Yemen to supply more unsubsidised fuel in bid to cut black market

Mohammed al Qadhi

Jul 18, 2011

SANAA // In an attempt to cut off a growing black market in fuel, the Yemeni government plans this week to increase the supply of unleaded petrol to be sold at unsubsidised prices.

The decision will almost double the price of a 20-litre canister of leaded petrol, increasing it from US$6.25 (Dh22.9) to about $13. A 20-litre canister of diesel, which used to cost about $4, would be sold at about $10.

"This is all just a temporary measure to stop the black market, smuggling and hunger for fuel. We will go to the normal price when the pipeline is fixed," said Mr Sharaf, Yemen's minister of trade and industry, referring to the main oil pipeline in the central province of Marib.

The boost in supply is expected to reduce the long lines of vehicles waiting for days at fuel stations and help re-open many factories that closed due to the lack of diesel fuel. But the price hike is also bound to be passed on to consumers, already dealing with rapidly rising prices of food staples and other commodities.

Tribesman damaged the pipeline in mid-March and had, until Tuesday, refused to allow the government to repair it. Repairs were finished Friday and first ship carrying crude oil from Ras Eisa port on the Red Sea to the Aden Oil Refinery is expected next week, said refinery officials.

The damage had caused a sharp drop in oil production to 3 million barrels a month from 5.8m barrels. Mr Sharaf said after the stop of oil production in Marib, the government has been spending about $450m per month on importing fuel.

In the ongoing unrest, tribesmen have taken control of some areas as part of the effort to force President Ali Abdullah Saleh to step down from power. The damaged pipeline is symbolic of the economic crises the country now faces.

The Yemeni government subsidises oil derivatives by US$1.5 billion per year, 73 per cent of which goes toward diesel and much of it to support farmers who use to pump water to their fields.

Mustafa Nasr, director of the Studies and Economic Media Centre (SEMC), a Sanaa-based non-profit organisation, said the government fuel plan "could be of positive results if it is a temporary measure, for it could revitalize the paralysed economic activity".

"It will be catastrophic if the government decides to stop subsidising fuel for good as this will increase the prices of all commodities, which means increasing poverty," Mr Nasr said.

Prices for petrol and diesel have risen by 900 per cent over the past three months on the black market, according to a recent study by the SEMC.

The punishing fuel prices have "affected the prices of all commodities and paralysed the function of many economic sectors and some service activities", the study said. It estimates that the cost of transporting goods has risen by 60 per cent since April.

The price of food staples such as wheat, flour, sugar, yogurt and milk has increased by 40 to 60 per cent.

Many people complain the government is deliberately heightening the suffering of the people to turn them against protesters who have been demanding since February the departure of Mr Saleh.

"The government is trying to punish us. They want the people to say life before the protests was better and that the revolution is making our life hard," said Nadeem Jamal, 31, a teacher in Sanaa.

Mr Sharaf estimates Yemen has suffered between $5bn and $8bn of direct and indirect losses in the past five months from lost oil exports, including the cost of oil purchases at international prices, and a drop in tourism, customs and tax revenues.

Tawfeek al Khameri, an owner of hotels and restaurants, said that his companies have lost about $45m since the start of the unrest in February.

Tourism, which accounted for about $1.2bn of the country's $33bn gross domestic product, has ground to a halt.

Hotels are nearly vacant and restaurants have restricted operating hours as they struggle to cut costs. Between 700 and 800 factories have shut down due to a shortage of diesel.

Mr Al Khameri said the Yemen economy is collapsing.

"I cannot see any silver lining that we will get out of this very soon and the he problem is that those people in power are heedless to the growing pains of the ordinary citizens and the calamity we are heading toward," he said.

Businessmen, analysts and western diplomats have also warned of the likely collapse of the economy.

Mr Nasr said an important signal of the economic collapse is the dwindling foreign reserves of the central bank, which he said is about $3bn. However, Mr Sharaf insists that it is $4.1bn.

Yemen

Sunday, July 17, 2011

Reuters reports that crude oil flows resumed on Saturday through Yemen's main oil pipeline after the link which had been shut since an attack by tribespeople in March was fixed on Friday, shipping sources said.

"They started pumping crude yesterday evening," one Yemen-based shipping source said on Sunday. "It looks like the repairs have been going on for some time."

Yemen's main oil pipeline, which carries around 110,000 barrels-per-day (bpd) of light Maarib crude from Maarib oil fields to the Ras Isa export terminal, had been shut since mid-March when angry tribespeople demanding the departure of President Ali Abdullah Saleh attacked it.

The lack of crude supply also forced the country's Aden refinery to shut, triggering a fuel shortage in the impoverished country and oil donations from neighbouring Saudi Arabia.

Yemeni crude pumped by the pipeline is usually shipped on oil tankers from the Ras Isa terminal in the Red Sea to the Aden refinery on the Gulf of Aden.

The first shipment of Yemeni crude from Ras Isa to the Aden refinery since the repairs were completed is expected to be sent later this week, another shipping source said.

"The pipeline has just started pumping. We need a sufficient level of crude accumulating in the tanks before shipping it elsewhere," he said.

Most of Maarib oil goes to Aden refinery which produces oil products for domestic consumption. Only a small percentage of Maarib is exported abroad from Ras Isa.

The Aden refinery, which has a capacity of 150,000 bpd, resumed production after Saudi crude was delivered in mid-June.

Yemen and the return of the dictator

By Hassan Hanizadeh

July 17, 2011

Yemen's ruling General People's Congress has announced that it has made the preparations for the return of the country's dictator Ali Abdullah Saleh to the capital, Sana'a.

On June 3, he was seriously injured by a bomb blast at the presidential palace and sent to a hospital in the Saudi capital of Riyadh for treatment.

The incident also inflicted serious injury on the prime minister, the speaker of parliament, the deputy prime minister and Sana'a's governor.

Now, after nearly two months of treatment, Saleh intends to return and take back the reins.

According to article 116 of the constitution, Yemen has to hold presidential elections in Saleh's absence, should his failure to govern the country exceed two months. Hence he is seeking to return within the stated limit.

The dictator's potential reappearance would severely afflict Yemen with crisis and create the prospect of tribal strife.

Yemen's social and tribal texture and the different tribes' possession of more than 60 million firearms and semi-heavy weapons set the scene for long-term tribal warfare.

On the other hand, Saudi Arabia has always been trying to prevent the formation of a parliamentary and democratic system in Yemen. This has been due to Riyadh's desire to claim some of the country's territory and its fear that the developments there affect the Saudi nationals.

The complexity of the political and social state of affairs in Yemen has prevented political observers from being able to realistically analyze the country's future.

But the bulk of players on Yemen's political arena come under domestic, regional or international categories.

Domestically, the ruling system, which has been directing Yemen's destiny for more than 33 years through the use of violence, has been able to use the armed forces and security organizations to crush the popular uprisings.

Most ranking generals, who usually wield the means of exercising power, are from the Hashid tribe affiliated to Saleh.

Furthermore, the tribes, which in some way possess local clout to direct social affairs, play an important role in the shaping up of domestic developments.

For the same reason, the tribes affiliated to the government structure have now stood against the youth's revolution and stalwartly support Saleh's dictatorial regime.

Regionally, the Persian Gulf states, especially Saudi Arabia, play an extraordinary role in the precipitation of the crisis.

These states strived to keep Saleh at the helm of power by proposing various schemes at the beginning of the Yemeni revolution.

According to these plans, Saleh was supposed to remain in power until the end of his presidency in 2012 and hand political control over to the next president after general elections are held.

But the scheme was thwarted as a result of the escalation in protests by the Yemeni youths and the intensification of popular demonstrations in different cities of the country.

Yemenis are well aware that Saudi Arabia, as an ally of Saleh, fears any change in Yemen's political structure.

Saudi Arabia, which represents a tribal system, is terrified at the prospects of the establishment of a democratic regime in Yemen, as this may exert a considerable effect on the Saudi Arabian society.

Internationally, the United States and the West in general oppose any fundamental change in the political structure of Yemen, conceiving that the overthrow of Saleh's regime may invigorate the presence of al-Qaeda in areas close to and overlooking the Bab-el-Mandeb Strait.

The U.S. would like a powerful military person, who can afford to contain the influence of al-Qaeda in the southern parts of Yemen, to seize power in the country.

Therefore, after the departure of Saleh from Yemen, the U.S. was considering a military option, which was foiled by the continuation of popular demonstrations.

In other words, the formation of a group of revolutionary youths to protect the attainments of the Yemeni popular movement caused the U.S. to set aside the military coup option temporarily.

Now that Saleh plans to return to Sana'a after almost two months, Yemen has entered a critical phase.

In the run-up to the possible return of the Yemeni dictator, the country has been divided into two poles, with one opposing his comeback and the other approving it, and this is expected to seriously challenge the security and unity of Yemen.

In the event of Saleh's return, there is the possibility that Yemeni tribes enter an armed conflict, which will increase the risk of the disintegration of the country.

Given that Saudi Arabia is behind the violent and deadly incidents in Yemen and also plays an important role in empowering al-Qaeda in Aden and Zinjibar regions, one may argue the return of Yemen's dictator will pave the way for the division of the country into southern and northern parts.

Disintegrating and weakening Yemen constitute a key part of Saudi Arabia's policy as it is averse to seeing Yemen enjoy an acceptable degree of political stability and unity.

In such an atmosphere, the Yemeni youths should seize the initiative from the Saudi-dependent tribal leaders and take into their own hands, by forming revolutionary councils, the task of running the country.

(Source: Press TV)

Yemen's wounded president visits injured officials in Saudi hospital

SANAA, July 17 (Xinhua) -- Yemeni President Ali Abdullah Saleh, who is being treated in Saudi Arabia for bomb injures, paid visits Sunday to some other wounded Yemeni officials in the Saudi Military Hospital in Riyadh, the state-run Saba news agency reported.

The officials were wounded along with Saleh in the June 3 bomb attack on Sanaa presidential palace and were hospitalized in Riyadh.

"President Saleh visited Prime Minister Ali Mujawar, Shura Council Chairman Abdul-Aziz Abdul-Ghani and Sanaa governor No'aman Dwaid," Saba said.

"During the visits, Saleh reiterated his appreciation to the Saudi leadership for the care, saying it reflected the deep-rooted relations between Yemen and Saudi Arabia," said the report.

Saleh also "highly valued the Saudi attitude of supporting Yemen's unity, security and stability, as well as its support for the Yemeni people under any circumstances and in all areas," it said.

Saleh, who was injured by a bomb attack on his presidential palace on June 3, has faced six-month-long protests across the country, demanding an end to his 33-year rule.

Yemenis Protest on 33rd Anniversary of Saleh's Rule

July 17, 2011

VOA News

Tens of thousands of people in Yemen have rallied in the country's two largest cities to demand the ouster of President Ali Abdullah Saleh on the 33rd anniversary of his autocratic rule.

Protesters in the southern city of Taiz waved black flags to mark Sunday's anniversary of Saleh's rise to power in 1978. Opposition activists also chanted anti-Saleh slogans in a main square of the capital, Sana'a, where they have been camping out for months to try force him out of office.

Saleh has been receiving treatment in a Saudi hospital since suffering severe burns in a June 3 bomb attack on his presidential compound. The bombing also wounded his prime minister, the Sana'a governor and the chairman of Shura Council, a branch of Yemen's legislature.

Yemen's state news agency says the president visited the three wounded officials at the Saudi hospital on Sunday, and expressed happiness about what it calls the "constant progress in their health." Saleh has rejected protesters' demands to step down immediately, insisting that he should lead a transition to more democratic system of government.

It is not clear when he will return to Yemen, which has been led in his absence by his deputy, Vice President Abed Rabbo Mansour Hadi.

Islamist militants have taken advantage of Yemen's political turmoil by seizing two towns in the southern province of Abyan in recent months. Yemeni government forces have been trying to recapture the towns, including the provincial capital, Zinjibar.

Yemeni officials said Sunday local tribes have agreed to join forces with the Yemeni military to try to drive out the Islamists, whom the government says have links to al-Qaida. The officials say the alliance has allowed the government to send its first reinforcements to the military's 25th brigade, which had been under siege by Islamists near Zinjibar for weeks.