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Yemen Infrastructure Report Q4 2009
Market |
Construction |
Report Type |
Market Research |
Country |
Yemen |
Published |
1 October 2009 |
Number of Pages |
66 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Yemen approved investing US$2.9bn in 46 electricity projects with the aim of boosting generating capacity by 1,500 MW
The report forecasts that Yemen’s construction industry value will rise from YER149.5bn (US$0.75bn) in 2008 to YER225bn (US$0.8bn) in 2013, representing a compound annual growth rate of (CAGR) of 8.57% over the forecast period. However, we believe that there will be downside risks to this forecast due to a fall in public revenues related to oil prices. A further problem is the deteriorating security situation in the country. The government is currently battling a Shi’ite revolt in the north, secessionists in the south, and the country has suffered a recent wave of Al-Qaeda attacks. Indeed, foreign investment in the country is decreasing, with only 21 projects announced in H109 with a total value of YER19mn (US$94,409), a fall of 24% year-on-year (y-o-y).
However, in August 2009, Yemen’s cabinet approved the 2010-2012 plan for the electricity sector. This will include investing US$2.9bn in 46 projects with the aim of boosting generating capacity by 1,500MW. On top of this, the government is looking to attract US$1.8bn in investment from the private sector to construct a further 24 projects. Presently, Yemen’s electricity capacity stands 620-650MW, with a further 200MW purchased from companies that rent mobile generators. But the country is in desperate need of investment in its power infrastructure. In recent months there have been blackouts lasting up to 12 hours, which have had a devastating impact on the economy. Thousands of workers have been unable to complete an eight-hour shift because of sudden outages and the total power deficit is estimated at 350MW. Whether Yemen will be able to raise private funding in the current environment of reduced liquidity is another question, however. In addition, the political turmoil in the country could also discourage investors.
In July 2009, it was reported by the Saba News Agency that Yemen had spent 78.4% of the donor fund provided after the London Donor Conference in 2006. Out of the US$5.5bn earmarked for the country, US$4.47bn has now been spent, with 50% of these funds going on infrastructure and the remainder used in areas such as human development and supporting institutional concerns such as good governance. The largest tranche of the funding, some US$1.3bn, was allocated for public works in the road industry, with some of this total going to rehabilitate flood-damaged areas. Meanwhile, US$1bn went on the electricity, agricultural and fisheries sectors. This is an important announcement as international donors had been complaining about the slow disbursement of donated funds, threatening future investment in the country.
Meanwhile, as of going to press, the Marib 1 power plant has yet to come online, causing further problems as the onset of the holy month of Ramadan will result in increased demand for electricity. The Ministry of Electricity and Energy has claimed that although the 500MW station has been ready for almost a month, problems still persist regarding transforming stations and transporting lines. The plant has suffered a series of embarrassing delays of late, heightening Yemen’s problems with power shortages.
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