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The UK government has pulled a controversial $1.15bn (£870m) loan to a giant gas project in Mozambique that has been accused of fuelling the climate crisis and deadly terror attacks in the region.
The business secretary, Peter Kyle, said the UK would withdraw its export finance to the Mozambique liquified natural gas project, five years after it ignited bitter opposition from campaigners over its impact on human rights, security and the environment.
The decision to cut the UK’s support for the project has emerged as its developer, the French oil company TotalEnergies, prepares to restart the troubled scheme, which has been on hold since an Islamist insurgency attacked a nearby town, killing more than 800 people in 2021.
On Monday, Kyle said that the UK’s export credit body, UK Export Finance (Ukef), had taken the decision to end its participation in the project after a “comprehensive assessment of the project and the interests of UK taxpayers”.
“Whilst these decisions are never easy, the government believes that UK financing of this project will not advance the interests of our country,” Kyle said.
The Mozambique support package was first agreed in 2020, just over a year after MPs on the environmental audit committee and the Labour party 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 had evaluated the risks around the project and concluded they had increased since 2020.
Ukef had originally claimed that the project would support more than 2,000 UK jobs, including small businesses across the country, and could prove “transformational for Mozambique’s economic and social development”. Gas from the project may also have helped warm British households through a supply deal struck with Centrica, the owner of British Gas, in 2019.
But green groups, including Friends of the Earth, called for a judicial review of the government’s support for the gas project and have argued 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 region, and was also accused of violating the human rights of local communities who were relocated from the area when development work began.
Antoine Bouhey, a campaigner at Reclaim Finance, which promotes sustainable finance, said the government’s decision showed that ministers had recognised that the project was “riddled with problems and cannot be supported”.
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“It has been blatantly clear for years that this project is a disaster for local communities and for the climate,” Bouhey said. He called on the leading international banks Standard Chartered, Crédit Agricole and Société Generale 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 Rehman, the chief executive of Friends of the Earth, said: “This Mozambique gas project is a huge 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 backing for this destructive project.
“The UK should instead support countries like Mozambique, which are on the frontline of the climate crisis, by helping them adapt to its impacts and invest in their abundant clean energy resources to bring affordable energy to the 60% of the country locked into energy poverty,” Rehman said.
TotalEnergies has been contacted for comment.
