Saudi Arabia is supplying oil derivatives to operate 70 power plants in Yemen
In a strategic move aimed at bolstering the stability of the energy sector and supporting the national economy in the Republic of Yemen, the Saudi Development and Reconstruction Program for Yemen ( today supplying more than 70 power plants with petroleum derivatives. The first shipments departed from the headquarters of the Yemeni Petroleum Company (PetroMasila) and are destined for various Yemeni governorates, in accordance with directives issued by the Saudi leadership on 25 Rajab 1447 AH, corresponding to January 14, 2026.
Details of the new oil grant
The new grant includes a substantial quantity of 339 million liters of diesel and fuel oil, with a total value of US$81.2 million. This step culminates the agreement signed on January 21, 2026, between the Yemeni Ministry of Electricity and Energy, PetroMasila, and the Saudi Program, which aims to purchase petroleum products from the Yemeni national company to enhance local content and stimulate the domestic economy.
To ensure transparency and fairness in distribution, the grant was subject to comprehensive and integrated governance, whereby a supervisory committee was formed comprising several Yemeni entities that undertake the tasks of monitoring and ensuring that the quantities reach the end beneficiary based on the actual needs of the power generation stations in the different governorates.
The context of continued Saudi support for Yemen
This grant is not an isolated event, but rather part of a long history of Saudi support for Yemen's energy sector, which has suffered for years from fluctuating supplies. Historically, the Saudi Development and Reconstruction Program for Yemen (SDRPY) has provided previous grants for petroleum derivatives, including a $180 million grant in 2018, a substantial $422 million grant in 2021, and another $200 million grant in 2022. This continued support aims to prevent the collapse of the electricity grid, which is vital for daily life and essential services.
Economic and financial impact on the state
This grant has significant economic implications that extend far beyond simply powering the lights; it directly contributes to easing the financial burden on the Yemeni state budget, which had been depleting a large portion of its resources to provide fuel. It also plays a pivotal role in supporting the Central Bank of Yemen by reducing the demand for foreign currency to purchase fuel from abroad, thereby strengthening the stability of the local currency and preserving foreign exchange reserves.
Enhancing basic services and living standards
On the service and social front, a regular electricity supply is essential for the continued operation of hospitals and medical centers, ensuring the functioning of schools and educational facilities, and sustaining operations at ports and airports. It is expected that supplying these quantities will increase the operational efficiency and productivity of Yemeni institutions, improve services provided to citizens, and positively impact living and social stability, thus supporting Yemen's comprehensive economic recovery.
