– Human rights violations by Mozambican troops in Cabo Delgado were central to the decision
– The cut financing represents about 10 per cent of the total investment and is unlikely to jeopardise the project
By MOZTIMES
Maputo (MOZTIMES) - The British and Dutch governments on Monday announced that they are withdrawing a total of 2.2 billion dollars in support for the Mozambique LNG project, in the northern province of Cabo Delgado.
The UK government said it was withdrawing its 1.15 billion dollar backing for the project. In 2020, the UK had pledged a 300 million dollar loan and insurance worth about 700 million for the project via UK Export Finance.
Also on Monday, the Dutch government said Total had withdrawn a 1.1 billion dollar export insurance request for the project.
Acording to the Reuters news agency, Atradius Dutch State Business authorised 1.3 billion dollars in export insurance via two policies, the larger of which has been rescinded at the company's request, the Dutch finance ministry said.
UK Export Finance had originally claimed that the project would benefit British interests. But on Monday, the UK Business Secretary Peter Kyle issue a statement declaring "Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country”.
Kyle said "In preparation to restart the project, UKEF was presented with a proposal to amend the financing terms it had agreed originally. My officials have evaluated the risks around the project, and it is the view of His Majesty’s Government that these risks have increased since 2020." The interests of UK taxpayers "are best served by ending our participation in the project at this time," he added.
Environmental groups have attacked Mozambique LNG, but human rights concerns are likely to have been determinant. There were reports that Mozambican troops, responsible for protecting the project, had detained, tortured and murdered civilians.
Mozambican President Daniel Chapo has denied these allegations, but they cast a long shadow over the project.
Mozambique LNG has been paralysed for four and a half years, ever since a jihadist group linked to the Islamic State terrorist organisation launched a major attack against the town of Palma in March 2021, forcing TotalEnergies to declare a state of force majeure.
With Rwandan support, the Mozambican armed forces took back control of Palma, and in October Total lifted the force majeure and declared that the area as now safe to work in.
Total has made it clear that the withdrawal of the British and Dutch support is unlikely to stop the project.
Patrick Pouyanné, the chief executive of TotalEnergies, said in February that he was “ready to exercise all my contractual rights” if export credit agencies did not stand by their contracts. It remains to be seen whether he will carry out this threat.
So far there has been no reaction from the Mozambican government. (MT)
