By: Mohammed Abdo Al-Absi
Abdullah Al-Baradouni once said “All people are good till they reach power; they are not anymore.” Human nature and history show that those who once opposed the ruler, soon adopt the ruler’s habits when they attain positions of power.
Diesel fuel has again raised heated arguments between the government and parliament as they discussed new prices for the commodity. Interestingly, both sides – members of government and of parliament – traded roles. Those who opposed the idea of raising diesel prices some years ago are the same who now propose to raise them; meanwhile, those who wanted raise prices before now reject the idea. The discussion was more like a fancy dress party to show what politicians in disguise can do to such an exhausted country.
Today’s government, which yesterday represented the former government’s strongest opponents, has now started to adopt the latter’s approach. Sakhr Al-Wajeeh, who proposes to raise the price of diesel, is the same man who some time ago rejected the deal of selling liquefied gas.
Personally, I oppose the decision of raising diesel prices in such an abrupt way, and of doing so at such an inauspicious time. Raising the price of diesel during this difficult time is akin to performing a medical operation without anesthesia. People’s suffering has reached unbearable levels, and government subsidies for the purchase of oil derivatives are important. It is clearly important to retain some semblance of a middle class in the country.
One week ago, when the government discussed the possibility of raising diesel prices, it justified its decision with an International Bank report which stated that only 23% of average- or low-income citizens benefit from the lowered prices, whereas 77% of the support is capitalized upon by wealthy people. It would be easier to imagine that raising oil derivative prices would increase the amount of poor citizens from 7 million to 8.3 million.
Hisham Sharaf, Minister of Oil and Minerals, dealt with Yemenis as though they were nothing more than a bunch of ignoramuses when he announced that Yemen doesn’t produce diesel, but that it does import it from other nations at YR 190 per liter and sells it for only YR 50 per liter. Responding to this lie, I would say that any employee of the Ministry of Oil understands that sector 18 produces 23 thousand barrels a day, a supply which was reduced or stopped due to sabotage attacks – and also that refineries in Aden and Mareb provide the market with 70 thousand liters of the monthly 230 thousand tons used by Yemenis. Meanwhile, the difference is imported.
Extreme way of solving problems
Abdulghani Al-Eryani once described Yemen’s smuggling losses as amounting to more than the budgets for the health and education sectors combined. Despite the fact that government subsidies for oil derivatives reach around YR 49 billion YR, removing such support would be an absolute failure as far as possible solutions for the problem go.
I, as one of many reasonable people among you, find it difficult to believe that the new government and the ones which came before it are/have been truly incapable of controlling smuggling. I am sure that it would only cost the government $3 million to purchase an advanced and effective monitoring system, one in which all ships would be equipped with GPS so that they could observe whether they are steering in the right direction or not. However, there appears to be a genuine lack of good, true intentions.
The real problem concerns the importation of diesel. Some years ago, Representative Abdurrahman Ba-Fadhl said the diesel was smuggled, as Yemen imported more than it needed of the commodity using government finances. Ba-Fadhl also said the diesel could be smuggled in the first place because of a lack of governmental authority and because no specific planning was behind its distribution.
Yemen almost produces enough diesel for local consumption. So what provokes the government to import it? Reports state that in 2009, one electricity station consumed around 1 billion, 900 liters of diesel, whereas in 2008 the Bukhari station consumed 684 million liters at a cost of over YR 17 billion. In addition, in the same year diesel stations consumed one billion, 242 million liters of diesel. These are hugely unreasonable numbers and statistics.
Yemenis do not realize that the real problem with diesel is electricity itself. Those who attack electricity lines are essentially the same who attack the Safer oil pipeline. Looking at it, using diesel to produce 400 megawatts of electricity costs Yemen a million and half dollars per day. However, using gas to produce the same amount of power costs only $126. A number of thugs who are not only linked to ousted president Ali Abdullah Saleh, but to other figures also, target the electricity lines to receive a piece of such amount of money – the former amount, certainly not the latter…
A good point to take notice of here is the former government’s decision in late 2010 to stop using diesel to generate electricity. The move to call off this decision came from Ba-Sundown’s government. The new government rented a 60-megawatt diesel-powered station in Hadhramout from Fathi Tawfiq Abdurrahim. It also rented a 30-megawatt station in Hodieda and another 60-megawatt station in Aden. All stations run on diesel rather than gas!
One substance consumed by the people… and monopolized by only two
I believe that corrupt administrations beget corruption far and wide. The greatest proof of my words is that great countries like Japan and U.S fought because the U.S. pushed Japan to remove government support for Japanese rice farmers, while the U.S. continued to subsidize its own cotton and wheat farmers. Sakhr Al-Wajeeh has contradicted himself, as he now demand that government diesel subsidies be cancelled. His attitude raises the question whether it is he or the diesel which changed.
Some time ago, Sakhr Al-Wajeeh stated that he who believes in subsidizing diesel is involved in a form of corruption and is completely wrong. “Corruption is represented by the one who gives this support and it is he who deserves punishment,” Sakhr said before. He added that smuggling is carried out on a huge scale over the seas rather than by poor fishermen in Hodeida.
For more clarification on his statement, Abdulbasit Al-Qaedy asked him once, before he became a minister, about diesel smugglers. Sakhr literally said that two people were behind the problem – one of them being a maritime transport contractor, a man at the head of a company which had monopolized its field for ten years. He was referring to Al-Isa Malek, chairman of the Football Union and owner of the A’ali Al-Behar Company.
“The biggest share of oil derivative distributions can be traced back to one contractor, a situation which makes him appear as if he is the only one to use oil derivatives,” he added. In this part of his speech, Sakhr was speaking about Fathi Tawfiq Abdurrahim. Sakhr gave an assurance that all such things prove there is an official intention to make use of diesel prices and revenues for powerful figures in the country.
It is interesting to learn that the former government – influenced by Sakhr Al-Wajeeh’s criticisms – decided to eliminate intermediaries from the process of supplying diesel and fuel oil to electricity stations and cement factories. Disastrously, the new government, in which Al-Wajeeh is a minister, brought back the intermediaries and renewed contracts with Fathi Tawfiq.
When Al-Qaedy asked him who was responsible for smuggling diesel, Sakhr Al-Wajeeh replied, “We have to understand that all oil derivatives that are sold in the country, whether locally-produced or imported, are monopolized by the government. Thus, the only trader who should be held accountable for all such problems is the government itself.” Sakhr Al-Wajeeh should understand that he now represents the government.
In 2012, Al-Wajeeh said the government budget didn’t make use of raised diesel prices as it had reduced gasoline prices in turn – which sounds somehow illogical, as the first increase in gasoline prices was, in the first place, illegal. However, Sakhr then had a completely different opinion on the issue. In 2008, he said, “Some people believe that cancelling oil derivative subsidies would improve state revenues and reduce the smuggling problem, as though the state treasury is controlled by a monitoring system.”
An important question to be raised here is whether the state treasury was secured simply because he was the Finance Minister. Sakhr Al-Wajeeh forgot that the state budget wasn’t real and that it couldn’t be backed up with documents. It’s impossible to have a well-managed budget when it includes a YR 600 billion increase. A clever game that Sakhr Al-Wajeeh found himself playing, and a good point scored for his political –not his humanitarian – portfolio.
Sakhr: In this regard, many rumors were, in the end, spread about Hadi’s displeasure of your rebellion against his decrees. I personally back you up in your insistence to know who benefitted from presidential assistance and realize that you must regulate. I also agree with you, in that Hadi should not follow the former president’s steps in buying people’s loyalty with money. I do however belittle the widespread rumors and believe they are attributable to facts – not those facts which are reported, but those facts which only a few people know of.
Seems like Yemeni people are paid for at international rates…
The prime minister said that Emirati and Saudi officials told him that they stand in support of Yemen, even though the Yemeni government sells diesel at lower-than-international prices. In spite of my high considerations of Basindwa, I do not believe that such things were said in such a way. Simply because the smuggling problem is not only found in Yemen, but also in Saudi Arabia and the U.A.E – but at lower percentages. In Yemen, smuggling is just a monster.
From another perspective, if the Yemeni government speaks about international prices, it had better look into whether Yemeni workers and employees are paid in accordance with international rates or not. Here, I would believe Ali Ashal, a Member of Parliament and friend of the Islah Party. I was surprised not to hear his voice in the last parliamentary assembly and I didn’t know whether it was due to shyness from his colleague Sakhr Al-Wajeeh, or in compliance with his party’s decision. Anyhow, I left Ali Ashal as he explained himself to Basindowa.
When can governmental subsidies for oil derivatives – and especially diesel – be cancelled without causing great harm to the farmers? Regarding this issue, Ashal says the only possible solution is to provide an alternative power or energy source at a reasonable price, such as electricity stations that can be linked to all agricultural areas – through which farmers can link to the public service to receive power. However, he believes that such a solution isn’t possible… at least in the near future. For my part, I say it’s impossible that it would happen anytime in the next five years.
As if no revolution took place in Yemen
Interestingly, no-one in parliament directed fundamental questions to Basindowa regarding the increase in diesel prices. Questions such as: How much diesel is allocated to the army, to different ministries such as those concerned with communications, public works, farmers and fishing boats? What kind of contract allows the Aden refinery to sell diesel out at sea, though it is not authorized to do so?
Nobody asked the government why diesel imports from abroad increased and parliamentary recommendations haven’t been committed to. If they have simply been forgotten, allow me to remind them what the recommendations were.
On July 3, 2010, the House of Representatives formed a committee to investigate facts concerning the diesel crises, which involved around eight members, including GPC member Ali Al-Ma’amary, Ali Ashal, Mohammed Abdullah Al-Qadhi and, last but not least, the godfather of the Development Committee, Finance Minister Sakhr Al-Wajeeh. The committee proposed a number of recommendations, chief among which were:
* Redistributing diesel among the different provinces in a fair way, so that no one contractor would receive the largest share of the governorate’s allocated amount of diesel. (Putting into consideration that Makha governorate’s allocated amount is five million liters monthly while the amount allocated for the four large governorates of Aden, Abyan, Lahj and Dhali is 6.6 million liters monthly!!)
* Reconsidering the results of an industrial survey that was carried out by financial, petroleum, and industrial committees which exaggerated the specified needs of factories and which also allocated absurd amounts for factories that hadn’t yet started functioning. (They allocated 50 thousand tons; experts meanwhile reported that the actual need was only 17 thousand tons. Until the present time, no reconsideration has taken place.)
* No renting of electricity stations that use diesel or fuel oil to function; and preventing the establishment of new stations. Taking a different approach was recommended, including looking towards cheap and environmentally-friendly alternatives. (The reconciliation government did the complete opposite.)
* Forming a joint government committee and a commission to investigate facts, to be assigned by the House of Representatives to perform field surveys at electricity station in order to be able to specify actual diesel needs. The committee noticed that the statistics received from oil companies included huge numbers which needed to be reviewed.
The fourth recommendation was the most important, as official reports concerning the use of diesel by electricity stations have not only been exaggerated, but appear to be utterly delusive.
I prefer to be optimistic all the time, but returning to square one is not a good omen. Simply put, it indicates that the revolution and the shedding of Yemeni blood had no effect, that the regime, new clothes aside, is therefore one and the same as our former government.