Water desalination in Taiz
In 2010, the Yemeni government began plans to construct a water desalination plant in the coastal city of Mokha in Taiz governorate, hiring JFA Consulting, a British consulting firm, to assess the feasibility of the project. The plant would be connected via a pipeline to Taiz city, often referred to as Yemen’s driest, located 94 kilometers east of Mokha and the proposed site. Hypothetically, within several years, the plant would able to meet the entirety of Taiz’s water consumption needs, at 55,000 cubic meters (m3) per day. The project was suggested due to the persistent water shortages that have been seen throughout the country as a result of the drying up of the country’s ground water reserves, which have increased in recent years. According to government estimates, at least 19 of Yemen’s 21 ground aquifers are over exploited.
In Taiz, increased urbanization and a massive youth bulge has caused the city’s population to more than double since 1996. These factors have squeezed public utility networks and prevented many citizens from obtaining regular access to water. Despite this, some within government have opposed the construction of the desalination plant, claiming that the desalination process itself is too expensive when compared to ground water extraction, particularly as Yemen suffers from a protracted economic and financial crisis that has lasted since 2011. Others, such as Deputy Minister of Water and Environment Towfiq Al-Sharjabi, admit that although water desalination is usually a ‘last resort’, that the situation in Taiz is too desperate, and that few other options exist. Part one of this report, published on Tuesday, analyzed the social and economic impact of Taiz’s water crisis on its residents, and the extent to which water desalination could help address the crisis. Part two of this report, found below, looks into the reasons as to why the Yemeni government has failed to secure funding for the plant’s construction, after years of negotiation and study.
Alternative sources of non-conventional water
According to Towfiq Al-Sharjabi, Yemen’s deputy minister of Water and Environment, the Yemeni government has been in ongoing negotiations with the Saudi Fund for Development (SFD) since late 2011 in an attempt to secure upwards of $280m worth of funding for construction of the water desalination plant in Mokha. The SFD is the official development wing of the Saudi Arabian Ministry of Finance and was established by royal decree in 1974.
Previous attempts to secure private funding for the project back in 2012 had been skirted, including an offer put forth by the Hayel Saeed Group, a multi-national multibillion dollar conglomerate owned by the powerful Hayel Saeed family that in 2007 controlled roughly 35% of Yemen’s economy.
Mohammad Masrawi, is the deputy chairman of the Projects Division within Yemen’s Ministry of Planning, and has been responsible for negotiating with the Saudi Fund for Development and other potential financiers since 2011—when the project was first introduced.
Masrawi said that the government rejected the Hayel Saeed Group’s proposal in 2012, because the company was charging exorbitant rates that the government could not afford, although he would not mention specific amounts. “They’re a private corporation, their goal is to reap profits,” he said. “In order to be able to afford the offer put forth by Hayel Saeed Group, we would have to increase the price of water sold from the plant for consumers. This would undermine the reason for launching the project in the first place, which is to provide citizens with affordable water.”
The Yemen Times spoke with Ahmed Showqi Hayel, one of the company’s largest shareholders and current governor of Taiz, who would not comment as to why the company was not commissioned to finance the project. Repeated calls were not returned.
According to Masrawi, in 2012 Yemen did not possess any law or legal framework regulating joint government and private sector development projects that could allow the ministry to effectively bid for private sector funding at affordable rates. However according to some, this may have changed recently.
On Nov. 18, 2014, Yemen’s Ministry of Planning and International Cooperation and Federal Chamber of Commerce, under the auspices of the United Nations Development Authority (UNDP), signed a ‘Memorandum of Understanding’, which, by the end of the first quarter of 2015, obligates the government to form a joint economic-social committee made up of business and government officials, and create ‘mechanisms’ both at the federal and local level to facilitate “public-private sector dialogue,” (PPD).
According to Abdo Seif, head of UNDP’s Advisory and Oversight Team in Yemen who oversaw the drafting of the memorandum, such bodies will be tasked with drafting suggestions to be submitted to the government for public-private sector projects to be undertaken jointly in the future. “Such bodies will finish their work to be submitted by March,” he said. Such a framework could create the type of institutions needed by the Yemeni government to more effectively launch bids and compete for private sector funding.
However as of now, none of the provisions within the memorandum, which the Yemen Times has reviewed, could regulate private investment, either foreign or domestic, into Yemen’s public utilities networks. Like most development projects implemented throughout the country, the construction of a desalination plant in Mokha would need to be implemented with the help of a foreign government or organization, in this case the SFD.
Seeing as negotiations with the SFD have been ongoing since 2011, this then begs the question: Why has no financing agreement yet been signed, and why, three years later, has the project still not gotten underway?
In an interview published on June 26, 2014 on alshorfa.com, Yemen’s former minister of water and environment, Abd Al-Salam Razzaz, claimed that the government was one week away from signing a final financing agreement with the SFD to pay for the construction of the desalination plant and its pipeline leading to Taiz. In the interview, Razzaz estimated the project would cost upwards of $300 million.
Alshorfa is a news outlet operated by USCENTCOM, the Unified Combatant Command Department within the United States Defense Department responsible for overseeing US military operations in the Middle East, North Africa and Central Asia.
In the interview, Razzaz claimed that the pipeline would stretch from Mokha to Taiz to Ibb, and then onto Lahj, Aden and Sana’a governorates, though he did not provide a time line for the construction of the pipeline within the atter three governorates.
Razzaz made the claim to Alshorfa one month before President Hadi’s decision to lift fuel subsidies was enacted, and the subsequent turmoil that overtook the country in its wake.
Beginning in August, shortly after the lifting of the subsidies on July 31, the Houthis—an armed rebel group based in Yemen's northern governorate of Sa'ada, accused by some of having links with Iran—spearheaded protests against the move that lasted throughout September. On Sept. 21, the Houthis took control of the capital city of Sana’a, after several days of fighting that left at least 300 people dead. The Houthis soon after entered and took over a number of other governorates throughout Yemen.
Two months later, on Nov. 9, a new cabinet was formed in accordance with the Peace and Partnership Agreement signed on Sept. 21, and Razzaz was let go and replaced by Al-Azi Hebat Allah Ali Sharim. Since then, little information has been available regarding any progress made in securing financing for the project.
Despite the recent shakeup in Yemen’s cabinet, Al-Sharjabi maintains that the agreement referred to by Razzaz was in fact signed before the recent turmoil that engulfed the country in August, and that the agreement is still valid. According to Al-Sharjabi, the ministry agreed to accept a $100m loan from the Saudi Exports’ Support Line, a fund within the SFD, to pay for the construction of the desalination station and the power plant used to power it. “We’re still negotiating on a $180 million grant that will pay for the pipeline from Mokha to Taiz.” He claimed ministry representatives would be traveling to Saudi Arabia in the coming weeks to discuss the final $180m grant.
However interviews the Yemen Times conducted with SFD representatives paint a different picture. Mohammad Al-Arifi is the lead engineer within the SFD responsible for overseeing the organization’s operations in Yemen, who claimed that no such agreement had been signed, and provided different figures for the amounts that had been discussed during negotiations.
“The SFD has been prepared to pay out $200 million for the construction of the pipeline leading from Mokhta to Taiz and then Ibb,” Al-Arifi said. “The Saudi Treasury also pledged to put forth $50 million during negotiations for construction of the plant itself, which we’ll be administering.”
The Yemen Times asked Al-Arifi about a financing agreement already having been signed by the ministry of water and environment and SFD.
Al-Arifi claimed that no such agreement was signed, and went further to claim that Yemen’s Ministry of Planning had not yet put forth the bids and tenders necessary for the SFD to make an official offer.
“Let me remind you, these figures are mere estimates determined after several years of negotiations, but are by no means official,” Al-Arifi added.
Masrawi says that these claims are inaccurate, claiming that the bids and tenders process had already begun, and that the Ministry of Planning had received several financing offers, including from the SFD, however, unlike Al-Sharjabi, denied that any final agreement had been reached with any party.
Conflicting accusations and the pointing of fingers means at the end of the day the site upon which the desalination plant was supposed to be constructed remains empty. However the stalling of the project, according Al-Arifi, can be attributed to one primary factor.
“In the last several months, Yemen has been rocked by instability, which has caused the current government to refocus its priorities,” he said. “For many of the country’s new ministers, construction of the plant has taken a back seat to other issues.”
In part one of this story, the Yemen Times interviewed Abdullah Saleh, the former head of the National Water Resource Authority (NWRA) within the ministry of water and environment, who worked with JFA Consulting in both 2010 and 2013 when the latter conducted field studies in Mokha and Taiz regarding the feasibility of the construction of the proposed desalination plant.
For him, the cause for all the stalling and intransigence is clear. “The Saudis were ready to go ahead with funding this project six months ago before the latest round of turmoil began,” he said. “Now the Houthis control the capital, and are the real power behind the throne. The Saudis see them as agents of Iran, and don’t want to give Yemen any money at a time like this.”
Additional Reporting by Madiha Junaid