Friday, June 24, 2011

Yemen’s economy teeters on collapse

23-06-2011

Ali Saeed

SANA’A, June 20 — Yemen’s nationwide fuel shortage is threatening to force the country into total economic collapse. Along with fuel, other basic services have been suspended including water and electricity.

Citizens say that if immediate action is not taken to relieve these shortages, there is potential for disaster.

In the Hodeida coastal governorate, 200 km west of the capital Sana’a, more than 15 patients, most of them elderly people and children, were reported to have died in hospitals because of extended power cuts, lasting for hours.

Locals told the Yemen Times that their lives are at risk when without diesel to run generators to pump water from wells for drinking and irrigation.

“A farmer who used to have four to five water-wells in Hodeida is now looking for water to drink because there is no diesel to run generators,” said Mahbob Hadi, an agricultural expert in Hodeida. “The farmer watches the water in the well, but can’t drink it. The situation has become unbearable,” he added.

Hadi, who works on a farm that relies on diesel for extracting well water for irrigation, explained that around 90 percent of farms in his region have stopped producing due to the diesel shortage.

“If the diesel problem continues, farms will be turned into playgrounds,” he said.

“Farms support the national economy through exporting cash crops to some neighboring countries including Saudi Arabia, Jordan and Syria and consequently their stoppage will harm the economy,” said agriculture expert Mahbob Hadi.

“If this fuel shortage continues, farmers will no longer be able to sell their crops which may cause a foot shortage as well,” he added.

Ali Heil, a farm owner, told the Yemen Times that most farm work has stopped for 20 days due to the shortage.

“We use the diesel for generators to extract water and if the crisis continues, farms will disappear,” said Heil.

No alternatives

With the critical diesel shortage some farmers have resorted to using kerosene, mixing it with oil to run generators. But the increased demand on kerosene in place of diesel has also caused a kerosene shortage.

“We have been forced to use kerosene mixed with oil to run generators, but now it is also gone and we no longer able to find even kerosene,” said Heil.

Some Yemeni trucks that export cash crops to Saudi Arabia used to fill up extra diesel from Saudi petrol stations, but with the acute shortage in Yemen the Saudi authority banned any Yemeni truck from leaving the Kingdom with extra diesel, according to a Yemeni exporter who sends his trucks regularly to Saudi Arabia.

“We are out of options,” he said

“It is an economic, social and even humanitarian disaster,” said Dr. Mohamed Jubran, professor of economics at the University of Sana’a.

Between 75-80 percent of industrial plants have been shut down due to power cuts and fuel scarcity, according to the professor. “This is considered a catastrophe because around 150,000 people have lost their jobs,” he said.

“Other factories will shut down soon if power and fuel is not provided within the coming weeks,” Jubran said.

The professor warned that by the end of June, Yemen’s industrial infrastructure will come to a complete halt, causing agriculture and other economic sectors to collapse as a result.

“The problem with farms is not only represented in difficulty of water extraction to irrigate crops, but there is also no fuel to transport agricultural products and that means the agricultural sector will fail following the industrial shut down,” he explained.

The Yemen’s economy has lost around USD five billion during only three months of the political crisis which started six months ago, according to Yemen’s ministry of industry and trade in the care-taking government, Hisham Sharaf.

The professor said that this is only was confined to Yemen’s economic losses in the industry and services sector, but the agricultural damage is still unknown.

“The human cost is also worsening,” said Jubran. “Just imagine a student who has final secondary school exams in the next week and can’t find the light to study.”

“In addition water supply in urban areas was cut off due the lack of power and fuel shortage and the water price has gone up ten folds in Yemen’s cities. The price of one water truck has increased from YR 1,200 (USD 5) to 10,000 (USD 50) and the water is not drinkable,” he said.

Most stations which run by diesel have been off either power or water stations, according to Jubran.

“The administrative and consultative industry has been also suspended due to power cuts and fuel shortage,” he said.

Water disaster in rural areas

The professor indicated that there will be water disaster in Yemen’s rural areas with the suspension of the state-water projects because no other water resources in the countryside.

“In Yemen’s urban and rural areas there will be no glass of water to drink due to the power-off,” he said. “There will be catastrophe because bakeries will stop since no diesel,”

The economist said that “this comes only as tactics by the regime to keep the Yemeni people busy with their grievances in order to guarantee the people’s loyalty to the president even he is clinically dead.”

At the beginning of June, Yemen’s minister of oil said that Saudi Arabia promised to grant Yemen three million oil barrels as Yemen’s oil production was stopped on March with the attack on the Mareb oil pipeline which connects crude oil to Aden oil refineries.

“Part of this grant has just arrived Aden two days ago to be refined and distributed to Yemen’s areas and the crisis is hopefully to disappear after one week,” Abdul Qawi Al-Udaini, the press officer at the ministry of oil told the Yemen Times on Tuesday.

He explained that the size of Yemen’s tanks at refineries is not big to receive the entire Saudi grant at once and for that they receive it on parts.

Source: Yemen Times

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