book tickets earlier. The cost of a ticket booked a month before travel is much lower than that booked a few days to the travel date. This applies to all destinations.
Does Civil Aviation Authority (CAA)) have any incentives to promote Uganda Airlines?
In addition to the already existing incentives for airlines such as; 100 per cent discount on aeronautical charges for one flight for every seven frequencies a week in/out of Entebbe International Airport on a specific sector, among others. The authority will grant the airline a self-handling services licence at Entebbe International Airport and any other future national and international airport in Uganda upon fulfillment of the requirements.
The national airline will be provided with optimal operating space and marketing support for the brand. We are also looking at the possibility of relaxing some non-aeronautical and aeronautical charge such as aircraft parking charges since Entebbe will be the base of the airline and parking for long hours will be inevitable.
What are some of the privileges for Uganda Airlines passengers?
The first obvious benefit is direct routes to their destinations through direct flights. The passengers will also have national pride enhanced. In terms of direct offers, this question will best be answered by the airline’s management. The mandate of CAA in relation to airlines is regulatory and does not extend to micro management of airline operations. The management of the airline is expected to come up with specific promotional packages for their customers.
What is the status of ground handling services?
Ground handling services at Entebbe International Airport are operated under a liberalised regime. Besides, ENHAS, which is now NAS, there is also DAS Handling Ltd and the two concessionaires share the business. The two have running contracts, which ought to be respected. If government policy on ground handling is reviewed, the decision will be communicated.
Ground handling is a capital intensive investment. That said, the national airline has the option of conducting self-handling for its operations.
In terms of the expansion programme of Entebbe Airport, Exim Bank gave CAA money to expand the airport but construction has been behind schedule, why?
Current overall progress for the upgrade and expansion of Entebbe International Airport is at 52 per cent as opposed to the planned progress of 55 per cent. This is commendable progress. At one point in time, there was a delay in release of money from the Exim Bank of China to the contractor (CCCC), which led to a slight delay that has since been resolved. There was a difference of opinion between Exim Bank and the Government of Uganda on the loan agreement clauses. This necessitated the Government of Uganda and Exim bank of China to renegotiate the terms. This was done and the matter resolved amicably. The contractor has since increased resources committed to the project including manpower and equipment. The rainy season also affected works.
What are the repayments terms of this loan?
The loan is payable over a period of 20 years with a grace period of seven years. During the seven-year grace period, it is only interest that will be paid. After the grace period, payments for the principal and interest can be effected at an interest rate of 2 per cent.
How much do you need to construct the aerodromes?
The cost of upgrading an airport or aerodrome facility depends on what is involved. We usually conduct master plans and detailed engineering designs that form the basis for costing the works. We recently did these for Arua, Gulu and Kasese, which are planned for upgrade to international status in future.
In relation to Kasese, implementation is planned to be undertaken in three phases with the first phase estimated to cost $59 million (Shs221b). This will cover paving the runway, taxiways and parking apron, construction of a fire station, and relocation of the railway line, drainage works and installation of navigation aids.
In relation to Gulu airfield, the first of three phases is estimated to cost $57 million (Shs213b) to cover widening and strengthening of the runway, construction of a new parallel taxiway, new apron, fire station and installation of navigation aids.
Drug and wildlife related trafficking have found a magnet in Entebbe. What is aiding such vices?
Weak state laws to punish the traffickers. They are released on bond when there is sufficient evidence to incriminate them. Traffickers also use a sophisticated network, which makes it hard to trace the poacher, trafficker and buyer.
