The French energy company Total on Monday announced it would completely withdraw its employees from a multibillion-dollar liquefied natural gas project in Mozambique in view of the tense security situation.
According to earlier reports, about 1,000 employees are directly affected, but Total did not give a number.
Agostinho Vuma, the president of Mozambique’s business association earlier estimated the total damage to the economy by the looming production stop at around 90 million dollars.
According to his preliminary estimates, about 410 companies involved in the gas production project in Cabo Delgado from suppliers to security services to lodge owners will have to shut down their operations.
Around 56,000 people would become unemployed as a result.
Mozambique’s government confirmed the indefinite halt of the project as well as the cancellation of numerous contracts with supplier companies.
The town of Palma in the north of the south-east African country was attacked by Islamist rebels on March 24. Total is involved in an over-20-billion-dollar liquefied natural gas project in the region.
In view of the circumstances, Total is now using the legal term “force majeure,” which refers to unforeseeable circumstances that prevent a party from fulfilling a contract.
The company hopes that the country’s government and international partners would succeed in restoring security, according to a statement.
If the uncertainty in the region persists, however, further lay-offs are to be expected, it said.
The planned gas extraction was linked to high hopes in Mozambique for a sustainable development boost.
The United Nations World Food Programme (WFP) has already warned of a worsening crisis in the conflict province of Cabo Delgado.
Thousands of people are fleeing due to the recurring violence and almost one million people are currently affected by severe hunger. Some 50,000 people have fled after the attack in Palma.