Mozambican businesses are feeling acute pain after French energy company Total suspended work on its giant, $20bn LNG project in Palma after vicious attacks on the town last month by a group linked with Islamic State.
Following attacks in January, the company had evacuated some workers and suspended construction work on the project, the biggest in its history.
It then resumed work on the scheme, but this was abandoned after a deadly siege on Palma starting 24 March that lasted five days and led to dozens of deaths and the displacement of around 40,000 people.
News of the suspension came from the Confederation of Economic Associations of Mozambique (CTA), which this week announced it was conducting a survey of businesses, in coordination with Total, to discover how many companies were affected by the suspension.
CTA president Agostinho Vuma told reporters that affected companies include an Italian contractor building a resettlement village and a Portuguese company building a new airport, reports the AFP news agency.Â
Vuma told AFP that small and medium-sized local businesses have already lost $90m since the latest siege on Palma.
The LNG scheme had the goal of awarding $2.5bn in contracts to Mozambican companies, representing more than a third of Total’s total onshore contracts.
Julio Sethy, a businessman born in Palma who has invested in property, a quarry and a transport business in the area, told Bloomberg that it was unlikely that Total would restart this year.
"It’s a complete disaster. We don’t know what’s going to happen," he said.
Mozambique had been relying on the LNG plant to buttress its economic development plans. Projected revenues were put at $100bn in revenue over 25 years, roughly six times its annual GDP. The International Monetary Fund has reduced its forecast for economic growth from 38% in 2021 to 2%.
The insurgency that began in the northeast of the country in 2017 has left at least 2,780 people dead, according to the Cabo Ligado website, which tracks the conflict. It’s also displaced more than 700,000 people in Cabo Delgado province.
In June last year, eight construction workers on the scheme were killed after gunmen attacked their vehicle near Mocimboa da Praia, near the site of the LNG works (see further reading).
Image: The town of Palma, Mozambique on 24 March 2021, the day of the latest siege by militants (André Babtista/VOA/Public domain)