Environmental groups call for funding to be stopped for TotalEnergies project in Mozambique

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TotalEnergies signs at a service station in Nice

TotalEnergies signs are seen at a gas station in Nice, France October 10, 2022. REUTERS/Eric Gaillard/File Photo Acquire license rights

CAPE TOWN, November 17 (Reuters) – Banks and other financiers are expected to withdraw their support from the TotalEnergies group. (TTEF.PA) A $20 billion liquefied natural gas (LNG) terminal in Mozambique, environmental lobby groups urged in a letter sent Friday to more than two dozen backers of the project.

The letter, seen by Reuters, comes at a crucial time for the French energy group as it prepares to relaunch Africa’s largest foreign direct investment project.

Campaigners warn the project could worsen climate change and fuel human rights abuses in the poor southern African country.

“As a key financial supporter of the project, you bear direct and significant responsibility for its terrible impacts,” said the letter, supported by more than 100 organizations, including ActionAid International and Greenpeace France.

Last month, Dutch lawmakers said they would insist on being consulted on security and human rights concerns before being able to approve a 1 billion euro ($1.06 billion) loan guarantee for the project, which has been blocked since April 2021.

Welcoming the Dutch decision as an important signal, Lorette Philippot, campaigner on private finance at Friends of the Earth France, said activists “hope that other financiers will make appropriate assessments and withdraw from this project time bomb “.

TotalEnergies said the arrangements were unchanged from its previous statements and that funding for the project remained in place despite a shutdown due to “force majeure” in 2021 when Islamist militants threatened the project site.

A company spokesperson said an update on details was expected Monday.

Financing agreements for the project were concluded in 2020 with direct and guaranteed loans from eight export credit agencies, 19 commercial banks and the African Development Bank (AfDB).

Societe Generale (SOGN.PA), one of the main commercial banks involved, declined to comment. The ADB also declined to comment.

The Absa Group bank confirmed receipt of the letter and said it would review its contents before responding to the correspondence.

Funding worth $15 billion is currently under review as part of restart procedures, a credit official with knowledge of the ongoing negotiations said.

The South African export credit insurance company plans to seek board approval early next year to support the project, its acting CEO, Ntshengedzeni Maphula, told Reuters.

The project delay has led some investors to reassess their previous cost assumptions in light of inflation and fluctuations in the global gas market.

US bank Exim, which guarantees $5 billion, said it was carrying out due diligence on plans to resume construction.

“EXIM will review and evaluate any proposed changes to the terms of its approved financing of the Mozambique LNG project,” Reta Jo Lewis, the bank’s president, told Reuters earlier this month.

Islamist insurgents attacked the port city of Palma in March 2021, killing many civilians in areas near Mozambique’s LNG infrastructure projects.

Reporting by Wendell Roelf in Cape Town; Toby Sterling in Amsterdam, Nellie Peyton in Johannesburg, Forrest Crellin and Mathieu Rosemain in Paris and Yuka Obayashi in Tokyo; Editing by Tim Cocks, Olivia Kumwenda and Elaine Hardcastle

Our standards: The Thomson Reuters Trust Principles.

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