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Electrification for
Rural Yemen
Rural Energy Access Project
(REAP)
Somin Mukherji
Senior Financial Analyst
ADFD/WB Project Preparation and Appraisal Workshop Abu Dhabi, April 2010
Key Characteristics - Yemen
 Country of 22.4 million people with a high population growth rate of
about 3%
 Yemen is among the poorest countries in the Middle East Region
with per capita income of less than US$870
 The GDP is US$ 22.5 billion and the economy grew at an average
of about 4.1 % per annum during 1997-07
 Oil exports have been the main source of Government revenue but
reserves will decrease significantly without new discoveries
 Other key sectors of economic activity include Agriculture, Industry,
Manufacturing and Services
Source: The World Bank
2
Power Sector Key Indicators
PEC - Commercial Report 2005
MW
GWh
Installed Generation Capacity
(interconnected)
Fuel: HFO + Diesel
774
4.064
Isolated Generation Capacity
Fuel: HFO + Diesel
276
714
TOTAL
1050
4.778
Rental Generation (since 2007)
(interconnected)
Fuel: Diesel
210
1.472
Consumers (Mio - %)
GWh (Sales)
Urban
1.05 - 93.5%
3.202 / 97%
Rural
0.072 - 6.5%
92 / 3%
1.122
3.294 / 100%
PEC Consumers (2005)
TOTAL
3
Why Rural Electrification?
 Yemen’s population is
predominantly rural
 Fragmented government
investment in rural electrification
 Subsidy-dependent national
electric utility
 Environmentally unfriendly
diesel used for isolated
generation
 Most rural schemes are
unsustainable due to lack of
institutional mechanisms
 Significant disparity between
urban and rural electrification
Yemen's Population Division
5,733,000
27%
15,267,000
73%
Urban
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Rural
Urban vs. Rural Electrification
Population With vs. Without Access
8,400,000
40%
12,600,000
60%
Access
No Access
Urban vs. Rural Electrification Rate
1,932,000
23%
6,468,000
77%
Urban
5
Rural
A Familiar Institutional Challenge
 Power sector dominated by state owned Public Electricity
Corporation (PEC), undergoing gradual, difficult reform
 Rural electrification until recently attached to PEC
 Project decisions influenced by political pressure and social
compulsions
 Tariffs well below cost of service; collection performance
unsatisfactory, RE is a drag on PEC’s financial recovery
 Result: only 1 in 5 rural households have electricity today – that
too of a poor service quality.
 Order of the day: Implement adopted National RE Strategy Rationalize investment planning, Demonstrate a model that can
rapidly increase coverage, Apply least cost service options
6
Yemen´s RE Approach

Yemen´s Electricity Law of 2008 defining the pillars of the
Power Sector Reform adopted by Parliament (March 2009)

Comprehensive grid and off-grid Rural Electrification Strategy
adopted by the Government (July 2008)

Development of enabling Institutional framework underway
(Creation of an independent Public Authority for Rural
Electrification - April 2009)

Parallel Subsidy Reform Program being prepared

Strong donor interest catalyzed; AFD, USTDA, CIM, IsDB, and
World Bank

Shift from PEC ad hoc project approach to developing scaled,
regulated rural electric service providers

Actively engage communities in program ownership of rural
electric service providers.
7
RE Implementation Strategy
 The RE program will electrify about 540,000 households
and is expected to increase access in targeted rural areas
from 20% to 37%
 Phase-1 (Rural Energy Access Project - REAP) will
provide access to about 195,000 households (175.000 new
consumers, 20.000 SHS), at a cost of app. US$120 million
funded by IDA, AFD, IsDB, USTDA and CIM
 Significant additional Investments (Phase-2 and Phase-3)
required for achieving the program goals ~ US$150 million
8
Service Territories and
Off-Grid Target Areas
9
RE Institutional Framework
Institutional Framework for Rural Electrification
Regulatory
Agency
Tariffs, quality
of service,
environmental review
Ministry of
Electricity
Government/
Donors
Policy setting
Program financing
Rural Electrification Agency
program management, financing
Project identification, project analysis,
technical oversight, standards, & licensing
Project selection,
financing, & monitoring
Service Providers
Cooperatives, contractors, or renewable energy service providers
10
REA Organizational Structure
11
Thank you!