Rwanda is finalising talks with a Chinese firm to construct the Bugesera International Airport, as it seeks to address pressing capacity constraints at Kigali International Airport.

Silas Lwakabamba, the Minister of Infrastructure confirmed that the government was finalising negotiations with China State Construction Engineering Corporation (CSCEC). The firm won the deal expected to cost over $650 million. This is the largest investment in Rwanda’s history.

Authorities say the government will work with CSCEC to raise funding from Exim Bank.

Exim funds are usually concessionary loans that attract low interest rates and whose repayment is spread over a long period of about 20 years. The success of CSCEC in outbidding its competitors highlights the growing onslaught by Chinese firms looking for lucrative infrastructure deals in countries in the region.

The new airport, located 25 kilometres southeast of Kigali, is expected to complement Kigali International Airport, which is operating beyond its capacity of 300,000 passengers a year.

READ: Congested Kigali airport to be expanded in Rwf12b project

Data from Rwanda Civil Aviation Authority shows that passenger traffic through Kigali International Airport grew by 30 per cent to 488,903 last year, up from 377,327 in 2011.

With 300 flights every week, the current airport is operating 10 times above its capacity. The airport is currently being expanded as a short-term measure.

The new airport is expected to handle three million passengers annually.

The first phase of the construction begins this year, and is expected to end in 2017, at an estimated cost of $600 million. The construction includes a 4.2 kilometre-runway and cargo and passenger terminals capable of handling 1.8 million passengers annually.

This is expected to divert some traffic from Kigali International Airport.

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Rwanda joins other East African countries seeking to upgrade their airline infrastructure to rival Africa’s key hubs like Ethiopia and South Africa.

Analysts said that with most East African governments strapped for cash, they are likely to increase airport fees as they look for financing, a factor that would reduce the competitiveness of regional carriers by making their fares expensive, especially as they do not enjoy low fuel costs like their peers in the Middle East.

Since November last year, Kenya has been mulling over building a temporary terminal at its main airport as it awaits construction of the planned Ksh55 billion ($647 million) Greenfield facility — a project national carrier Kenya Airways is banking on to expand its operations and stem losses.

The government has set aside Ksh55 billion ($660 million) for the Greenfield Terminal which is expected to take three years to complete.

But this project, which has been riddled with controversy, is behind schedule by more than a year, forcing authorities to consider the stop-gap measure of expanding the capacity of the Jomo Kenyatta Internationally Airport (JKIA).

The JKIA expansion project caused controversy when it emerged, last December that the tender for the construction of the terminal was given to two Chinese companies by the Kenya Airports Authority management, without the approval of the Board.

Later the Public Procurement Oversight Authority ruled that the tenders to Anhui Construction Engineering Group and state-owned China National Aero-Technology International Engineering Corporation were above board, and KAA should sign contracts with the firms.

JKIA has a capacity for 2.5 million point-to-point passengers — those who fly to the airport as their final destination — but is currently handling over 6 million passengers.

Most East African airports are expected to see an increase in passenger traffic as the continent opens up to the world for business.

Tanzania is planning a multi million-dollar transformation of its Kilimanjaro International Airport. The move will see all runways, aprons, taxiways and passenger lounges refurbished to offer a smooth trip to the northern Tanzanian tourist circuit.

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Uganda is putting together financing to get the Entebbe Airport Master Plan off the ground, activities that can only be financed through regulatory fees.

The country manager of Air Uganda, Cyprian Kabeera, says the completion of a Bugesera International Airport “will be a great relief to the airlines as this will enable us to give our customers what they deserve.”

Rwanda is becoming the focus a global and regional airlines because it has been under-served, and has potential for further growth.

READ: Airline price wars: Why virgin Rwanda market is hot

Late last year, Qatar Airways, Turkish Airlines and South African Airways launched direct flights to Kigali, just a year after Amsterdam’s KLM had done so, heightening competition for an airspace previously dominated by SN Brussels and Ethiopian Airlines.

Regional airlines that serve Kigali, namely Kenya Airways, Air Uganda and the national carrier RwandAir, have, in the past three months, revamped their operations in anticipation of increased competition.

Rwanda is keen to increase the external connectivity to boost exports and balance trade. The country’s exports have been primarily to neighbouring nations, requiring smaller cargo planes, but the recent diversification into Asia, Europe and America requires easier access to the new markets.

RwandAir, which offers some of the lowest fares in the region, is focused on extending to parts of Europe and the Far East by 2017.