The U.S. Export-Import Bank may lend a US$5 billion direct loan to Mozambique for the development of a liquefied natural gas (LNG) project. This, if it takes place, will be the bank’s biggest export financing deal in years. The US government has intended the US Congress about the possibility of the transaction. It is likely that the approval of the Congress may come in a month’s time from now.
The loan money is meant for supporting U.S. exports of goods and services for the engineering, procurement, and construction of the onshore LNG plant and related facilities on the Afungi Peninsula in northern Mozambique. Counties like China and India normally give such loans tied to import of equipment and technology from their countries. There is a cool calculation from the part of the US also. If the project is through, there is considerable pay off to the US. Over the next five years, when the project would be under implementation, it would support 16,400 American jobs among suppliers in Texas, Pennsylvania, Georgia, New York, Tennessee, Florida and the District of Columbia. By way of fee and interest, a US corporation namely Occidental Petroleum Corp.’s recently acquired by Anadarko Petroleum Co. will pay to the US exchequer more than US$ 600 million. The deal will be the largest one in the last four years, since the power of sanctioning loans and guarantees above US$ 10 million was taken out of the EXIM banks purview and it was restored only recently.
The project would be the single biggest financing deal since EXIM’s full lending powers were restored in May with the confirmation of three new board members. That ended a drought of nearly four years in which the bank could not approve loans and guarantees of more than US$10 million due to a protracted fight in Congress over its future.
The proposed Mozambique LNG project will first develop the Rovuma Basin, one of the world’s most extensive untapped reserves of natural gas. This project will have considerable impact on the economy of Tanzania.
