Total’s departure leaves investors, businesspeople with “a rope around their necks”

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Total’s departure leaves investors, businesspeople with “a rope around their necks”

7:18 CAT | 28 Apr 2021

File photo: DW

The decision by the French oil company Total to temporarily abandon the Afungi gas project in northern Mozambique has left Mozambican businesspeople with their hands tied and unpaid debts to banks.

Reef Investments, a civil construction company headquartered in Pemba, was one of the subcontractors of the French multinational Total in the Afungi gas project in Cabo Delgado.

Even before Total announced the “force majeure” suspension of its operations in the region, this Monday (26.04), Reef had already recording losses after its workshop, including heavy equipment, was set on fire in the March 24 terrorist attack on Palma.

“Life is going to be very difficult,” with Total’s departure, company owner Svrika Karidi told DW Africa, detailing direct losses of more than US$4 million.

DW Africa: What does this announcement of the withdrawal of Total Afungi mean, in terms of financial losses?

Svrika Karidi (SK): As you may know, the oil and gas project is very demanding, in terms of quality and safety standards, so my investment there in Palma is more than US$4 million in equipment alone. I recently purchased two new heavy machines that have not yet started working at a cost of around US$650,000.

DW Africa: Did you have to take out loans to purchase this equipment?

SK: Yes. All of these investments were made via borrowing – bank loans, and now I don’t know what to do. I am paying in instalments. I pay two million meticais [about €29,000] monthly and I thought that we would have returns if we were working. I also built a 40-room camp, in the hope that my workers would stay in Palma. Now I don’t know what we’re going to do with it.

DW Africa: Is this a huge loss for your business accounts?

SK: It will be difficult, because we don’t know if there will be another project where we can place our machines or find a way to make our equipment more profitable. Just imagine, too, how many companies are now leaving Afungi for Pemba. Many, all of these companies are looking for new opportunities, because we need to pay the money back to the bank. Not only that, we need to get our Afungi machinery to Pemba safely, which we can only do by sea.

DW Africa: With this announcement of Total abandoning the Afungi project, and Reef being a company with 10 years in the national market, do you plan to carry on the same way as before to try to recover your losses and repay the bank?

Karidi.dw_ — Reef Investments is put up for sale

SK: Let’s see what will happen. Everything is premature now, because there are still no security guarantees in Cabo Delgado. Today, people are just pointing a finger at Total, saying it left the country, but what did they want Total to do? It is not to blame. It can leave, because it also lost a lot of money, and security for continuing does not exist.

After this attack on Palma, I put my company up for sale. I have Reef Investments and a hotel, but I am selling everything and leaving the country, because there is no security to continue investing here. I do not want to leave – I have lived here for 15 years – but things are not looking good. Two or three months from now I don’t know what’s going to happen.

DW Africa: Are you leaving the country because of security or because the business environment is no longer favourable to you?

SK: What makes me think more about leaving the country is the lack of protection. In the attack on Palma, many of our workers were left to fend for themselves. No one provided evacuation for them. They were left there to die. This, for me, shows that nobody has love for their neighbour. It has nothing to do with the business, because things are like that, one day it can be fine and the other not, the business environment is always like that.

Also read: Insecurity, hunger and despair in Palma and Quitunda – Media Fax

Source: Deutsche Wellle