Increased power tariffs amid shortages in Yemen

Government raises power prices to compensate General Electricity Corp.

Yemen is struggling to meet its energy needs.
Yemen is struggling to meet its energy needs.

The Yemeni government has raised power prices in order to compensate the state-owned General Electricity Corp. (GEC) for the increase in costs it has suffered from the rise in the regulated diesel price.

GEC is now paying about 40 Yemeni rials (US$0.17) per litre for its diesel feedstock, up from 17 rials. Power tariffs have been increased from 4 rials to 6 rials for the first 100kW used, to 9 rials for the following 100kW, with an additional 2 rials added to each category thereafter.

For commercial clients there has been a roughly 50 percent increase in power tariffs, from 17 rials per kW to 24 rials.
The price increases have sparked a lot of criticism as they come during the peak demand season, at a time when the whole country is being plagued by widespread blackouts and brownouts.

The GEC is continuing to buy electricity from private generator owners, offering to provide the diesel, but according to Arif Taha, the general manager of rental power in the GEC, "there is 108MW shortage of power; therefore we have to do constant maintenance, and the rented power is just a [temporary] substitute", reports the Yemen Observer.

The Yemeni power problems look intractable, as the government struggles to raise money to fund almost all sectors, given falling mature oil production, while its LNG exports are unlikely ever to bring in funds close to what the country used to earn from its oil exports, says Sam Ciszuk from IHS Global Insight.

“The spreading shortage of funds in a still largely patronage-based tribal society has meant an increase in political and tribal unrest, with southern tribes being increasingly secessionist and northern tribal unrest hard to mollify. This has forced the government to prioritise military spending, while general economic development is left on the back burner,” Ciszuk writes in a research note.




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