Senator Criticizes US Exim’s Backing of Mozambique LNG Project
In a move that has sparked considerable debate, U.S. Senator Jeff Merkley has publicly criticized the Export-Import Bank of the United States (US Exim) for its latest endorsement of a lucrative liquefied natural gas (LNG) project in Mozambique, worth a staggering $20 billion. In a recent letter to US Exim’s leadership, the Democratic senator lambasted the agency for what he perceives as a hasty decision that bypassed Congress, raising questions about accountability and proper governance.
The Controversial Loan Approval
Senator Merkley’s concerns are particularly focused on the agency’s re-approval of a $4.7 billion loan to French energy giant TotalEnergies. This decision came in March, even as the company aims to restart development of its offshore LNG project—an initiative that had come to a screeching halt in 2021 due to a violent insurgency in the region. The on-again, off-again nature of the project has raised eyebrows, particularly regarding its financing—a $14.9 billion project financing package that US Exim and other Export Credit Agencies (ECAs) have now recommitted to.
Concerns over Congressional Notification
In his strongly worded letter, Merkley argued that US Exim’s leadership neglected its “statutory requirement” to notify Congress prior to making such a significant financial decision. “I write to express my frustration that the Export-Import Bank of the United States failed to notify Congress before updating and approving its commitment to the Mozambique LNG project,” he stated. This lack of communication has led to considerable unease among lawmakers, particularly as the senator emphasized his commitment to utilizing the notification process to offer feedback on potential projects.
Merkley claims he would have sought a briefing and submitted comments if notified about the loan approval, showcasing a desire for collaboration and oversight in such critical matters.
Governance Issues at US Exim
Another layer of controversy revolves around governance issues within US Exim itself. The senator underscored that the three-member board includes two temporary appointments and lacks the necessary quorum to conduct votes legally. “Exim voted to move forward with Mozambique LNG with just one congressionally confirmed board member,” he pointed out, suggesting that decisions of such magnitude should not be made without full accountability and proper board composition.
Changes in Project Leadership and Landscape
Merkley also highlighted that the situation surrounding the Mozambique project has changed considerably since its initial approval back in 2019. Originally led by American company Anadarko, the project has seen TotalEnergies take charge after Anadarko sold its stake. Compounding the issues, TotalEnergies suspended operations in response to security threats, effectively leaving the project dormant for four years.
With the international LNG landscape evolving—especially with U.S. liquefied gas exports doubling—Merkley believes Mozambique’s LNG project has become riskier. “Today Mozambique LNG is riskier, led by a foreign company and competing directly with LNG export terminals proposed in the U.S.,” he argued, suggesting these factors should have been assessed before financial backing was reconsidered.
US Exim’s Justification
Despite these criticisms, US Exim has defended its actions, stating that no additional congressional approvals were required for the loan re-approval because it was fundamentally an update to the 2019 financing agreement. They asserted that this amendment did not involve any material changes that would necessitate new notifications to Congress.
Activist Concerns
Echoing Merkley’s apprehensions, activist groups have raised alarms over the socio-economic implications of US Exim’s backing of the project. Last month, the organization Friends of the Earth filed a civil suit against the agency, arguing breaches of its charter and failing to consider the human rights and environmental risks associated with the project.
Human Rights Issues in Mozambique
Human rights activists have also been vocal about the potential for severe consequences tied to the project. Reports have emerged regarding the actions of Mozambican security forces, who were alleged to be involved in the massacre of civilians during the insurgency that disrupted the original plans for the LNG project. French prosecutors are currently investigating TotalEnergies for potential manslaughter, adding another layer of complexity to an already fraught situation.
Conclusion
At the heart of this conflict lies an urgent call for transparency and accountability in government decision-making. Senator Merkley’s response highlights not just concerns about a single project but reflects broader questions about ethical governance, human rights, and environmental responsibility in international finance. As discussions continue, many are left wondering how these dynamics will shape future investment in Mozambique and elsewhere.
