The potential for developing a domestic oil industry was launched as a campaign issue during a speech on Monday (January 14) by Progressive Party of the Maldives (PPM) presidential prospect, MP Abdulla Yameen.
Yameen proclaimed “when the PPM comes to power” it will conduct oil exploration, attract foreign investment and create 26,000 tourism jobs.
However, the Maldives’ environmental image and commitments are no obstacles to oil industry development, according to Tourism Minister Ahmed Adheeb – currently standing for nomination as the PPM’s vice president.
Adheeb told Minivan News the Maldives was “a big nation, and places not in marine protected zones or tourism areas could be explored for oil, like in the less developed north.”
“Oil exploration is a term and [we] cannot conclude something with out the details. Regulations and more planning need to be done,” he said.
The ‘Draft Maldives Fourth Tourism Master Plan’ released January 9 by the Ministry of Tourism, Arts and Culture emphasises the need for climate change mitigation, adaptation, and renewable energy as part of its five-year strategic plan.
“The tourism sector is expected to contribute to the carbon neutral goal by introducing measures over the next eight years for energy efficiency and replacing fossil fuel with renewable energy,” the report states.
The plan contains various strategic actions aimed at “developing and enforcing” management plans for [marine protected areas] and sensitive environments. This includes “implementing a low carbon program for the tourism industry”.
“A long-term focus on adopting reliable and affordable energy from renewable resources (like sun, wind, sea and biomass) provides an opportunity to enhance our tourism development model, already well known for its sustainable practices. A low carbon path for development has been identified as key development strategy in Maldives as a whole,” the report notes.
“[Economic] diversification is in line with the tourism master plan,” Adheeb told Minivan News.
“[The] first priority should be tourism [however] the economy needs to be diversified and protected,” he said.
Yameen pledges oil exploration
During the launch of the PPM ‘Team Yageen’ campaign, Yameen declared his platform would focus on foreign investment and the creation of job opportunities, local media reported.
“Given the current economic situation, local businessmen alone cannot create enough job opportunities. We must welcome foreign investors for the benefit of our nation,” Yameen said, according to Haveeru.
Yameen’s proposals include searching for oil, prioritising the tourism industry, and creating a cargo transit port.
Previous oil exploration attempts in 1980 found the cost of retrieving the oil was too high compared to the US$20 (MVR 308) price per barrel at the time. However the present price of US$125 (MVR 1925) per barrel made further exploration feasible.
“It is very possible oil might be found in the Maldives,” Yameen said.
“[The PPM] have a very close relationship with tourist resort owners. The [economic] benefits of the tourism industry are creating job opportunities through the [tourism goods and services] tax,” he added.
Team Umar’s stance
‘Team Yageen’s opposition for the PPM leadership, ‘Team Umar’, played down the proposal.
PPM Interim Vice President Umar Naseer said it was not acceptable for people in responsible portfolios of the government to talk about things that they could not do while they were in power.
Yameen’s proposal to search for oil in the Maldives was not new, Naseer claimed, noting that Yameen had plenty of time during the Gayoom administration to pursue such an agenda.
”Fifteen years is enough time for someone searching for oil to find it. ‘Team Umar’ will not make empty talk; if we are to search for oil, then we will find it and sell it,” said Naseer.
”These words are not new to us. If they had been new words they would have impressed ‘Team Umar’ as well,” he added.
Government biosphere and renewable energy commitments
The development of an oil industry in the Maldives would be an apparent reversal of President Mohamed Waheed’s declaration during the Rio 20+ UN Conference on Sustainable Development in June 2012 that the Maldives would “become the first country to be a marine reserve”.
During the conference, Waheed highlighted the 2012 establishment of the first UNESCO Biosphere reserve in Baa Atoll, as well as the Maldives’ commitment to carbon neutrality and sustainable development.
“Our tourism sector is a sustainable one, relying on the preservation of our magnificent coral reefs, beautiful beaches and our rich and diverse marine life,” Waheed stated.
The Maldives is meanwhile participating in the 3rd General Assembly of International Renewable Energy Agency (IRENA) in Abu Dhabi, United Arab Emirates, which started this week (13 January 2013).
Minister of Environment and Energy Dr Mariyam Shakeela has also highlighted the ongoing renewable energy activities undertaken by the Maldivian government and the necessity of renewable energy for mitigating climate change.
Shakeela recently signed a Memorandum of Understanding (MoU) with the Diesel Replacement Project of the Clinton Climate Initiative’s Clean Energy Initiative, a program of the William J Clinton Foundation.
The focus of this program is to enact “projects and policies that directly reduce greenhouse gas emissions” including renewable energy projects to reduce dependency on diesel fuel.
Chief Technical Officer of the State Electricity Company (STELCO) Dr Zaid Mohamed has said that the problem of state run companies not paying their electricity bills is a long term one, made more urgent by recent rises in the price of oil.
“This problem has gone for a long time – a couple of years but lately the bills have been getting higher,” said Zaid.
Zaid said that the recent rise in fuel prices was beginning to threaten the company’s ability to operate and so the board made the decision to disconnect certain companies.
The most recent figures from the Maldives Monetary Authority (MMA) show the price of crude oil to have risen 9 percent in the last month and 6 percent between August 2011 and August 2012.
STELCO has since started discussions with the government to resolve the issue.
“We have payments to make to our suppliers,” said Zaid, who was reluctant to discuss individual clients while the company was holding discussions with the government.
However, local media reported earlier this week that STELCO had sent staff to both the Maldives Broadcasting Corporation (MBC) and the headquarters of Malé City Council (MCC) to disconnect their electricity.
MCC councillor Kareem told Minivan News that the money had now been sent to the finance ministry.
MBC have released a statement blaming the government for a lack of financial assistance resulting in the possible suspension of its services – Television Maldives (TVM) and Voice of Maldives (VOM), reported Haveeru.
The statement added that it had received warnings for non-payment of bills from several other service providers.
“The average monthly revenue of this corporation during the year has been MVR1.6 million. Due to the highlighted financial difficulties most services and other items had been sought on credit,” the statement was reported to have read.
Minivan News was unable to obtain comment from the Finance Ministry regarding this matter at the time of press.
Haveeru reported that STELCO was owed MVR7.1 million (US$460,000) and MVR6.8 million (US$440,000) by MBC and the MCC, respectively.
The paper discovered that STELCO is owed MVR150 million (US$10 million) from various state institutions, including the Malé Health Service Corporation (MHSC), the police and the Maldives National Defence Force (MNDF).
Oil dependency
The Maldives dependency on oil was discussed yesterday by President Dr Mohamed Waheed Hassan at the World Energy Forum in Dubai.
“A development path primarily based on expensive diesel generated electricity is unsustainable in any country, let alone a small country like Maldives,” said Waheed at the forum’s opening ceremony.
“Today, we spend the equivalent of 20 percent of our GDP on diesel for electricity and transportation. We have already reached the point where the current expenditure on oil has become an obstacle to economic growth and development,” he continued.
President Waheed explained that the current price of 35-70 US cents per KW hour meant that the government was being forced to provide “heavy subsidies” to consumers, giving little option but to move towards a low carbon alternative.
The Maldives Energy Authority recently announced that its US$138 million project would convert ten islands within the country entirely to renewable energy with 30 percent of the total energy demands of a further 30 islands provided from renewable sources.
“Under this strategy, through installation of up to 27 megawatts of renewable electricity, we will be saving on the use of 22 million liters of diesel per year and reduce up to 65,000 tons of carbon dioxide emissions each year,” Waheed explained in Dubai.
“In addition we will be making significant savings from the heavy fuel and other electricity usage subsidies that are currently in place,” he added.
“We are mindful that these programmes cannot be implemented without the engagement of the private sector. In order to make the investment environment more favorable for the private investors, a number of attractive financial guarantee instruments and measures will be adopted.”
Some of the key behind the Scaling-Up Renewable Energy Program (SREP) for the former government said earlier this year that the project had fallen through after political instability following February’s controversial transfer of power had deterred potential investors in the scheme.
The SREP plan revealed the scale of the problem: “If the oil price rises to $150/bbl by 2020, and consumption grows by four percent per annum, oil imports are expected to reach around US$700 million.”
This figure equates to around US$700 million or almost US$2,000 per head of population, whose per capita income – based on the most recent government figures – is just under US$4000.
On the afternoon of February 7, 2012, the Maldives was set to sign into existence a plan that would have revolutionised the country’s energy sector, immediately attracting US$200 million of risk-mitigated renewable energy investment. It was proposed that investment would eventually reach US$2-3 billion – a gigantic step towards the country’s goal of carbon neutrality by 2020.
The Scaling-Up Renewable Energy Program (SREP) proposal was produced by the Renewable Energy Investment Office (REIO) under President Mohamed Nasheed’s administration, and driven by Nasheed’s Energy Advisor Mike Mason – an unpaid position.
Mason, a UK national, former mining engineer and expert on renewable energy, carbon finance and offsetting, collected and analysed data on energy use and the existing diesel infrastructure across the Maldives.
He discovered that the Maldives was facing an energy crisis that was as much economic as it was existential.
The greater Male’ region generates 30 MW, with a further 8-10 MW for industrial purposes, while government utilities across the island chain generate a further 18 MW. The tourist resorts privately produce and consume 70 MW.
The SREP plan reveals the scale of the problem: “If the oil price rises to $150/bbl by 2020, and consumption grows by four percent per annum, oil imports are expected to reach around US$700 million – or almost US$2,000 per head of population.
“This is clearly unsustainable. Decarbonisation is at least as much a matter of national economic security and social welfare as it is a matter of environmental concern,” the report notes.
Energy revolution
Former Energy Advisor Mike Mason
Mason calculated that solar photovoltaic (PV) could be supplied directly to consumers at US$0.23 per kWh during the day, but only at US$0.44 per kWh from batteries at night. However an optimum mix of solar, battery and wind could supply 80 percent of power requirements at US$0.36 per kWh. Biomass could be supplied to Male at US$0.16 per kWh, or US$0.20 a kWh including capital.
Mason compared this to the volatile cost of import-dependent diesel generation, which ranged from US$0.28 per kWh hour in Male’, and up to US$0.70 per kWh on some of the most inefficient islands.
Existing solar initiatives in the Maldives, such as the Japan International Cooperation Agency (JICA)’s 675 kWh of solar panelling on schools and other public facilities across Male’, were “stupidly priced, uneconomic, symbolic, and don’t address the problem of energy storage,” Mason noted. He also proposed that large scale wind generation suffered from extreme seasonal variability and risked impacting the stability of the grid.
Mason concluded that the most realistic and commercially-viable renewable option was to run 90 percent of the country on solar supplemented by small-scale wind power, while a 24 megawatt biomass plant could provide the baseload of the greater Male’ region at more than 40 percent less than existing rates.
The pricing was attractive, but the challenge was attracting the significant upfront capital investment required: “with renewables, on day one you buy 20 years of electricity,” Mason explained.
Attracting this capital investment was therefore crucial, however “because of its political history and economic inheritance, the Government of Maldives is poorly placed to raise capital at normal ‘sovereign’ rates of interest,” the SREP report noted.
This was to be a key innovation in Mason’s proposal: rather than pour donor funding into myriad haphazard capital-intensive renewable energy projects, Mason’s plan was to instead use the available World Bank and Asia Development Bank funding to dramatically reduce the commercial and sovereign risks for foreign investors, lowering the cost of capital to attractive levels comparable to other countries.
“In practice, the guarantees may not be needed for all projects or by all developers, and once the Maldives becomes an established destination for renewable development finance the need for guarantees is expected to diminish,” the SREP proposal notes.
“Right now the cost of capital, if you are in Germany, is very low. In a country like the Maldives, it is stupidly high,” Mason explained to Minivan News.
“If [the Maldives] wants to get somewhere it has to take out the risk – at least risks not in control of the investor. If you can do that, then the cost of capital drops to 6-7 percent – about the same as a powerplant [in the West]. The whole thing becomes economic – the sensible thing to do – rather than a matter of subsidies,” he explained.
The World Bank team working on the project had given verbal approval for the plan, describing it as one of the most “exciting and transformative” projects of its kind in any country, according to Mason.
“It was a shoo-in. But the coup happened the day we were due to submit it – later that very day, in fact,” he said.
Amid the disintegrating political situation, the decision was made to suspend the submission.
“The whole point of the plan was to take out the instability. The thing about a coup is that it takes that model and turns it upside down,” Mason told Minivan News.
As the political instability increased, so did the cost of capital. Investors who had been “queuing up” made their excuses.
In an email exchange, incoming President Dr Mohamed Waheed Hassan requested that Mason continue with the submission and remain in his current position as Energy Advisor.
Mason chose to resign.
“I don’t think Dr Waheed is a bad man – actually I like him a lot personally,” he wrote, in an email to an official in the Trade Ministry obtained by Minivan News. “However, he has done nothing to assure me that this is really a democratic process. Rather, my intelligence tells me this is a Gayoom inspired coup with Dr. Waheed as an unfortunate puppet.”
Mason added that if the new government sought political accommodation with the MDP, made “a concerted attempt to remove the corrupt judiciary”, and ceased police brutality “so that people can walk the streets freely as in any other civilised country”, “then I will be back on side in the blink of an eye.”
“I have given the best part of my life to this over the last 18 months, but I fear I have a set of democratic and moral principles that override other considerations,” Mason stated.
President Waheed responded on March 23:
“It would be nice if you listened to something other than Nasheed’s propaganda. He is free to go anywhere he wants and say what ever he wants,” Waheed wrote.
“Have you ever thought that Nasheed could have made a stupid mistake under the influence of what ever he was on and blown everything away? I thought you had more intelligence than to think that I am someone’s puppet and Maldives is another dictatorship,” the President said.
Further emails obtained by Minivan News show that Waheed’s new government was interested in continuing with the submission of the SREP plan.
“I am certain that this is the wrong time to press ahead with the SREP IP. It relies at its heart on getting the cost of capital down by reducing risk,” wrote Mason, to a government official.
“That is not believable in an atmosphere in which [airport developer] GMR is being attacked as an investor in infrastructure; the legal system is, frankly, corrupt so contracts cannot be relied upon; the politics are (in the most charitable possible interpretation) a major risk factor; and the President has no parliamentary party of consequence. I also doubt that the SREP sub-committee will approve funding the plan as they too will see through the plan to the problems (or at least they should if they are any good),” he wrote.
“If things clear up, and faith in democracy and the rule of law is restored than a second go at this would be worth while – but meantime I am sceptical. A much more limited and less ambitious plan – say for the smaller islands only, might fly.”
The very premise of the plan – mitigating investor risk – had been scuttled by the political upheaval and both domestic and international challenges to the legitimacy of Waheed’s government, said Mason.
“Even if I did work with Waheed, I couldn’t deliver the plan now [because of falling] investor confidence,” he told Minivan News. “[The perpetrators] have destroyed US$2-3 billion worth of investment and condemned the country to an unstable economic future based upon diesel.”
Climate of crisis
Earlier this month President’s Office Spokesperson Abbas Adil Riza said the new government would “not completely” reverse the previous government’s zero carbon strategy: “What we are aiming to do is to elaborate more on individual sustainable issues and subject them to national debate. Previously, these discussions on sustainability were not subjected to a national debate, such as through parliament,” Riza said.
President Waheed last week attended the Rio +20 summit and announced the Maldives’ intentions to become the world’s largest marine reserve in five years.
During his speech in Rio, Waheed also pledged that the Maldives would “cover 60 percent of our electricity needs with solar power, and the rest with a combination of biofuels, other clean technologies and some conventional energy.”
“Progress towards achieving these goals is slow because of the huge financial and technological investments involved. If we are, as a global community, committed to the concept of transitioning to a green economy, then developing countries will need significant financial and technical support,” the President stated, going on to appeal for financial assistance.
“A small island state like the Maldives cannot, on its own, secure the future we want. We rely on our international partners to ensure that their development paths are sustainable and don’t negatively impact on vulnerable countries like the Maldives,” Waheed said.
Former President Nasheed’s Climate Change Advisor – UK-based author, journalist and environmental activist Mark Lynas, who drew a monthly stipend of Rf10,000 (US$648) for expenses – told Minivan News that the loss of democratic legitimacy in the Maldives had destroyed its ability to make a moral stand on climate change-related issues, and be taken seriously.
“I think that the Maldives is basically a has-been in international climate circles now,” Lynas said.
“The country is no longer a key player, and is no longer on the invite list to the meetings that matter. Partly this is a reflection of the political instability – other countries no longer have a negotiating partner that they know and understand,” he said.
“Partly, I think it is because of the lack of democratic legitimacy of the current regime – in the climate negotiations the entire ask of the small island and vulnerable countries is based on their moral authority to speak on behalf of those who are most suffering from the impacts of climate change.
“Yet Waheed and his representatives have no moral authority because they were not elected, have strong connections with corrupt and violent elements of the former dictatorship, and took power in the dubious circumstances of a police coup,” Lynas argued.
The government’s high expenditure on international public firms such as Ruder Finn – also responsible for the Philip Morris campaign disputing the health hazards of smoking – had further undermined its credibility with journalists across the world, Lynas said.
“Journalists and others are aware that the Waheed regime has hired PR agencies to act on its behalf – which makes them doubly suspicious. It is widely understood that the Maldives post-coup government has no real interest in the climate issue, but is instead trying to use it as a greenwashing tool in order to buff its credentials abroad and in order to obscure its undemocratic nature at home. I don’t think this will work, as it is hardly very subtle and journalists are not stupid,” said Lynas.
“The Maldives has lost many years of work already – it has little credibility left with donors or international investors. Investors and donors alike are looking for stability and strong governance – and they will not get either of those whilst the political system is essentially deadlocked between competing parties, with regular protests and ensuing police violence.
“In climate terms the Maldives is well on its way to becoming a failed state – I see no prospect of it achieving Nasheed’s 2020 carbon neutral goal, even if that goal is still official policy,” Lynas said. “I think time has basically run out now – unless there are early elections quickly and a legitimate government re-established there is no real prospect of resurrecting the Maldives’ leadership on climate change. By 2013, it will certainly be too late – other countries will have overtaken it and the Maldives will essentially be left behind.”
The National Planning Council has approved the State Trading Organisation (STO)’s plan to build an oil storage facility on an unidentified island in the north’s Haa Alif atoll.
The facility would cover 600 square metres and contain over 200 tons of oil, reports Haveeru. It is said to be 10 times the size of a similar facility at Funadhoo.
STO’s Managing Director, Shahid Ali said studies show the project would benefit the Maldivian economy. He said it has already drawn the interest of foreign investors.
The project is awaiting approval from the Cabinet.
Saudia Arabia has drafted 10,000 soldiers and banned all protests and marches after reports of a 20,000 strong uprising brewing in Riyadh this coming Friday.
Saudi rulers have already offered its citizens benefits worth US$37 billion in a bid to insulate the country from the wave of revolutionary turmoil currently affecting the Middle East.
The UK’s Telegraph newspaper reported that Saudi’s Interior Ministry had issued a statement on national television warning that protests “contradicted Islamic laws and social values”, and threatened violence against any disruptive elements.
In response, Saudi opposition groups were reportedly circulating Facebook messages encouraging demonstrators to stack the front lines on Friday with women, to prevent security forces from firing on the civilians.
Along with the overthrow of Egyptian President Hosni Mubarak and Libyan President Muammar Gaddafi’s campaign of violence repression against his population, tensions in Saudi have also been exacerbated by the Shia uprising in nearby Bahrain.
Small demonstrations have erupted across the Saudi in areas home to Saudi’s Shia Muslim minority, many calling for the release of prisoners allegedly being held without trial.
Maldives’ economy could “collapse in hours”
Saudi Arabia sits on 20 percent of the world’s oil reserves and is its single largest producer of crude. Regional tensions have already pushed the price of oil to US$116 a barrel.
Yesterday, UK Aid Minister and former oil trader Alan Duncan speculated in the country’s press that the price could rocket as high as US$200 a barrel while a full-scale regional meltdown could see it hit US$250 a barrel.
”Two hundred dollars is on the cards if… anyone is reckless and foments unrest,” Duncan said. ”It could be very serious. If crude oil doubles, you’re going to have a serious spike [in petrol prices]. Try living without it for a week.”
One country that cannot afford to live with it for even a day is the Maldives, which spends 25 percent of its GDP on fuel – primarily marine diesel. That currently represents a daily expenditure of US$670,000 to meet the country’s fuel needs, approximately US$800 per person per year in a country where the average annual income is under US$5000.
If that price were to hit Duncan’s estimate on the back of Saudi unrest, “the Maldives’ economy would collapse with hours”, predicted a senior government source.
Civil war in Libya
Western countries have meanwhile put troops on standby as Libyan President Muammar Gaddafi fights back against a growing uprising in the troubled country.
British SAS forces have already been active in the country evacuating UK nationals, many of whom worked in the country’s oil industry. The UK press reports that eight SAS soldiers were captured by Gaddafi’s forces while escorting a British diplomat to meet opposition leaders, although UK authorities would not confirm or deny the report.
Much of eastern Libya is under rebel control, including the town of Benghazi and, after several attempts by Gaddafi to retake it, Zawiyah near Tripoli. The opposition also now control the oil port of Ras Lanuf.
Rebel forces reportedly captured two tanks during the fighting on Saturday, but apart from the equipment brought by an estimated 6000 defecting soldiers, the opposition is considerably outgunned by those loyal to the 41 year old autocracy.
Gaddafi has used foreign mercenaries and aerial bombing in an attempt to quell the uprising, and some opposition groups have tentatively stated that they would approve of foreign intervention to create a no-fly zone in a bid to ground Gaddafi’s airforce and stop it from bombing protesters. Two airforce officers who disapproved of their orders flew their planes to Malta and requested asylum.
Some civilian fighters have armed themselves with rocket-propelled grenades and anti-aircraft guns, reports a Telegraph journalist in the country, but the majority are armed with little more than “hammers and barbecue skewers”.
“Much of the rebellion is being fought by welders and engineers, shopkeepers and waiters, a dishevelled army of civilian volunteers commanded by a handful of military officers who have agreed to join the fight,” reports the UK’s Telegraph.
Interpol has put out a global alert against Gaddafi and 15 others including his family members and close associates, “in a bid to warn member states of the danger posed by the movement of these individuals and their assets.”
The Maldives Minister of State for Foreign Affairs, Ahmed Naseem, has called on leaders at the UN Human Rights Council in Geneva to assist the countries undergoing a democratic transition in the Middle East.
Naseem said the Maldives welcomed the spread of democracy in the Muslim world, and praised the bravery and determination of those citizens in Egypt, Tunisia, Tunisia and elsewhere “for asserting their fundamental rights and freedoms, and for believing in a better future.”
“The Muslim Awakening heralds the end of power of the few for the few, and the beginning of a new era founded upon universal values, individual freedom, and mutual respect and tolerance,” Naseem said. “The Awakening also puts to bed, once and for all, the notion that Islam is somehow inherently incompatible with human rights and democracy.”
Former President Maumoon Abdul Gayoom has lashed out at comments made by the Presidential Commission yesterday that top-level officials from the former administration were involved in blackmarket oil deals with the Burmese military junta.
The allegations were first published in India’s The Week magazine on Friday. In the article, CNN-IBN Chief National Correspondent Sumon K Chakrabarti described Gayoom’s half brother and former STO Chairman Abdulla Yameen as “the kingpin” of a scheme to buy subsidised oil through the State Trading Organisation’s branch in Singapore and sell it on through an entity called ‘Mocom Trading’ to the Burmese military junta, at a black market premium.
The article, which has since been published on the magazine’s website, also claimed that Singaporean police were investigating the incidence of shipping fraud linked to STO Singapore. It drew heavily from a draft report from forensic accountancy firm Grant Thorton, commissioned by the Maldives government to investigate financial records on three hard drives pertaining to STO Singapore’s operations.
Gayoom has claimed that the allegations by the Presidential Commission were politically motivated. Newspaper Haveeru reported Gayoom as distancing himself from the STO, quoting the former President as saying that “I [had] no connections with the STO when I was the president and after that.
“STO has a board and a Chairman that oversee all the operations of the company. I never [got] involved in the matters of STO. The company will reveal its annual financial report at its General Meeting every year and discuss on the matters [raised in the report],” Haveeru reported Gayoom as saying.
“The commission is trying to tarnish my reputation because of the support given to me by the residents of the islands and the success DRP achieved in the local council election,” he reportedly added.
Yameen dismissed the allegations as “absolute rubbish” following the publication of Chakrabarti’s original story in The Week.
He acknowledged using the STO to send funds to his children in Singapore during his time as chairman, but denied doing so money following his departure from the organisation.
“After I left, I did not do it. In fact I did not do it 3 to4 years before leaving the STO. I used telegraphic transfer,” he told Minivan News.
Yameen also denied being under investigation by the Singaporean police.
Asked to confirm whether the STO Singapore had been supplying fuel to Myanmar during his time as chair of the board, “it could have been – Myanmar, Vietnam, the STO is an entrepreneurial trade organisation. It trades [commodities like] oil, cement, sugar, rice to places in need. It’s perfectly legitimate. “
In a subsequent interview with VTV’s ‘Fas Manzaru’ program, Yameen acknowledged flying to Burma during a period when the STO faced a rice shortage, “a very long time ago.” He had not visited in the past 16 years, he said.
“Perhaps this government is afraid that with my supposed Myanmar military links, I might bring over weapons from that country and overthrow this [Maldivian] government. But I have to say that those military officials in the Burmese government are ones I have never met. I don’t even know them,” Yameen told VTV.
He also announced that he was “ready to offer anyone 90 percent” of the alleged US$800 million in laundered money cited by The Week article, “if they locate it for me.”
“I only want 10 percent. If I get US$800 million now, 10 percent of that will suffice for me. Even if I get around US$80 million dollars, it will be enough for me,” Yameen said.
“Therefore this time for anyone who helps locate this [money], I am ready to hand over 90 percent of all that into the finder’s name.”
Yameen called on police to investigate the matter alongside previous allegations in the Indian press that President Nasheed had consumed alcohol.
“I welcome investigation. But if investigations are being done, then it should also be investigated when an Indian newspaper publishes such defamatory material against the President,” Yameen said.
The Presidential Commission has meanwhile stated that details of the alleged racketeering would be disclosed on conclusion of the investigation, in collaboration “with international parties”.
The Maldives’ economy could be crippled by rising oil prices sooner than expected, after a leaked cable from the US embassy in Riyadh sparked fears that Saudi Arabian oil reserves could be 40 percent lower than previous estimates.
In the cable dated November 2007, geologist and former head of exploration at Saudi Arabia’s state-owned oil giant Aramco told US consul general John Kincannon that the world’s largest oil company may have overstated its reserves by 300 billion barrels.
Saudi Arabia is believed to sit on almost a quarter of the world’s oil reserves, the export of which directly accounts for almost 50 percent of country’s GDP and indirectly for much of the rest of its industry.
In 2007, Aramco reported that it had 716 billion barrels of total reserves, 51 percent of which was recoverable. Within 20 years the company predicted it would have 900 million barrels, and a recovery rate of 70 percent.
“Al-Husseini disagrees with this analysis, as he believes that Aramco’s reserves are overstated by as much as 300 billion [barrels] of ‘speculative resources’,” the cable reads.
“In al-Husseini’s view, once 50 percent depletion of original proven reserves has been reached and the 180 billion [barrel] threshold crossed, a slow but steady output decline will ensue and no amount of effort will be able to stop it. By al-Husseini’s calculations, approximately 116 billion barrels of oil have been produced by Saudi Arabia, meaning only 64 billion barrels remain before reaching this crucial point of inflection. At 12 million [barrels per day] production, this inflection point will arrive in 14 years.”
Al-Husseini was on Aramco’s board of directors from 1986 until 2004, and sat on the company’s Board of Directors from 1996 to 2004. He was, states the cable, “no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”
A decline in the rate of oil production at a time when demand continues to surge, particularly in the developing world, will cause the oil price to skyrocket.
The Maldivian economy is dependent on oil to such an extent that is spends a quarter of its GDP on it – US$245 million – mostly marine diesel. The 15 percent increase in oil prices over the past five months has led to the Maldives spending almost US$100,000 more on fossil fuels, per day.
Recent turmoil in Egypt – home to the Suez canal, one of the world’s major oil routes which sees 3 million barrels pass through daily – has seen oil prices jump twice past the US$100 a barrel mark in the last few weeks.
Were that price to eventually stick, due to either ongoing Middle East instability or concerns over supply such as those cited in the Riyadh leak, then the Maldives could end up spending upwards of US$230,000 a day on fuel when accounting for possible economic growth of about eight percent during 2011.
The Maldives must cure itself of its addiction to oil and develop alternative energy sources from local resources if it is to prosper, Vice President Dr Mohamed Waheed Hassan said today at a UN roundtable held at Bandos Island Resort.
The occasion was the Maldives signing a commitment to phase out hydro-chlorofluorocarbon (HCFC) emissions by 2020, a decade ahead of other countries, and one that has attracted an assistance grant of US$1.1 million from the UN.
HCFCs (such as chlorodifluoromethane) is used in older refrigeration and air-conditioning units as a replacement for heavily ozone-depleting CFCs, however it also is now considered too harmful.
“It makes sense to move away from HCFCs,” Dr Waheed said. “It is outdated technology and has already been phased out in most western countries, and it is increasingly difficult to repair appliances that use it.”
The move was part of the government’s larger agenda of becoming carbon neutral by reducing reliance on fossil fuels, driven by economic as well as environmental imperatives, the VP explained.
“The Maldives is highly dependent on oil. Our economy totally dependent on imported fuels, but we have absolutely no control over oil prices,” Dr Waheed said. “Our economy is slowly recovering from mismanagement of the past, and an oil price hike now would destabilise our economy. We all know how volatile oil prices are – and the global economic recovery means an increased demand, which is likely to increase prices further.”
Because of the country’s dependency, Dr Waheed explain, “a high oil price means a high cost of doing business. We want to break our dependence on foreign oil using our own natural resources: sun, wind and waves. In the Maldives renewable energy makes sense because imported oil is costly – it is very expensive to ship oil to small islands like the Maldives.”
The Maldives’ oil addiction meant that “today we have one of the world’s highest prices for electricity – 25-30 US cents per kilowatt hour, and there are some reports islands where people are forced to pay 60 cent per kilowatt hour. Schools complain that 25 percent of their budget is spent fueling their diesel generators.”
Addicted
A report published by the UNDP in 2007 on the vulnerability of developing countries to fluctuating oil prices ranked the Maldives dead last, a fair stretch behind Vanuatu, effectively placing the country among the world’s most oil-addicted nations.
“Island countries in general are extremely vulnerable to increased oil prices. They comprise distant and small markets and have to bear the burden of higher shipping costs, while electrical power generation is largely fueled by diesel,” the report noted.
President Mohamed Nasheed said that the Maldives stood perfectly placed to demonstrate to the rest of the world “that a less hazardous development pattern is possible, viable and financially feasible.”
He acknowleged the efforts of the previous government towards that development, noting that the Maldives was able to phase CFCs two years before its mandated deadline.
“I thank the previous government, especially former President Maumoon Abdul Gayoom, for his singular focus on CFCs, ozone depletion and the environmental issues he raised very early.”
He also acknowledged that even if the Maldives succeeded in demonstrating that a country could be powered by renewable energy and reached its goal of carbon neutrality, “what we do not have major impact health of planet.”
Rather, Nasheed said, the Maldives could prove to other countries that isolated communities could be self-sustaining.
“The window of opportunity this planet has is not so long – science is very certain and we have to act,” he said. “If we don’t, this planet will go on, with new equilibriums and balances that may not be receptive to human habitation – that is what we are trying to overcome.
“We have the technology already – it is a question of how bold we are in implementing it.”
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