UK withdraws $1.15BN loan from Mozambique Pusp project over climate and security risk
The UK government has withdrawn its support for a $1.15BN (£870m) loan to a major gas development in Mozambique, citing rising climate emissions, human rights violations and deadly protests that included a deadly protest.
Business Secretary Peter Kyle confirmed on Monday that the UK Export Finance Agency (ukef) would withdraw its support for the Mozambiqued Gealicied Getros Project, led by French Energy Giant ENERGIMES. The decision comes five years after the plan became the focus of environmental protests and allegations of exploitation in the state of Cabo Delgado.
The project has been frozen since 2021, when Islamic militants burned down the nearby city of Palma, killing more than 800 people and forcing a total number of layoffs. The company is preparing to resume work in the coming months after improved safety measures were put in place.
Kyle said Ukeeh’s withdrawal followed “a thorough assessment of the project and the interests of UK taxpayers”, and while these decisions are never easy, the government believes that funding this project will not advance our country’s interests. “
The UK first approved the loan in 2020, shortly after MPs on the Environment Committee called on the previous government to end financial support for offshore oil, warning that the support is said to harm the UK’s climate.
Ukef initially argued that the program could support more than 2,000 UK jobs, benefit small businesses and bring economic development to Mozambique. The 2019 deal with Centria also suggested that gas from the project could supply British homes.
But environmental groups and development campaigners have long criticized the climate impact and forced displacement of communities living near the construction site. They also pointed out that Mozambique – one of the countries most vulnerable to climate change – should be supported to increase its renewable energy potential.
Antoine Bouhey Of Reciene Finances said that the withdrawal of the UK showed that the project “is full of problems and cannot be supported that the big lenders including chartered, crédit agricole and société générale should now follow suit. “It has been very clear for years that this project is a disaster for the local communities and for the climate,” he said.
Friends of the Earth chief executive Asad Rehman said the government’s decision was not overdue for a long time. “This gas project is a huge carbon footprint, linked to human rights abuses,” he said. “There should never have been any support from UK taxpayers in the first place.”
Rehman urged other governments to withdraw support and called on the UK to exchange support for climate adaptation efforts and clean energy projects in Mozambique, where 60% of those do not have access to electricity.
