Major Irregularities Revealed in Yemen’s Oil Refinery Project Agreement
emen’s Central Organization for Control and Auditing (COCA) has uncovered significant irregularities in the agreement signed between the Yemeni government and Maliha Limited for Leasing and Project Financing. The agreement involves constructing a crude oil refinery and oil storage tanks at the Dubba Port in Hadramaut.
The report highlights that the project, which includes building a refinery with a daily capacity of 25,000 barrels, storage tanks, and a free industrial zone, failed to comply with legal transparency mechanisms, such as an open bidding process. Furthermore, the report criticized the neglect of Aden Refinery’s development.
One clause in the agreement grants Maliha Company exclusive rights to establish refineries at Dubba Port, conflicting with a previous partnership agreement signed with the Hadramaut Refinery Company and the Ministry of Oil. The earlier agreement granted the latter the right to build refineries in the same area.
The Hadramaut Refinery Company (Med Gas) has filed an international arbitration case demanding $233 million in compensation. This amount covers capital costs, feasibility studies, and financial facilities secured from the Korean Export-Import Bank.
The audit report warned of several legal loopholes, including the absence of clear capital requirements and a lack of economic or technical feasibility studies. These deficiencies have led to continued reliance on imported fuel and the loss of significant economic opportunities.
COCA recommended revising the agreement, determining the necessary capital, and conducting essential studies to ensure accurate project implementation. Additionally, it urged resolving the Med Gas Company’s legal dispute through an amicable settlement to avoid international arbitration costs and emphasized ensuring transparency in national projects.
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