Dossier

Gas in Mozambique

In 2011 one of the world’s largest gas reserves was found in the coastal province of Cabo Delgado, in the north of Mozambique. A total of 35 billion dollars has been invested to extract the gas. Dozens of multinationals and financiers are involved in these rapid developments. It is very difficult for the people living in Cabo Delgado to exert influence on the plans and activities, while they experience the negative consequences. With the arrival of these companies, they are losing their land.

False promises

American company Anadarko first owned the concession for the Mozambican gas fields, but sold it to the French company Total in 2019. Total is responsible for building all the infrastructure required to sell the gas. Thousands of farmers, fishermen and others live on the land it will be built on, and 2,500 people have to be relocated. The companies promised the communities that the gas extraction would improve their lives, bringing enormous prosperity and creating many jobs. So far, however, the communities have seen few of these benefits.

On the contrary, many have lost access to fertile land and fishing grounds and have had to leave their homes. The compensation procedure is unclear and chaotic. When relocating people, the authorities have taken no account of the social and geographic context: fishermen have been relocated inland where they can no longer fish, and there have been conflicts between local populations and newcomers. Local people have been expected to make their already scarce land available to the newcomers.

Violent conflict

There is much frustration, especially among young people. The employment and the enormous wealth promised at the start of the project have not materialised. The work that is available to the people from Cabo Delgado is low-skilled and thus low-paid, but it does attract enormous numbers of people from elsewhere looking for work. In addition, a very violent conflict has been raging in the region since 2017. Armed militias burn houses and people are set on fire or beheaded. There are many stories about who these people are and what their reasons are, but young people in particular appear to join the group out of frustration.

Thousands of people have fled their villages. The Mozambican government has responded by sending troops to the area, but that has not made the local people feel any safer. They are picked up at random by soldiers on suspicion of terrorism or beaten up for no reason, and journalists are not allowed to enter the area or are arrested. No one seems to know exactly what the conflict is about; local organisations say that the gas extraction is one factor driving it, while the media and Mozambicans themselves have other explanations, but the government remains silent. One thing is certain: the confusion contributes to the chaos in the area.

Debt crisis

Besides all the chaos, there is an enormous corruption scandal surrounding the gas project. In 2016, it emerged that the private banks VTB Capital and Credit Suisse had secretly loaned two billion dollars to three Mozambican state companies without the approval of the country's parliament. Because the gas extraction took longer than expected, Mozambique could not repay the loans and the country was plunged into a gigantic debt crisis. The Mozambican elite, including president Filipe Nyusi, benefitted from the loans. The president is accused of having received four million dollars to finance his election campaign. That debt now has to be repaid from taxes, and possibly from the gas revenues.

Dutch involvement

Dutch companies are also involved in the gas extraction in Cabo Delgado. Dredging company Van Oord has been awarded a contract to conduct dredging activities off the Mozambican coast to free the way for the construction of necessary infrastructure in the sea. Smit Lamnalco, an associated company of Boskalis, has signed a ten-year service contract to ensure that large LNG ships can sail safely. Shell has a contract with the Mozambican government to build a Gas to Liquids (GTL) installation and make the gas suitable for the national market. Dutch export credit agency Atradius DSB has received an application from an as yet unnamed Dutch company for insurance relating to the gas project. Currently, Atradius DSB is conducting a comprehensive financial, environmental and social assessment. Both ENDS has shared the concerns of local NGOs with Atradius DSB.

Fossil fuels

The Dutch government is considering giving its support to a Dutch exporter in the gas project. The support will contribute to a carbon lock-in for Mozambique. The gas field in the north of Mozambique is one of the largest in the world, containing reserves that will take 30 years to extract from the ground.

In a context of enormous investments, extreme violence and political tensions, civil society organisations are doing everything they can to defend the rights of affected communities. Both ENDS is working together with UPC, the farmers' trade union in Cabo Delgado and Palma, which represents more than 8,000 famers in the region, mainly women. UPC is working in the Palma district to support communities in monitoring the relocation process, and regularly sits around the table with Total and the Mozambican government. Both ENDS maintains contact with Dutch parties involved in the project and, where necessary, urges them to take heed of their responsibilities regarding the environment and human rights. Both ENDS also calls on the Dutch government to stop giving public support to fossil projects.

African Development Bank

In November 2019, the African Development Bank (AfDB) confirmed in a press release that it would provide a $ 400 million loan to the project in Cabo Delgado. The AfDB is a development bank and therefore operates with public money from many countries, including the Netherlands. The AfDB, like most development banks, has a "Disclosure and Access to Information Policy" which says that anyone can submit requests for information through the bank's website.

The Mozambican organisation UPC and Both ENDS asked the AfDB for more detailed information about the project, but the AfDB stated that it could not provide this because of confidentiality.

According to Both ENDS and UPC, this is not in line with the bank's goal to be transparent and therefore they decided - as the first civil society organisations ever - to make use of the possibility of appealing to the AfDB. This turned out not to be easy as it was not clear how to appeal and to whom the appeal should be addressed, but finally, on March 6, 2020, the organisations appealed against AfDB's refusal to share information about the investment.

Pending the appeal, the AfDB already shared more information with UPC and Both ENDS. This information showed, among other things, that doubts have grown within the board about the costs and benefits of the project, about compliance with social and environmental requirements, and about reputation risks for the bank. In addition, it became clear that the AfDB loan is primarily intended to convince export credit insurers that this is a stable project.

Unfortunately, the appeal was rejected at the end of April 2020, which compels Both ENDS and UPC to think about next steps. However, filing the appeal has also had positive results: not only did the AfDB share much more information after the appeal was lodged than in the period before, but also clear information has been made available about the procedure for lodging an appeal after our complaints.