TotalEnergies is facing pressure from environmental advocacy groups to halt its $20 billion liquefied natural gas (LNG) terminal project in Mozambique as environmental advocacy groups are calling on banks and financiers to withdraw their support.
The plea, conveyed in a letter sent to over two dozen project funders, urges a reconsideration of their backing for what has been touted as Africa’s largest foreign direct investment project, Reuters news report said.
The missive, endorsed by more than 100 organizations including ActionAid International and Greenpeace France, asserts that financiers of the project shoulder direct responsibility for its potentially adverse impacts, citing concerns about exacerbating climate change and perpetuating human rights abuses in Mozambique.
Lawmakers in the Netherlands recently announced their intention to seek consultations on safety and human rights issues before approving a 1 billion euro ($1.06 billion) loan guarantee for the project, which has remained stalled since April 2021.
Lorette Philippot from Friends of the Earth France welcomed the Dutch decision as a significant indicator, expressing hope that other project financiers would conduct comprehensive assessments and withdraw support from what activists label a “time bomb project.”
TotalEnergies responded, stating that the project finance arrangements remain intact despite a halt in 2021 due to security threats from Islamist militants at the project site. Details about the project’s status are expected to be disclosed by Monday.
The project’s financing includes commitments from eight export credit agencies, 19 commercial banks, and the African Development Bank (AfDB). Societe Generale, a prominent bank involved, declined to comment, while the AfDB offered no remarks.
Absa Group bank confirmed receipt of the letter and expressed intentions to consider its contents before issuing a response.
Approximately $15 billion in financing is under review for restarting procedures, according to a credit official familiar with the ongoing negotiations.
South Africa’s Export Credit Insurance Corporation is planning to seek board approval in early 2023 to support the project, as relayed by acting CEO Ntshengedzeni Maphula.
The project’s delay has prompted some investors to reassess their cost assumptions amid inflationary pressures and fluctuations in the global gas market.
The U.S. Exim bank, which is guaranteeing $5 billion for the project, stated it is conducting due diligence on proposed construction resumption plans.
The unrest in Mozambique, highlighted by Islamist insurgent attacks in Palma in March 2021 resulting in civilian casualties near the LNG infrastructure projects, remains a pressing concern for stakeholders involved in the project.