The UK government has withdrawn a controversial $1.15 billion (£870m) loan for a giant gas project in Mozambique, which has been accused of fueling the climate crisis and deadly terrorist attacks in the region.
Britain will withdraw its export finance for a Mozambique liquefied natural gas project, five years after a bitter protest from campaigners over its impact on human rights, security and the environment, the business secretary, Peter Kyle, said on Monday.
The decision to cut UK support for the project comes as its developer, French oil company TotalEnergies, prepares to restart the troubled plan, which has been on hold since an Islamic insurgent attacked a nearby town in 2021, killing more than 800 people.
Kyle said the UK’s export credit body, UK Export Finance (UKEF), had decided to end its involvement in the project after a “comprehensive assessment of the project and the interests of UK taxpayers”.
“While these decisions are never easy, the Government believes that UK funding for this project will not best promote our country’s interests,” Kyle said.
The Mozambique aid package was first agreed in 2020, just a year after the Environmental Audit Committee and Labor Party MPs called for an end to the Conservative government’s support for polluting projects overseas, saying it “undermines the UK’s climate commitments”.
Kyle said officials evaluated the risks around the project and concluded that they have increased since 2020.
UKEF originally claimed that the project would support over 2,000 UK jobs, including small businesses, across the country, and could prove “transformative for Mozambique’s economic and social development”. Gas from the project will also help heat British households through a supply agreement with British Gas owner Centrica in 2019.
But green groups including Friends of the Earth have called for a judicial review of the government’s support for the gas project and argue that the East African nation should be encouraged to invest more heavily in renewable energy to build a sustainable green economy.
The project became a lightning rod for terror in the area, and was also accused of violating human rights of local communities who were relocated from the area when development work began.
Antoine Bohe, campaigner for Reclaim Finance, which promotes sustainable finance, said the government’s decision showed ministers had recognized the project was “rife with problems and cannot be supported”.
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“It has been increasingly clear for years that this project is a disaster for local communities and the climate,” Bouhey said. He called on the major international banks Standard Chartered, Crédit Agricole and Société Générale to withdraw their support for the project, saying “they can no longer turn a blind eye to the problems and must immediately withdraw their support”.
Asad Rahman, chief executive of Friends of the Earth, said: “This Mozambique gas project is a giant carbon timebomb, linked to serious human rights abuses. It should never have been given UK taxpayer-funded support in the first place. We now urge other countries to follow suit and end their support for this destructive project.
“Instead the UK should support countries like Mozambique – who are on the frontline of the climate crisis – by helping them adapt to its impacts and investing in their abundant clean energy resources to bring affordable energy to the 60% of the country locked in energy poverty,” Rahman said.
TotalEnergies has been contacted for comment.
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