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Tony Blair’s words are misleading – gas is an economic disaster that will push Mozambique deeper into debt

The opinion piece by the Tony Blair Institute about fossil fuels in Africa, including the gas industry in Cabo Delgado, northern Mozambique is misleading, factually incorrect and perpetuates neo-colonialism. We write as Justiça Ambiental/Friends of the Earth Mozambique (an organisation which works with communities on the ground in Cabo Delgado) and Friends of the Earth England, Wales and Northern Ireland, to respond on an issue from which Mr Blair is clearly very far removed.

Impacts to date

Mr Blair uses the word ‘development’ 61 times.  This is his indicator of success, and he claims it will only transpire if Mozambique’s gas reserves are exploited.  He says Mozambique will be condemned to poverty without gas. Yet, even though not a drop of gas has been extracted, the industry has caused irreversible devastation to already poor communities, with thousands of people displaced and pushed deeper into poverty.

Five hundred and fifty families from rural fishing and farming communities living around Total’s Afungi Liquid Natural Gas (LNG) Park were displaced to a replacement village far from their land and 10km from the sea, leaving them without livelihoods. Total offered replacement farming plots but these were so small that many people opted for inadequate compensation, following an unsatisfactory consultation process. The only jobs created have been menial, unskilled and temporary. Communities’ compensation complaints were waved away, leaving people to rely on food parcels.

This has helped create strong anti-government sentiment which has fuelled the violent conflict involving insurgents, the Mozambican and Rwandan military and mercenaries – a conflict that has created 800,000 refugees. The connection between the LNG project and the insurgency was acknowledged earlier this year in the UK Parliament by government minister Lord Goldsmith.

Total’s $24 billion Mozambique LNG project is currently on indefinite hold. After it claimed ‘force majeure’ in April 2021 as a result of the insurgency, it stopped all compensation payments and all payments to Mozambican contractors, including small businesses.

Will gas benefit Mozambique?

There is no guarantee that the gas will bring electricity to the 70% of Mozambicans who do not have it. The vast majority of the gas will be exported to India, France, the UK, China and Indonesia among other countries. And it makes far more sense for a majority rural population to produce energy from decentralised, small-scale and community-owned renewable resources, of which Mozambique has plenty.

Mozambique’s record gives little assurance that the LNG will bring any benefit to people. Sasol’s Pande and Temane gas projects in Inhambane have been mired in controversy over a 15-year old agreement, which has recently been renewed, in which the Mozambican government earns little in tax revenues while Sasol benefits by selling gas, in essence, to itself.

And gas will be a major economic disaster for Mozambique. The consortiums which own the projects have subsidiaries in Dubai, and Mozambique’s double tax agreement with Dubai means the consortiums will not pay the 20% withholding taxes on interest and dividends as they would have done under Mozambique’s tax laws. A report by OpenOil shows that this means Mozambique will lose $5.3 billion in tax revenue over the life spans of Coral LNG and Mozambique LNG. Furthermore, the project owners have also received an 8% corporate income tax reduction for the first 8 years of production.

Climate impacts

Mr Blair talks of the need to meet globally-agreed climate targets. But he does not mention that the Mozambique LNG project is not aligned with the Paris Agreement. The construction phase alone would increase Mozambique’s greenhouse gas emissions by up to 14%. And burning the gas that the project would produce would generate annual climate emissions equivalent to the entire European Union aviation sector.

But despite this, the United States Export Import Bank has agreed to finance Mozambique LNG with $4.7 billion, its largest loan for many years. And the project was also supported by the UK government, host of the critical COP 26 climate talks, which claims to be a world leader on climate change. However the UK government’s funding decision is being judicially reviewed by Friends of the Earth on the grounds that it did not adequately consider whether the project was in line with the Paris Agreement.

And he almost completely skirts over methane. He refers to the latest report from the UN’s Intergovernmental Panel on Climate Change (IPCC) but does not mention that that report states that methane levels need to be reduced immediately, that over 20 years methane has a warming impact of 84 times that of CO2, and that methane leakage from gas projects is endemic.

And we shouldn’t forget that Mozambique is one of the most climate vulnerable nations – and the most impacted country in the world in 2019 following the devastating tropical Cyclone Idai.

The real way forward

Mr Blair is caustic about developed countries phasing out funding for gas projects, claiming it is driven mainly by sending the right signals to domestic electorates. He’s right that people in richer countries like the UK don’t want to see their money used to fund climate change around the world. And it’s in line with the Paris Agreement which requires richer countries to provide financial help to developing countries to help them meet their targets to cut emissions – not to increase them. He should be encouraging such moves.

Mr Blair refers to Mozambique’s gas projects as providing intra- and inter-generational justice, and as a development imperative that serves people, prosperity and the planet. We couldn’t disagree more.

Investment in gas will just lock Mozambique into fossil fuels, increase climate emissions and the threat of greater impacts on an already badly-affected country.

Developing countries like Mozambique need to move past fossil fuels and develop their abundant renewable resources, supported by the climate finance that developed countries have already committed to provide.

That is the true development imperative and would be true climate justice.

By: Justiça Ambiental/Friends of the Earth Mozambique and Friends of the Earth England, Wales and Northern Ireland