In a move aimed at bolstering economic and service stability in the Republic of Yemen, the interim capital, Aden, witnessed the signing of a strategic tripartite agreement between the Yemeni Ministry of Electricity and Energy, the Yemeni Petroleum Company (Petromasila), and the Saudi Program for the Development and Reconstruction of Yemen. This agreement aims to supply large quantities of petroleum products to operate more than 70 power generation plants distributed across various liberated Yemeni governorates.
Details of the new Saudi grant
Under the agreement, the Saudi Development and Reconstruction Program for Yemen will purchase petroleum derivatives directly from the national company PetroMasila, totaling 339 million liters of diesel and fuel oil. The total value of this grant is US$81.2 million, a step that complements the ongoing support provided by the Kingdom of Saudi Arabia to the energy sector in Yemen.
The context of the crisis and the importance of timing
This support comes at a time when Yemen's electricity sector is facing immense challenges as a result of years of conflict that have damaged infrastructure and led to a severe fuel shortage for power plants. Frequent power outages have paralyzed many vital sectors, making this grant crucial not only for lighting homes but also for ensuring the continuation of daily life.
Expected economic and service impact
The importance of this agreement extends beyond mere service provision; it encompasses crucial economic dimensions. By providing fuel as a grant, the Central Bank of Yemen is significantly relieved of pressure, as it saves the government the hard currency it would otherwise have spent on fuel imports, thus contributing to the stability of the Yemeni rial's exchange rate and curbing inflation.
On the service level, the grant will ensure the continued operation of hospitals and medical centers that rely on electricity to run operating rooms, incubators for newborns and kidney dialysis machines, in addition to ensuring the operation of schools, ports and airports, which will have a direct positive impact on the lives of Yemeni citizens.
Comprehensive governance to ensure access
To ensure that this support is used to its fullest potential, strict and comprehensive governance mechanisms have been put in place. A supervisory committee, comprising representatives from several Yemeni entities, has been formed to monitor the distribution of petroleum products and ensure their delivery to targeted power plants based on the actual needs of each governorate, thus enhancing transparency and operational efficiency.
A history of ongoing support
It is worth noting that this grant is not the first of its kind, but rather an extension of a long history of Saudi support for the Yemeni energy sector. The Saudi Development and Reconstruction Program for Yemen has provided previous grants for petroleum derivatives, including a $180 million grant in 2018, a substantial $422 million grant in 2021, followed by a $200 million grant in 2022, culminating in the current support, which underscores the Kingdom's commitment to supporting Yemen's stability and development.
