Africa

Fishermen in the LNG rich Afungi Peninsula in the Palma District of Cabo Delgado Province, northern Mozambique. The area is the site of major LNG projects, including the Mozambique LNG project. Credit: Justica Ambential

By Maina Waruru
NAIROBI, Aug 19 2025 (IPS)

Environmental campaign groups are confident that a suit filed in the United States, seeking to stop the country’s Export-Import Bank (EXIM) from the ‘unlawful’ lending of nearly USD 5 billion to the controversial Mozambique Liquefied Natural Gas (LNG) project, will succeed.

The groups, including Friends of the Earth U.S. and Justiça Ambiental/Friends of the Earth Mozambique, with representation from EarthRights International, filed a lawsuit and believe the financial transaction in March in a deal with the project owners, TotalEnergies, was rushed through to avoid going through requisite requirements.

It alleges that EXIM rushed through approval without conducting required “environmental reviews, economic assessments, and the required input by the public and US Congress.

“EXIM failed to follow its own Charter and federal law, setting a dangerous precedent for future decisions,” they said in papers filed on 14 July.

They allege that in February, President Donald Trump ‘illegally’ constituted EXIM’s acting Board of Directors without the US Senate’s consent, and weeks later, in March, EXIM’s improperly constituted “acting” board of directors announced final approval of the massive USD 4.7 billion loan.

The bank, they charged, entered the transaction despite the ongoing conflict and humanitarian crisis in Mozambique and the fact that the project operator, TotalEnergies, declared force majeure more than four years ago after a violent uprising.

The French oil giant has been unable to resume operations since.

“EXIM’s Board charged ahead with subsidizing the project, without considering the conflict and the harms the project will inflict on the environment and local communities, and despite multiple nations’ open investigations into allegations of serious human rights violations at the project site,” they added.

An EXIM spokesperson would not comment on the ongoing legal proceedings.

“The Export-Import Bank of the United States (EXIM) is aware of recent reports, letters, and inquiries regarding ongoing legal proceedings. As a matter of longstanding policy, EXIM does not comment on pending litigation,” the spokesperson said in an email. “EXIM remains committed to its mission of supporting American jobs by facilitating the export of U.S. goods and services. The Bank continues to operate in accordance with all applicable laws and regulations.”

According to Hallie Templeton, Legal Director of Friends of the Earth, EXIM is bound by a number of different federal laws that govern its actions and financing, including the Export-Import Bank Act, which is its charter.

“The US Congress placed a number of important limitations and procedural protections on EXIM’s activities, given the sensitive foreign policy, economic, and human rights issues that lending to foreign corporations for foreign projects can entail,” he explained.

“Among other things, this includes numerous notice and comment procedures, particular economic considerations to ensure EXIM isn’t harming the US economy, limitations on over-subsidization, the requirement that a quorum of Senate-confirmed members of the Board approve major transactions, and consideration of environmental and social impacts,” he told IPS News.

At the direction of Congress, EXIM also has put in place a number of important policies and procedures that govern the projects it finances and the conditions on which it does so. These include compliance with a number of important environmental and social standards and other safeguards.

“The acting board lacked legal authority to approve this loan. EXIM also failed to conduct mandated procedures and analysis under the National Environmental Policy Act and overall acted contrary to multiple provisions of the Administrative Procedure Act’s requirements on process and sound decision-making in the federal government,” Templeton explained.

Exim’s Act is clear as to how members of the Board are to be appointed. Those procedures weren’t followed in appointing the acting board, he said, adding that it was not clear whether President Trump’s intention for the appointments was so as to approve the loan.

“We cannot speak to the intent behind the way the President proceeded or the individuals he selected, but it was unlawful to bypass the Senate and appoint ‘acting’ members to the Board,” he noted.

He observed, “Likewise, rushing through the loan without federally mandated notice and comment or complying with the other legal requirements for final approval of a loan of this size was unlawful. EXIM should have taken these steps in any scenario.”

The financier’s “disregard of the law,” he said, is worsened by the ongoing conflict, allegations of grave human rights violations, and the numerous pending investigations, some of which specifically concern forces providing security to the project and the role of the project operator itself.

Friends of the Earth-US has the utmost confidence in the case’s success, especially given that EXIM has “violated multiple federal laws, with the board acting contrary to the ‘plain text’ of its Charter and other federal laws, ‘acting as if they are above the law.’”

“We are confident that they will be held accountable,” he added.

Through the US’s Freedom of Information Acts, it has been revealed that EXIM ignored the risks of Mozambique LNG when they approved the project in 2019/2020, and in 2025, they have not only ignored the risks but have also failed to follow the proper process, Kate DeAngelis, Economic Policy Deputy Director for Friends of the Earth US told IPS News.

Exim bank, she complained, did not want to provide the Congress or the public the time to comment because they know that this is a bad deal for American taxpayers.

“There are legal procedures and processes in place to ensure the U.S. Export-Import Bank does not waste taxpayer dollars on risky projects plagued by violent insurgencies.”

“Yet Exim—like the rest of the Trump administration—believes that it can operate outside the law. We will not stand by while it cuts health care and disaster aid so that it can give handouts to fossil fuel companies,” the official added.

“Exim’s Board’s illegal decision to subsidize this project, without even considering the risks to local people, let alone the serious allegations that project security committed a massacre at the project site, is beyond reckless. EXIM needs to do its job and actually consider the harms this project will inflict on local people,” said Richard Herz of EarthRights International

An Islamist insurgency in the Cabo Delgado province in northern Mozambique since 2017 has led to thousands of deaths and displacement of the civilian population in one of the bloodiest conflicts in Africa in the recent past.

While the Jihadist violence has diminished after intervention by regional forces, an attack was reported in the Meluco district of the gas region last March, indicating a province that is far from safe.

TotalEnergies suspended operations in the Mozambique LNG project in April 2021 due to the insecurity, leading to the withdrawal of personnel and a halt to construction, a decision directly linked to the escalating attacks by the militants in the province.

Last December, climate and environmental activists from Japan criticized the Japan Bank for International Cooperation (JBIC) for financing the LNG project to the tune of USD 3 billion in a loan signed in July 2024.

The groups, in a report, revealed that the bank supports the Mozambique LNG project directly with a USD 3 billion loan and through a loan of USD 536 million to Mitsui, a Japanese corporate group that is involved in the development.

“The Mozambique LNG Project is linked to violent conflict, has resulted in social injustices among Mozambican citizens, and is a potential source of massive carbon emissions,” the report noted.

It concluded that if it proceeded, despite becoming the biggest gas project in Africa, it would deliver low revenues to its host country and place the country at risk of liability if it failed.

IPS UN Bureau Report

 

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