The British government has withdrawn its support for a $1.15 billion (£870 million) loan for a major gas project in Mozambique, citing growing concerns about climate impacts, human rights abuses and the deadly insurgency that has gripped the region.
Business Minister Peter Kyle confirmed on Monday that the UK Export Finance Agency (UKEF) would withdraw its support for the long-delayed liquefied natural gas project in Mozambique led by French energy giant TotalEnergies. The decision comes five years after the project became a focus of environmental protests and accusations that it was fueling instability in Cabo Delgado province.
The project has been on hold since 2021, when Islamist militants stormed the nearby city of Palma, killing more than 800 people and forcing Total to evacuate employees and halt operations. The company is preparing to resume work in the coming months following increased safety measures in place in the area.
Kyle said UKEF’s withdrawal followed “a comprehensive assessment of the project and the interests of UK taxpayers”, adding: “While these decisions are never easy, the Government is convinced that UK funding of this project will not advance our country’s interests.”
The UK had initially approved the loan in 2020, shortly after MPs on the Environmental Audit Committee called on the previous Conservative government to end financial support for fossil fuel projects abroad, warning that such support would undermine the UK’s climate commitments.
UKEF originally argued that the program could support more than 2,000 jobs in the UK, benefit small businesses and boost Mozambique’s economic development. A 2019 agreement with Centrica also raised the possibility that gas from the project could supply British homes.
But environmental groups and development activists have long criticized the project’s climate impacts and the forced relocation of communities living near the construction zone. They also argued that Mozambique – one of the countries most affected by climate change – should instead be supported to expand renewable energy capacity.
Reclaim Finance’s Antoine Bouhey said the UK’s withdrawal showed the project was “problematic and cannot be supported”, adding that major lenders such as Standard Chartered, Crédit Agricole and Société Générale should now follow suit. “It has been clear for years that this project is a disaster for the local population and the climate,” he said.
Friends of the Earth executive director Asad Rehman said the government’s decision was long overdue. “This gas project is a huge CO2 time bomb linked to serious human rights violations,” he said. “It should never have received support funded by the British taxpayer in the first place.”
Rehman called on other governments to withdraw their support and called on the UK to shift its support to climate adaptation efforts and clean energy projects in Mozambique, where 60% of the population still lacks access to electricity.
