The US Export-Import Bank has approved a $4.7 billion loan for TotalEnergies’ Mozambique LNG project, which had been stalled due to conflict. This financing has sparked debate over government priorities between foreign aid and fossil fuel support, while more than 40% of contracts have been awarded to US firms.
The US Export-Import Bank has authorized a significant $4.7 billion loan, which is the largest portion of funding for TotalEnergies SE’s Mozambique LNG project. This decision comes after the project faced a halt in construction due to militant attacks linked to the Islamic State over four years ago. Resuming operations demands not only a secure environment for workers but also the rekindling of previous financing agreements pledged by export credit agencies.
The financing was confirmed following a board vote at US Exim. This approval chain began with the Financial Times reporting on the loan’s passage, as stated by Mozambique’s Energy Minister Estevão Pale. The approval comes amid recent appointments to the bank from the Trump administration, with TotalEnergies previously seeking approval before the Biden administration ended.
Mozambique’s eurobonds, valued at $900 million and maturing in 2031, experienced a notable 3% increase to 82 cents per dollar, illustrating market optimism after the loan announcement. Despite this, environmental activists have expressed disapproval of the funding, arguing that it contradicts the government’s reduction in foreign healthcare support.
Critics, like Kate DeAngelis from Friends of the Earth US, highlight a significant disparity in governmental priorities, stating, “As the Trump Administration eliminates taxpayer-funded foreign aid… it is giving an almost $5 billion handout to the fossil fuel industry.” Furthermore, TotalEnergies has confirmed that over 40% of the project contracts have been allocated to American firms, although the situation remains complex regarding security despite improvements in the area.
The US Exim Bank’s approval of the $4.7 billion loan for TotalEnergies’ Mozambique LNG project represents a vital step towards restarting operations, halted by conflict. This financing highlights contrasting governmental policies regarding fossil fuel investments versus foreign aid. While there are opportunities for US contractors, the ongoing challenges regarding regional security and environmental concerns remain significant.
Original Source: financialpost.com
