Rwanda: Ten Things We Know About the Rwanda-Qatar Airways Deal

10 December 2019

Rwanda and Qatar Airways on Monday signed three agreements that saw the two parties set up a joint venture to build, own, and operate the new airport in Bugesera District.

It is the same airport that was under construction previously under the name Bugesera International Airport but the latest deal means that a new name will according to officials be announced in the coming days.

Below are key highlights of what The New Times has established so far on the deal that was witnessed by both President Paul Kagame and Sheikh Tamim Bin Hamad Al Thani, the Emir of Qatar:

The Three agreements signed

Speaking to The New Times, the Minister of Infrastructure Claver Gatete gave a sneak-pick into the three deals;

A shareholders' agreement on the nature of partnership whereby Rwanda now holds 40 per cent stake in the facility while Qatar Airways holds 60 per cent.

The second deal was a share purchase agreement. Initially, when the airport project was started about two years ago under Bugesera Airport Company, Rwanda was partnering with Mota Engil with the former as the majority shareholder of 75 per cent in the project.

To effect the new deal, Rwanda early this year had to purchase the 75 per cent shareholding by the Portuguese firm to hold 100 per cent before ceding the 60 per cent to the Gulf nation's airline.

The third agreement is guarantee for indemnity.

Considering that Aviation Travel and Logistics Holdings is entering the agreement on behalf of the Government of Rwanda, it was necessary to have an indemnity agreement to establish that they are guaranteed by the government.

Bigger airport

The partners are in the process of redesigning and planning the facility to what they termed are international first class standards.

Gatete said that they have now broadened their ambitions and are keen on a bigger facility that also meets international standards and has multiple sustainability elements.

The new plan will see the airport have capacity of seven million passengers annually in the first phase and 14 million in the second phase over the same period.

Previous plans for the airport were to have the capacity to process 1.7 million passengers in the first phase. The new capacity he said will see the airport not only serve Rwanda but the region as a hub.

New airport to cost $1.3 billion

The increased capacity and new design have driven up the cost of the facility to about $1.3B for the two phases.

Gatete said that they were still working on the details but estimates are at around $1.3B. Previous plans of the airport's first and second phases were estimated at around $825M.

Timelines

The airport first and second phases are expected to be completed and operational by 2032.

It's not entirely clear when the first phase will be complete as discussions are still underway but completion of the first phase and operationalization of the airport is expected to be around five years from start date.

Who is the contractor?

There are still discussions and considerations underway that will determine when the project will pick up pace. Among them is the selection of a contractor to undertake the task as well as concessional agreement.

"There are still discussions and negotiations of a concessional agreement was well as EPC (Engineering, Procurement, and Construction) who will undertake the construction works," Gatete said.

According to Gatete, the works at the airport had never stopped, saying that it has only slowed down and the new contractor will build from what is already in place, putting in consideration of the new design.

Mota Engil will however not maintain its role as lead contractor, but Gatete, said that considering that there will be a lot of work in the implementation of the project, there will be tasks that they can be subcontracted for.

He noted that they will find ways to involve Mota Engil's expertise in the construction.

How this agreement came about

Gatete was non-committal on who initiated the negotiations and proposal for the project saying that the two partners approached each other.

However, he said that it is part of the joint areas of cooperation in the bilateral framework which among other subjects covers logistics and transport.

Impact of the construction and new facility

The execution of the project is among other things expected to maintain economic growth and Gross Domestic Product in coming year.

Among other impacts, it's likely to have on the economy experts say include consumption and use of local materials, contracting of stakeholders in the construction sector and job creation among others.

Biggest employer in Rwanda

Gatete said that once complete, the new airport could be the biggest employer in the country.

With a capacity of 14 million people, he said that it will be an opportunity to employ create a massive employment opportunity for Rwandans in multiple capacities.

"Once it's done, it will be the biggest employer of Rwandans," he said.

The new facility will also drive the distribution of Made in Rwanda goods through duty-free shops accessed by travelers which he said will have a trickledown effect to multiple sectors of the economy.

Lessons learnt from the previous project

Gatete said that the previously started airport project enabled the government learn lessons and have better understanding on international airports systems and concepts which will be key in the execution of the new project.

He said that this also informed the new partner who has experience in the aspect.

Impact on RwandAir

The new facility is also expected to support the national carrier's expansion plans in the coming years. At the moment RwandAir serves 28 destination and is set to open new routes to four more; America, Angola, Mozambique and Ethiopia.

Gatete said that there are plans at an advanced stage to increase the fleet size in coming days to serve the new routes. Though tight-lipped on the timelines of the additional plans, termed it as soon.

The new aircraft he said will be wide body (large planes). With Rwanda increasingly signing more bilateral air service agreements, he said that the new airport will also enable the entry of more airlines in the local market.

Rwanda now has over 110 such agreements with the most recent ones signed in Jordan.

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