Parliament reports on corruption at oil establishments

The Oil and Development Parliamentary Committee has disclosed in a report a swathe of corruption cases and public treasury money misuse by the Yemeni Petroleum Company, failing to collect billions of the Aden Johaif renting revenues.  

The report’s discussion was delayed by businessman Fathi Tawfiq Abdul-Rahim, who collected 80 members’ signatures demanding that the report be discussed only at the Parliament’s committee meeting. 

The report reveals disorders in the Yemen Petroleum Company’s performance. Deficits were discovered in oil derivatives coming to the company’s facilities from Aden refineries in 2006, which mounted after the allowed deductions to YR 736 million and YR 498,000. Aden’s total rate of the mentioned deficit mounted to 45 percent.

The derivative supplies to this branch, according to the committee, should have decreased the deficit and not the contrary. 

The committee also found that Yemen Petroleum offered commissions over turbine sales, despite absence of a contract provision stipulating this. The total commissions paid in 2006 were YR 81 million and 274,000 out of the sales to Yemenia Airways and $181,513 to the foreign airlines.

The committee pointed out that petroleum tanks at Mocha port for supplying the port, Taiz and Ibb governorates’ institutions were also not exploited, leading to supplying them from Hodiedah and Aden, with increased transport costs, amounting to YR 325 million and YR 225,000 in 2006.

The report turned the attention to the failure in carrying out strategic storing facilities designed in the second fifth plan in a number of areas, with governmental funding mounting to $ 31 million and 20,000. Additionally the Yemen Petroleum Company lacks any storing capacities to meet any long term emergent cases.

Regarding Johaif’s facilities, which is one of Yemen Petroleum’s assets, the committee found out that the petroleum derivatives transportation contractor’s debts reached YR 2 billion, 451 million and 404,000,  which were scheduled in 2005 to be paid in three year’s time, yet only YR 817 millions were paid.

The committee also found out that the contract signed with the Oil Ministry in March 11, 2003 stipulates that the leaser should abide by keeping 49 job opportunities and pay all their liabilities; however the number decreased to only 33 jobs including retirement, death and arbitrary termination cases by the employer.

The report also stated that following the hiring out of the Johaif’s establishments, which have 144,000 metric ton capacity, the committee ensured that only 6 tanks remained with of 13,000 thousand metric ton capacity. However, the committee found that 2006 rents mounting to $ 400,000 were not paid in addition to an unpaid previous rents amount of $ one million and 200,000. 

The committee pointed to a case filed before the public money prosecution since 2004, regarding an amount of $ 514,242,000 as dues of gas sales, in addition to YR 17,269,000 as gas tankers transportation rent and $ 818, 849,000, which is the cost of the exported gas.

The report demanded that the government should not renew Johaif renter’s contract, and asked not to rent it to any other company, recommending that it stays under the Yemen Petroleum Company administration in order to be used as oil derivatives stores.

The report also recommended taking measures prior to Johaif’s rent’s period, up to the company’s reception of the facilities, demanding that legal measures should be taken to obligate the contractor to pay previously to the Yemen Petroleum Company and to solve the Gas Company’s debts.

In a related issue, the parliament returned the Oil and Development Committee’s report for further study regarding the Aden refineries defects. The refinery manager Fathi Salem said that the report depended on the old Central Organization for Control and Audit’s (COCA) reports, shedding doubts on the report’s figures.

He mentioned the refinery’s governmental liability on some authorities, mentioning $22 million as arrears, and other 23 millions in the Finance Ministry as house gas costs, in addition to other YR 50 million as government debts.

As all parliamentary blocs’ members refused the refinery’s privatization, demanding holding accountable those responsible for the defects, the Oil Minister denied any intention to privatize it, ensuring efforts to develop it.  The parliamentary Development and Oil Committee disclosed in their report that the refinery sells the crude oil to the foreign companies at the same decreased sales rates offered to them by the Oil Sales Management, giving favors of $ 16.5 million to these foreign companies in 2006. 

Since the refineries producing capacity does not exceed 60 percent of their planned capacity, the loss rate as described by the committee is exceptionally high, amounting to $ 351 million in the last five years. The committee expected $ 150 million deficit for this year.  

The refinery’s increase in Marib crude sea oil deficit mounted to $ 2 million in 2003, in comparison to the international rate of 0.5 percent.

The committee also said that the refinery's expenses are very high, with 99.70  percent rate in most of the years, leading to profit decrease despite the low taxes of 22 percent, which added to the rise in international oil prices between 2005- 2006.

The committee also found that the increase in liabilities to lenders, which mounted to YR 66 billion in 2005, are indebted with YR 37 billion: 556 million to the Ministry of Finance in 1994- 2005, and to over YR 2 billion to the Islamic Bank since 1994. 

The committee said that the refinery neglects collecting their debts despite their large liabilities to others. According to the refinery’s accounts they have debts of YR 31 billion on the Yemen Petroleum Company, some of them pending since 1991.

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