Resurgent Violence

While Russia’s invasion of Ukraine sent Europe on a scramble for alternative energy supplies that boosted interest in upcoming LNG production, projects in nations across Africa are still susceptible to a range of issues including political instability and construction delays. Mozambique has the added obstacle of an insurgency that’s become subdued by armed forces, though the Islamist fighters still carry out sporadic deadly raids.

A string of attacks since December has marked a resurgence in violence after Mozambican and regional forces last year announced major gains in the six-year conflict that’s left almost 5,000 people dead. The deadliest recent raid was about 136 kilometers (85 miles) south of the LNG project, and subsequent attacks have been much further away.

Since the latest outbreak of violence and attacks on civilians at the beginning of February, more than 70,000 people have been forcibly displaced in Cabo Delgado, the United Nations Refugee Agency said in a statement Friday.

Atradius Dutch State Business, the Amsterdam-based Dutch export-credit agency that’s committed $1 billion to Mozambique LNG, said it’s also assessing the situation. “Due diligence is currently ongoing to assess whether we can allow drawdowns under the loan,” it said.

Both US Eximbank and Atradius declined to provide a timeline on when their assessments would be concluded.

The US lender has been long familiar with the insurgency that ultimately suspended the project. Its own analysis flagged security risks even before the loan was approved.

On the continued violence, Exim said all transactions “undergo rigorous due diligence according to the agency’s statutory and policy requirements, including a feasibility review and alignment with Exim’s financial, technical, environmental, and social due-diligence procedures and guidelines.”

Bloomberg