China is providing a $350 million concessionary loan to build a multi-lane toll road linking Uganda's capital with the country's Entebbe airport, 54 km (34 miles) away, Ugandan officials said on Thursday.
The east African nation's parliament is expected to ratify the loan agreement soon and construction will begin in July once the money is officially allocated in the next financial year (2011-2012) starting in the same month.
Foreign investment flows to the east African economy have accelerated in the last few years, spurred by macroeconomic stability and lustrous growth prospects following the discovery of commercial hydrocarbon deposits in its west in 2006.
Entebbe is Uganda's main gateway to the world and the existing road is very small and can't handle the increasing traffic flow to and from the airport, said Dan Alinange, spokesman for the state-run Uganda National Roads Authority
That's why we're building this new express highway.
Uganda Investment Authority forecasts planned investment will leap 80 percent in 2011 to $3 billion fuelled by recovery in the global economy and an expected peaceful presidential election on February 18.
Over the last five years, China has funded the development of transportation and communications infrastructure and construction of gleaming public offices, including a $93 million state house villa built in 2007.
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It is interested in carving out a niche in Uganda's budding petroleum industry, with one of its oil giants, China National Offshore Oil Corporation (Cnooc) poised to buy a stake from Tullow Oil's fields in the country.
As part of the loan conditions, China will supply the contractor to construct the 54-Km road, Alinange said. The other condition is for the Ugandan government to soon embark on a process to compensate landowners along the road's path.
The loan has a 40-year repayment period but Alinange would not disclose the interest rate, saying that would only be possible after parliament has approved the loan agreement.