Power outage again

New fuel shortage in Aden resulting from Eisei monopoly, demand to raise oil prices

Aden – Debriefer
2019-03-02 | Since 3 Month

Ahmed Saleh al-Eisei

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Aden, the interim capital of the Yemen`s internationally-recognized government, has been battling a deepening fuel shortage for two days after its main oil refineries stopped pumping fuel supplies to Aden Petroleum Company reservoirs since Wednesday amid fears of a new rise in oil prices.

In a special statement to the "Debriefer" international News Agency, a government source in the Yemeni Petroleum Company (YPC)in the city of Aden, confirmed on Friday that the Yemeni businessman Ahmad Saleh al-Eisei, the only contractor to supply oil to Aden and other liberated provinces, "has been creating again crises in the markets after he stopped few months ago."

The source said that al-Eisei refused to pump fuel to the state-ownedYPC, despitethe large quantities in thepublic-owned tanks of Aden refinery, which became private property of al-Eisei, according to officials.

"The refusal of al-Eisei comes in response to the director of the YPC in Aden, Intisar Al-Arasha, whorejected his request to raise the price of 20-liter gallon of petrol to 6,000 riyals, up 500 riyals from the official price," the source said.

The source said that the request of al-Eisei to increase in the price of gasoline is contrary to the agreement with the YPC, providingthat fuel prices may not be higher than the official price of 5,500 riyals per barrel for one year. The agreement was signed less than three months ago.

Similar sources confirmed that al-Eisei justified his demand for aglobal increase in oil prices, in addition to the rise in the dollar exchange rate against the Yemeni riyal. That will cost the YPC a heavy loss as the company buys three million dollars a monthfrom the market.

The company buys oil and fuel of various kinds from "Arab Gulf", which monopolizes the process of importing fuel in Aden and other provinces and areas under the control of the Yemeni internationally recognized government.

Eisei company has controlled the Aden Refinery and YPC that now, under Hadi's decree, purchases oil derivatives from the Eisei-owned "Arab Gulf" company and sells them in prices decided by Eisei.

Eisei monopoly on fuel importation in Aden and other government-held areas is the first of its kind in the world. The government has handed over the country's most important economic and financial resource to the private sector.

The decision to liberalize the oil derivatives market came after the government of Hadi refrained from covering the import bill of fuel in foreign currency, in addition to stopping the state oil companies and the refineries of Aden from importing the fuel and turning them into mere warehouses for traders.

Yemeni observers and economists blamed President Hadi and his government for deteriorating service conditions in Aden and disrupting the movement in Aden due to the lack of fuel from time to time, making the humanitarian and living conditions more difficult.

They warned of the graveness of the continuation of this presidential decree on national security, the value of the national currency  and on the living conditions of citizens in the absence of the role of the state and its organs.

 

Yemeni Petroleum Company in Aden buys $3 million a month from blackmarket

Buying the dollar from the market

Sources in the YPC in Aden have told the "Debriefer" that the YPC"continues to buy about three million dollars a month from local exchange companies at the current price, in order to buy fuel from the Eisei company, which still insists on receiving the amounts of fuel in hard currency. This forces the YPC to buy the dollar from the market, in excess of one billion riyals from the official price set by the Central Bank of Yemen (CBY) at 480 riyals forone dollar, to pay the value of fuel to Eisei, causinga direcontinuous lack of hard currency in the market and contributing to the decrease in local value of "Riyal" against the dollar."

The Yemeni riyal has lost its value against the dollar and other foreign currencies in exchange market on Friday, in limited transactions between exchange companies in Sana'a and Aden, decreasing to more than 580 riyals per dollar- up 30 riyals amid a wave of continuing hikein food prices.

The sources accused parties and powerful figures in the legitimate government of concealing and colluding with Eisei in order to achieve material and personal gains at the expense of the interests of the nation and the people.

The sources warned that if the YPCcontinued to buy hard currency, the local currency would collapse again, and Eisei would persist to extort the State YPC to distribute fuel locally in southern provinces, as the company buys derivatives from Eisei at the price determined by him, resulting heavy losses on the government company.

The YPC leadership in Aden decided early last September to suspend the sale of fuel to government stations until the government and the CBYintervene and stop the speculation process at hard currency exchange rates.

The company said in a statement addressed to public opinion: "It is important for the citizen to know that the insane rise in the exchange rate of the dollar against the Yemeni riyal directly affects the process of buying the company's oil derivatives, especially in the absence of state intervention or provisionof subsidy for oil derivatives, or even prompt intervention to control exchangers, so asto contribute to fixed exchange rate."

The YPC confirmed that it has the sufficient financialcapacity and cashnecessary to buy oil derivatives, but did not make the purchase and thedelivery of oil materials to the local market through government stationsacross Aden,justifying that "so as not to burden the citizen." This causedthe suspension of work at the YPC's  stations at least for the time beingand until the stability of exchange rates and the intervention of thegovernment and the CBYto stop the speculation process at hardcurrency exchange rates.

The YPC in Aden said in its statement that failureby the state or the CBY to intervene and impose a strict control on exchangers, allowed them to speculate at exchange rates. "This will automatically reflect negatively on the purchasing value of oil derivatives, becauseof the rising rate of exchange, as the company buys oil derivatives in hard currency,leading to the closing of stations.

 

A continuing fuel shortage in Aden

"Debriefer" news agency's correspondent in Aden saw most of all the state-owned or privategas stations in the eight districts of Aden have been closed since Thursday, as the fuel shortage crisis continues and the black market thrives, which returned again after it had disappeared from the scene during the past months.

Residents of al-Burayqa District, west of Aden, say a number of gas stations were closed without notice on Thursday night, arguing that the depletion of supplies.

Citizens expect the closure will be followed by a new increase in prices of gasoline.

Labor sources at the oil port of Aden refineries confirmed that the movement of the petrol locomotives from al-BurayqaYPC's tanks had stopped since Wednesday.

No statement has yet issuedby Aden YPC explaining causesbehind lack of fuel at stations and stop the departure of locomotives from the port of oil.

Gasoline prices on Thursday and Friday rose sharply on the black market, the price of 20-liter gallon increased to 10 thousand riyals, 100 percent higher than the official price.

The citizens confirmed that the high prices of fuel further worsen their social and living conditions, especially as the rise is reflected directly on consumer goods, services and transportation, as well as prices of vegetables and fruits and other materials and commodities necessary for the people.

 

Power outage again

The stifling fuel crisis in Aden takes place on Friday as the power outage in the southern port city reoccur for reasons not yet known.

Aden's blackouts have been stopped since last November because of Saudi Arabia's decision to grant Yemen $60 million in fuel per month to generate electricity.

Citizens told Debriefer that the "planned power outage were less frequent,  with all areas witnessingone-hour blackout in the morning and a similar in the evening.

'Eiseiis internationally wanted' hushtag at the forefront of social media on Thursday and Friday

The blackmail practicedon the state YPC by "Arab Gulf", an investment company owned by Eisei, forced southern activists and young people to launch a large-scale campaign in the social media sites, criticized Eisei and the 'legitimate' government of President AbdRabbu Mansour Hadi for failure in many issues and charges of widespread corruption.

The campaign comes one week after a UN report had revealed Eisei's involvement in huge corruption in oil deals of millions of dollars with Yemeni 'legitimate' government.

Under 'Eisei is internationally wanted' hushtag, the activists called for holding Eisei accountable and prosecuting him and those involved with him for corruption that deepened Yemenis' sufferings caused by the 4-year war between the Saudi-backed Yemeni government and the Iranian-backed Houthi rebels.

Eisei is a key figure in Hadi's regime, and has deep relations with Jalal Hadi, the president's son, but also with the Yemeni Vice-president Ali Muhsin al-Ahmar who is also accused of smuggling oil in cooperation with Eisei, owner of oil companies.

From their tweets, most of those activists calling for Eisei and corrupt partners to be sued are from south of Yemen, since the businessman is from the southern governorate of Abyan, the same as Hadi.

 

Recent report by UN expert panel on Yemen has disclosed that the Yemeni businessman Ahmed Saleh al-Eisei was involved in US$ millions' worth corruption with the internationally recognized government of the war-torn country.

Having presented to the UN Security Council late last week, the report says the UN team of experts is still investigating huge corruption practices, involved in which are influential figures inside the legitimate government, including Eisei, local supplier close to President Abdrabbu Mansour Hadi and to his son Jalal.

The 230-page report indicates that Eisei's corruption concentrates on oil sector through his commercial investment firms.

According to the report, the expert panel is continuing investigation in potential cases of corruption and diversion of public funds allocated for power production in the southern official government-held governorates of Aden, Abyan and Lahj, where Eisei has been until recently solely monopolizing the importation of oil derivatives in collusion with Yemeni presidency and government.

The report says the UN expert panel has received an Aden Refinery-issued invoice claiming funds of more than US$ 3 million payable by one of Eisei companies for leasing 'M Spirit' crude oil tanker and associated demurrage.

Experts could not understand reasons behind the over-demurrage while the tanker is anchored in Aden Port from 4 September up till 6 October, incurring additional fees and fines, added the report.

The Yemeni government has informed the expert panel that the 'M Spirit' tanker had been contracted through Eisei Group to ship crude from Hadhramout to Aden Refinery and that only small portion of the contract value had been paid, says the report noting that the panel was still investigating the question.

The experts have received documents disclosing big difference between the volume of fuel indicated in tender documents and the actual volume of fuel channeled into electricity generating plants in 2017.

The report says the panel has briefed the official government on that information in a letter noting that terms in tender documents seem to favor a local bidder enjoying monopoly in Aden. In its reply, Hadi government claimed that the economic and fiscal conditions in 2018 forced Yemen to change the terms in fuel bid applications, making it difficult for other bidders to comply with new terms.

The government added that the Central Organ for Control and Audit (COCA) had been reactivated and already began auditing fuel imports to Aden during the period from 2015 to 2018, and that Saudi Arabia started since November 2018 donating fuel to Yemen for power generation.

The government reply includes confession of official corruption in oil imports monopolized by Eisei.

Such official-Eisei corruption is disclosed by UN experts as Yemen has been racked by an armed conflict between the Iranian-backed Houthis and the Saudi-backed government triggering the world's worst humanitarian crisis, according to the UN, with more than 22 million people in need for a type of humanitarian aid and immediate protection, including 8.4 million people unsure how to get next meal, and some 2 million children suffering severe shortage of nutrition.

The massive corruption has made UN expert panel recommend the UNSC to include, in a resolution or declaration, wording reminding Yemen's government, member states and other parties that corruption poses big threat for peace and security in Yemen and that perpetrators involved therein could be subject to penalties under the UNSC Resolution 2140 of 2014.

The experts also recommended the UNSC to remind Hadi government of its commitments under the International Conventions on economic, social and cultural rights applicable even in case of armed conflict, and on ensuring facilitated mechanisms of basic commodities, particularly food imports to all Yemeni areas.

The panel called on the UNSC to urge Houthi group to respect impartiality and independence of humanitarian work agencies.

Last July, a report by UN experts to the UNSC stated that war in Yemen had brought about new warlords who do not want the war to stop.

 

Aden Refinery (archive)

On January 26, the director of the YPC in Aden, Intisar al-Arasha stressed the importance of re-operating Aden Refinery Company, which will contribute to the stability of the local market for derivatives.

In interview with Aden TV,Arasha said: "The re-operation of Aden Refinery will also contribute to the decline in the prices of oil derivatives. Yemen's YPC is trying to rise again after it was hit by the war in the country and the impact of the economic crisis,"still going on.

Arasha stressed her company's determinationto provide oil derivatives to the citizens at the lowest prices and to stabilize the local market.

It is noteworthy that the giant Aden Refinery has been suspended followingadecree of Yemeni President Hadi, early last March, to liberalize the market for oil derivatives, open the field of import to private sector companies and make the sale and distribution of derivatives subject to competition between companies.

Under Hadi's decree, Eisei purchases oil derivatives from the Eisei-owned Arab Gulf company and sells them in prices decided by Eisei.

Debriefer news agency had then quoted officials in the YPC and Aden Refinery as accusing Eisei of monopolizing oil transactions in southern provinces and altering the refinery into storage facilities for his use.

"Most of Aden Refinery's officials are close and loyal to Eisei, as they were appointed under decrees or instructions from Hadi and his son," sources at the refinery had then told Debriefer. "Thus, that supplier managed to ink a long-term lease of the refinery's reservoirs."

In mid-December, the French newspaper Le Monde highlighted the role of Yemen's 51-year-old businessman Eisei in political and economic life of Yemen, a poor country that has been racked by an armed conflict between the Iranian-backed Houthis and the Saudi-backed government triggering the world's worst humanitarian crisis, according to the UN, with more than 22 million people in need for a type of humanitarian aid and immediate protection, including 8.4 million people unsure how to get next meal, and some 2 million children suffering severe shortage of nutrition.

The newspaper said the situation provokes angry responses in Aden, as  the businessman accused of keeping the old Soviet refinery he controls in the city nonfunctioning, in order to continue selling fuel to private generators in Aden, leading to a significant shortage.

The newspaper pointed out that Eisei controls the Aden Refinery Company and became the top hand in issuing republican decisions related to the officials of this giant company, which was founded in the early fifties of the last century, as the first company to refine crude oil in the Arabian Peninsula.

 


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