13 July 2013

Uganda: Entebbe International Airport Set for U.S. $400 Million Upgrade

IN move geared at increasing competitiveness and boosting Uganda's fast-growing reputation as East Africa's tourism and investment destination, the Government is developing a master plan to expand Entebbe International Airport (EIA) alongside four aerodromes.

Under a 20-year Civil Aviation Master-plan (CAM) valued at over $400m, about $300m will be spent in the expansion of EIA, as well as Kasese ($60m), Gulu ($26m), Arua and Kotido, said transport state minister, Stephen Chebrot.

"Functionally, EIA is constrained in capacity and funding," he told NewVision online on the side-lines of the just concluded Routes Africa 2012 summit hosted by EIA at Speke Reort, Munyonyo.

"Built in the 1960s, it is a very old airport in need of reconstruction. We have a 20- year master-plan that will modernise EIA and make it competitive like other international airports."

International Civil Aviation Organisation (ICAO), an umbrella organisation of 134 Civil Aviation Authority (CAAs), CAA Uganda inclusive, procured a consultant to undertake a six- month's feasibility study expected to be ready by December 2013.

Among others, EIA, opened by Queen Elizabeth in 1952, will have its aircraft hangar expanded, alongside development of a modern cargo terminal, aprons and relocation of oil tanks.

EA airports under expansion:

Expansion of EIA is expected to increase its passenger traffic that grew from 700, 000 in 2007 to 1.3 million in 2012, a feat mocked by Julius Nyerere , Kilimanjaro and Jomo Kenyata International Airports, respectively, that handle, on average, four million passengers annually.

EIA is also attracting international airlines. Between 2011- 12 EIA welcomed Qatar Airways, Turkish Airlines, NAS Air (Eritrea) and Gulf Air, a feat that won her the Best Marketing Award in Africa 2012, conferred by Routes International as well as hosting the Routes Africa 2013 held between July7-9.

Works and transport minister, Eng. Abraham Byandaala notes that capacity growth is a big challenge to African airports.

"At Jomo Kenyata and Julius Nyerere (International airports), capacity is being expanded," he says. "Rwanda is embarking on building a new modern airport. In Uganda, a new 20-year CAM is being developed to guide capacity expansion at EIA and other airports. The ultimate is to prepare the region for demand arising from projected traffic growth."

However, whilst $300m is quite a fortune that would, obviously, go a long way in making EIA better than it has been for years, this still falls short of valuation for full rehabilitation.

"To expand EIA alone, we need about $600m," says David Mpango Kakuba, the CAA Uganda deputy managing director.

"But, since it is a 20-year master plan and government is contributing $300m, it is a good start because we can expand EIA using internally generated resources."

Be as it may, the new CAM is not the first of its kind under the NRM government. Similar master plans were developed before in 1992 and 2012, but suffered still-births due to funding hitches.

Will the new CAM suffer a similar non-starter fate? "No," notes Chebrot. "Feasibility studies are being done and as soon as they are completed, construction will start."

Financing of rehabilitation works under PPPs:

Funding of these multibillion investments will not be from the consolidated fund account.

Borrowing from successes registered in the roads sector where, through a $476m concessional loan from China's EXIM bank, construction of the Kampala-Entebbe expressway kicked-off in 2012, government is undertaking a similar move for EIA and aerodrome's rehabilitation.

Business Vision has learnt that several Chinese, Canadian and South African companies have expressed interest in these projects.

"We have had discussions with Chinese companies and others interested in EIA's expansion," says Chebrot." If we get a willing contractor, construction work can even begin next (2014/ 15) FY."

Nonetheless, once the master plan is developed, CAA Uganda will undertake the mandatory Public Procurement and Disposal of Public Assets (PPDA) regime to get contractors.

"These companies are not giving us grants but long-term multilateral (loan) financing arrangements," says Kakuba. "So we have to ensure there is value for money for the tax-payer in our procurement (of contractors)."

In 2009, government allocated EIA 130 ha of idle land formerly belonging to the agriculture ministry's veterinary research institute but the ministry protested, attracting President Museveni's intervention.

"Like a father, the President directed that we (CAA Uganda) take 50% of the land while the ministry takes the other half," says Kakuba. "We will surrender the land titles, but we want land near EIA."

Land, especially for expansion purposes, is a critical asset to any airport. But, whilst CAA Uganda can't acquire 130 ha, Jomo Kenyatta International Airport, on the contrary, got additional 2, 000 ha of land adjacent to the game reserve from government for her expansion.

Why expanding EIA and aerodromes are critical to tourism growth

Where it to be realised, expanding EIA and modifying aerodromes would go a long way in boasting Uganda's tourism sector currently averaging 21% annual growth and contributing 24% of the total foreign exchange earnings.

Currently, Uganda's domestic tourism has grown by 50% over the past 10-years from her rich diverse culture, landscape, flora, and fauna, as well as 6.8% of the world's butterfly specie, 10.2% of bird species, 7.8% of the world mammals, 1, 063 bird species and 53% of mountain gorilla population, a mammal closest to man in structure, behaviour and thinking.

These feats won Uganda international recognition by Lonely Planet, the world's largest travel guidebook, ranking the country as not just Africa's, but the world's premier destination.

"Uganda's tourism growth over the years can clearly be correlated to the growth of the aviation industry," says tourism Maria Mutagamba.

"The policy of liberalisation of the economy enabled tourism to post significant economic growth. Both national and local players are encouraged to participate in Uganda's tourism and aviation sectors with government providing enabling policy leadership."

Yet, again, the discovery of huge deposits of oil estimated at 3.5 billion barrels also presented Uganda as an investments destination, a feat that continues to boost passenger volumes through EIA.

However, even before real oil production starts, Uganda is attracting more investments, with FDI rising by 92% to a record high of $1.72b in 2012, taking over EAC FDI pole position from Tanzania courtesy of 44% compared to Uganda's 45%. Kenya maintained her third spot, according to UNCTAD world Investment Report 2013.

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