The Government has rejected China Exim Bank’s proposal to mortgage oil as loan security for the construction of the Standard Gauge Railway (SGR).
Works and Transport Minister Gen. Katumba Wamala told MPs on the physical infrastructure committee that the bank “was looking ahead” and requested the Government to peg oil revenue as security for the loan.
Finance Minister Kasaija said the government rejected the proposal on grounds that the country did not know how much revenue would be generated from oil and that mortgaging the oil resource even before extraction was not good.
Government in 2015, entered into an agreement with the China Harbor Engineering Company Limited, to construct the 273km section of Uganda’s SGR project from Malaba to Kampala.
The Government has however been negotiating for a loan of $2.3b with the China Exim Bank to finance the construction.