Recommended Reforms for Electricity Utilities in Yemen: Obstacles and Recommendations


Sat, 23-04-2022 02:49 PM, Aden

Ahmed Bahakim (South24) 

Across all over the country, the fighting has damaged power plants capacity, transmission and distribution networks. Nevertheless, Houthi-controlled regions, the public grid has been badly damaged, leaving the majority of governorates without energy. Except in some regions, the public grid in the governorates held by the internationally recognized government is still operational, but it is irregular and unreliable. Almost 90% of households with access to energy get their electricity from sources other than the public grid, largely small-scale solar household systems that only supply lighting and phone charging. Those in government-controlled regions that are still linked to a functional grid pay cheap rates but only get energy for a few hours per day [1]

Prior to the conflict, much of Yemen's population lacked access to basic power. Yemen was already the least electrified country in the MENA region before to the conflict, with a pre-crisis access rate of barely 55% from all sources. In 2013, the country's per capita power usage was 318 kWh, which was about half of the regional average. Only roughly half of the population had access to inconsistent power due to the installed capacity of about 1,200 MW. The rest of the population lacks access to electricity, which has serious implications for socioeconomic development and poverty [2].

Over the prior decade, there has been minimal improvement in the energy industry. While costing the country over 10% of its GDP yearly in direct and indirect subsidies, the industry made little progress in increasing operational efficiency and quality of service, or in lowering substantial electricity losses. Since Marib power plant, which was contracted in 2005 and came online in 2009, no substantial infrastructure in the electrical industry has been developed. The supply and demand for electricity are still severely out of balance. In 2015, installed generating capacity was around 1,300 MW, falling 20% short of peak demand [3].

2009, when the first gas-fired (Marib I) power plant was commissioned, prior all energy was generated by the burning of heavy fuel oil (HFO) and diesel. The rest is made up of old and inefficient HFO/diesel-fired plants owned by the Public Electricity Corporation, as well as small diesel units rented from private suppliers on a short-term basis. HFO and diesel-fired power plants accounted for over 70% of grid-connected output in 2010. In addition, industry, business enterprises, and homes possess millions of tiny diesel units to battle the frequent blackouts caused by a shortage of grid-connected energy. The related high electricity prices and substantial pollution are a fundamental aspect of HFO/diesel-dominated power production systems [4]. Despite an average consumer tariff of around YR40 per kWh, revenues only covered roughly 12% of the economic cost.

Yemen's electricity is mostly reliant on diesel and heavy fuel oil (HFO). The war, as well as restrictions restricting imports to Red Sea ports, have significantly hampered access to petroleum. The government's decision in 2018 to liberalize imports, as well as a deal with the Kingdom of Saudi Arabia to sell fuel to power plants, have increased supplies to the market. However, in order to ensure a reliable fuel supply to power plants through the private sector, the government should provide fuel payment guarantees to ensure that imports are paid. Major efforts to restore the Aden refinery and transition to other fuels and technologies such as natural gas and renewable energy will lower prices in the medium future. In the medium term, actions to improve supplier competitiveness and incentivize fuel efficiency may provide better results [5]

In Aden's power grid, over half of the electricity is lost. This reflects the deterioration of the transmission and distribution networks, as well as the enormous number of unauthorized connections to the public grid. Collection rates for billed power are quite low. Less than 50% of the amount billed is collected in government-controlled governorates in 2021, although there are significant disparities in collection performance between governorates. There are also significant disparities in payment by customer type homeowners pay just two-thirds of their bills, while government entities pay only 10% of their electrical costs in 2021 [6].

Value for money should be at the forefront of the government's strategy to rebuilding generation, transmission, and distribution. The current focus is on completing huge capital projects. While they are crucial, there are numerous smaller expenditures that might result in considerable capacity and coverage increases. The government should prioritize expenditures based on the increased capacity and users they provide per million dollars, rather than their total size.

Tariffs represent a small percentage of the cost of power delivery, making it hard for PEC to plan ahead. However, increasing tariffs greatly would put the Yemeni people in even more suffering in the middle of a humanitarian catastrophe. Allowing suppliers to deliver more power at commercial prices over and beyond present supplies might be one answer. This might be done for certain consumer groups, specific geographic locations, or specific times of day. This would allow supply to increase to satisfy latent demand from those who can afford to pay, without adding to the burden on those who can't [7]

Perhaps, off-grid power has to be given more consideration. The majority of the population lives in rural regions without access to the public power grid [8].  International organizations have aided in the establishment of a market for distributed renewable power and have assisted in the provision of solar energy solutions for health clinics, schools, and water infrastructure. The demand, on the other hand, is enormous. The government should collaborate with foreign and local partners to develop the capacity to fulfill all Yemeni residents' energy demands, both on and off the grid, and allocate resources accordingly [9]

The strategy to repairing Yemen's power industry must be realistic and tailored to the country's existing situation. Rather than focusing on significant capital expenditures to improve urban power supply, it is critical to improve fundamental services, facilitate private sector engagement, and ensure inclusiveness [10].


Implementing the following recommendations might result in significant benefits at a reasonable cost:

• Renovation of generation, transmission, and distribution facilities should be prioritized according on the best return.

• By modifying Power Purchase Agreements, ensure that more effective use of current fuels is rewarded.

• Encourage the use of lower-cost fossil fuels, such as natural gas.

• Invest in zero-cost renewable energy options, such as solar and wind, at both utility and distributed and mini-grid scales, where appropriate.

• Establish a regulatory structure that permits commercial supply at the margin, such as through operating concessions.

• Test strategies to enhance billing and collection, such as offering discounts or local utilities incentives, or installing prepaid meters.

• Reduce electricity losses, for example, by removing or legalizing unlawfully connected users from distribution networks.

• Create a framework for future tariff revisions and inform the public about why such reforms are required to achieve service improvements.

• Make all contracts for energy investments and purchases public.

• Invest resources in expanding off-grid electricity for community infrastructure such as water pumps for domestic usage, health clinics, and hospitals.

• Expand electricity for productive use, such as for farmers, by leveraging existing links between MFIs, banks, accredited solar suppliers, and community groups.

• Connecting Yemeni electricity grid to the GCC and east African countries electricity grid.

Economist and energy researcher at South24 Center
Photo: A Yemeni family (UNOPS)

[1] Bahakim, A. (2022, 03 09). Electricity Utilities Crisis in Aden. Retrieved from South24:

[2] Charter, I. E. (2017). Energy Investment and Business Climate Report for Observer Countries. Retrieved from Brussels: Energy Charter Secretariat:
[3] Company, A. R. (2020, 03 03). Aden Refinery Company, Leadership and Excellence. Retrieved from
[4] Magazine, B. (2015, 08 13). Yemen’s Solar Power Surge. Retrieved from
[5] MoPIC. (2016, 05 14). Oil Sector Recovery in Yemen Urgently Needed. Retrieved from Reliefweb:
[6] Roser, H. R. (2020). Yemen: Energy Country Profile. Retrieved from Our World in Data:
[7] WorldBank. (2017). Republic of Yemen Restoring and Expanding Energy Access: Power Sector Reengagement Note. Retrieved from World Bank Group.
[8] WorldBank. (2020, 03). Yemen Monthly Economic Update March 2020. Retrieved from
[9] WorldBank. (n.d.). Electric power consumption (kWh per capita). Retrieved from DataBank:
[10] Charter, I. E. (2017). Energy Investment and Business Climate Report for Observer Countries. Retrieved from Brussels: Energy Charter Secretariat:

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