The Export-Import Bank of the United States of America (US) has approved a loan of US$4.7 billion for a gas project in Mozambique, despite its internal analysis warning of safety risks.
According to financial information agency Bloomberg, which cites internal documents obtained via the access to information law, the US Eximbank approved the funding that is equivalent to around 4 billion euros last year, arguing that it would foster the creation of 16,700 US jobs over the next five years.
This is the largest portion of the US$15 billion funding raised for the project led by France’s Total in northern Mozambique, which has since been suspended following the attacks on Palma earlier this month and was also influenced by the US attempt to diminish the influence of China and Russia in Africa.
According to the bank’s internal documents, an insurgency is “the main security threat to project timelines and costs, not to mention potential threats to life,” in a text that reads, “Mozambique presents a rapidly evolving insecurity dynamic with an equally challenging physical scenario.”
In the bank’s analysis, it also says that “the security environment is highly variable, security threats and risks to the project will evolve rapidly, and the situation is likely to get worse before it gets better,” the US bank wrote last year when it approved the funding.
“The attacks are horrific and show a complete disregard for the lives and safety of local people,” an Eximbank spokesman commented to Bloomberg, adding that funding for the project was not called into question by the Palma attack.
“We will continue to study this project to ensure that a reasonable payment guarantee is maintained,” the spokesman added.
The bank first received a proposal to support the project in April 2015, and it was presented to the board in August 2019, which concluded that partial funding for Total’s project would have a $2bn positive impact on the US economy.
The violence unleashed more than three years ago in Cabo Delgado province gained a new escalation about a fortnight ago, when armed groups first attacked the village of Palma, about six kilometres from the multi-million dollar natural gas projects.
The Mozambique LNG project consists of offshore gas exploration at the Golfinho-Atum field in Area 1 of the Rovuma basin, as well as the construction of an onshore power station.
French oil company Total is the largest owner of the project, with 26.5 percent, followed by the National Hydrocarbons Company, with 16.5 percent, and five other multinational entities, with smaller stakes.
The project is expected to start exporting gas in 2024, a year in which the country’s revenues are expected to rise exponentially, financing investments for Mozambique’s economic development.
The attacks have caused dozens of deaths and forced thousands of Palma residents to flee, exacerbating a humanitarian crisis that has affected some 700,000 people in the province since the conflict began, according to United Nations figures.
The Islamic State terrorist movement last week claimed control of the town of Palma, near the border with Tanzania, but the Defence and Security Forces (FDS) completely retook control of the town, the spokesman for the Northern Operational Theatre, Chongo Vidigal, announced on Monday, a statement reiterated on Wednesday by the Mozambican President.
Several countries have offered Maputo military support on the ground to combat these insurgents, but so far there has been no opening for this, although there are reports and testimonies pointing to the existence of security companies and mercenaries in the area.
