Saudi agreement to support Yemen's electricity with fuel worth $81 million

In a strategic move aimed at bolstering the stability of Yemen's energy sector, the interim capital, Aden, witnessed the signing of a significant 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 secure the necessary fuel supplies to operate more than 70 power generation plants across various Yemeni governorates, reflecting the deep fraternal ties and ongoing support from the Kingdom of Saudi Arabia to its brothers in Yemen.

Grant details and amount of support

Under this agreement, the Saudi Development and Reconstruction Program for Yemen will purchase large quantities of petroleum products from PetroMasila, totaling approximately 339 million liters of diesel and fuel oil. The total value of this new grant is US$81.2 million, a crucial step to ensure the continuity of essential services and alleviate the suffering of Yemeni citizens caused by power outages.

A historical context of ongoing support

This agreement is not an isolated event, but rather an extension of a series of generous Saudi grants targeting Yemen's energy sector over the past years. The Saudi program has previously provided similar grants for petroleum derivatives, beginning with a $180 million grant in 2018, followed by a substantial $422 million grant in 2021, and another $200 million grant in 2022. This timeline underscores the Kingdom's unwavering commitment to supporting the Yemeni economy and preventing the collapse of vital service institutions.

Expected economic and service impact

The importance of this grant goes beyond the operational aspect of power plants to include extremely important economic and financial dimensions, which are represented in the following points:

• Support for the Central Bank of Yemen: The grant contributes to easing the pressure on foreign exchange reserves, as it saves the state from depleting hard currency to purchase fuel from abroad.
• Relieving the financial burden: The Yemeni Ministry of Finance is helping to reduce expenditures allocated to fuel subsidies in the general budget, thus freeing up resources for other sectors.
• Continuity of vital services: The availability of electricity ensures the operation of hospitals, schools, ports, and vital facilities, which positively impacts the daily life of the Yemeni citizen.

Governance and oversight to ensure access

To ensure that this support is used to its fullest potential, comprehensive and integrated governance mechanisms have been put in place. A supervisory committee, comprising several relevant Yemeni entities, has been formed to rigorously monitor distribution processes and ensure that allocated quantities reach the targeted power generation stations based on the actual needs of each governorate, thus enhancing transparency and the efficiency of resource management.