Almost five years after Essar Ports acquired a coal terminal in Mozambique for $275 million, the financial closure of the project has hit a road block due to climate change and energy transition issues. According to industry sources, “The project now looks difficult as banks are not comfortable in lending for it, because it doesn’t seem to fit in the environmental, social and governance (ESG) framework of lenders.”
Rajiv Agarwal, Chairman of the Board and Managing Director, Essar Ports, has also confirmed that the financial closure of the project has been delayed. But it should be noted that neither the Mozambican government has terminated the concession agreement, nor the Essar Ports have exited the project. According to the banking sources, “Talks are going on for the financial closure, but there is no certainty that the funding tie-up will happen soon or if it will happen at all. In August 2017, Essar Ports had signed a 30 year concession agreement with government of Mozambique to develop a new coal terminal at Beira Port as a PPP project.
