Doubts have been raised over the future of the Mabar independent power project (IPP) in Yemen, after the government announced plans to issue a tender for a further IPP.
The move is an attempt by Sanaa to resume its ailing IPP programme. This will be the third attempt to tender an IPP successfully. Two previous projects that were originally conceived as IPPs, Marib 1 and Marib 2, were later tendered as engineering, procurement and construction contracts.
In 2006, a consortium of The Netherland’s Litwin, Turkey’s Gama Energy and the local Al-Fahem Group received an exclusive mandate from the Electricity Ministry to develop the Mabar IPP.
However, it is now not clear whether the government intends to replace the Mabar scheme with the new IPP.
The Mabar project hit difficulties in April this year when it emerged that Gama had abandoned the project. According to one source close to the scheme, Litwin and Fahem are now in talks with other potential partners, including a UAE-based company.
However, he acknowledges that the government’s latest IPP initiative, which is being developed in conjunction with the International Finance Corporation (IFC), a division of the World Bank, could affect the Mabar scheme.
“There are various possibilities,” says the project source. “The first is that on the basis of our existing mandate and the legal framework for the project, it will go ahead on a fast-track basis. The other option is that it will enter into the IFC process.”
If the government chooses to incorporate the Mabar project into its new IPP scheme, it could be offered to other developers through an open tender.
“Our consortium is not very motivated to participate in a tender,” says the source.
“In general, there are lots of opportunities in the region and companies that are able to commit to an IPP in terms of equity will not be running to Yemen”
Several other power projects in the country have already been postponed. The commissioning of the first 341MW phase of a plant at Marib has been delayed.
According to the client on the project, the Public Electricity Corporation, the substations for the plant will not be ready until late July.
In addition, the transmission contractor, South Korea’s Hyundai Engineering & Construction, has been unable to complete its work as a result of opposition from local tribes demanding better public services from the government.
There has also been speculation that the Marib 2 plant will be retendered, causing further delays to the government’s struggling power programme.
“I am convinced that the factor of timing will force the government to keep the Mabar project as it is,” says the project source.
“The absence of Marib 1 and Marib 2 and any delay to Mabar would have a very negative impact on power supply. Most energy in Yemen is now produced using diesel generators.”
A cabinet reshuffle on 19 May, when Awadh al-Suqatri replaced Mustafa Bahran as Electricity & Energy Minister, has added to uncertainty in the power sector.
A new head of the Public Electricity Corporation was also appointed. Abdulmomin Mutahar, who was formerly based at the Water & Environment Ministry will now lead the utility as its managing director.
Although no location has yet been agreed for the latest IPP, one of the possible sites is Belhaf on the east coast. The electricity ministry could not be reached for comment on the plan.