YEMEN DEBATES NUCLEAR POWER

C O N F I D E N T I A L SANAA 001905

SIPDIS

SIPDIS

SECSTATE PASS TO ALEX BURKART ISN NESS

E.O. 12958: DECL: 10/11/2017
TAGS: ECON EINV ENRG YM
SUBJECT: YEMEN DEBATES NUCLEAR POWER

Classified By: Ambassador Stephen A. Seche for reasons 1.4(b) and (d)

1.(C) SUMMARY The ROYG is planning to build five nuclear
power plants in partnership with the US-based Powered
Corporation over the next 10 years, with work to begin in

2009. The plants would provide 5,000 megawatts of nuclear
power at an estimated cost of USD 15 billion. Recent media
coverage questioning the partnership, and reports of
opposition within the ROYG developments shed doubt on the
likelihood that the plan will ever come to fruition. END
SUMMARY.


2. (C) On September 24, 2007, ROYG Minister of Electricity
and Energy (MEE),Dr. Moustafa Bahran, signed a Participation
Agreement with the Texas-based US company Powered Corporation
(PC) to establish a relationship for the sole purpose of
jointly and exclusively pursuing the development of at least
5,000 megawatts of safe and efficient nuclear electric power
in the Republic of Yemen as well as the development of
associated water desalination plants.


3. (C) In a meeting with CommOff on September 25, PC
executives James Jeffrey and Jalal Al-Ghani said that PC has
been pursuing the nuclear power deal in Yemen for the last
five years. Jeffrey claimed that that the State Department's
Office of Nuclear Energy, Safety and Security (ISN NESS) gave
them a "green light" for the project as long as they take a
regional approach. NOTE: ISN NESS told CommOff that the group
was part of a consortium formed by Retired Admiral James A.
Lyons, and that while the group had been in contact with
them, ISN NESS had never given any "green light" for nuclear
power projects in Yemen. END NOTE.

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ROYG and Media None Too Pleased
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4. (C) No one in Yemen outside of the MEE seems too thrilled
by this deal. Headlines such as "Yemeni-US Nuclear Deal
Shrouded in Suspicion," "Yemen's Big Time Nuclear Fraud,"
"Yemen Nuclear Deal Sparks Security Fears," and "Yemen Nuke
Deal May Not Hold" question Bahran's motivations behind
signing the deal, PC's lack of experience, and the character
of the PC executive officers involved in the deal. News
reports speculate that PC received the exclusive deal from
MEE based on a personal relationship between Dr. Bahran and
Yemeni-American Jalal Al-Ghani, head of PC's Dubai office.
Stories claim that their relationship goes back their college
days in Oklahoma. Al-Ghani was in the past accused of "fraud
against the shareholders" of another company and ousted from
his position with that organization through a hostile proxy
fight, according to one report; although all charges against
Al-Ghani apparently were settled out of court. PC readily
admits that it has never built, owned, or operated nuclear
power plants. They contend, however, that they will be
acting with experienced partners. They have been vague about
who those partners are, but were quick to point out that
Retired Admiral James A. Lyons is one of their consultants
and "still active with the Defense Intelligence Agency"
(DIA). NOTE: Post cannot verify any current relationship
between Lyons and DIA. END NOTE.


5. (C) Even though it is well-known that President Saleh has
in the past called for the peaceful use of nuclear power in
Yemen, POLECON contacts have told EmbOffs that the ROYG is
not pleased with the exclusive nature of the agreement and
that Bahran acted like a maverick, earning the nickname
"Bahranium." PC executives told CommOff that they were
fairly certain that Bahran kept the deal quiet from most
people in the ROYG, including those in the MEE. They did not
speculate on his motive for doing so. Contacts expect a full
investigation into PC's experience and the character of its
executives. Most believe Bahran will be "sacked" over the
deal. The deal gives PC the exclusive contract for the 3
million USD feasibility study for the project and the power
to "prepare a document suitable to solicit open competitive
tenders from qualified nuclear reactor vendors and related
engineering, procurement and construction companies." The
Agreement further grants PC the power to execute contracts
with all applicable parties and to proceed with project
development and operation. PC is also designated to assist
MEE with negotiating, with ROYG governing bodies, all laws,
regulations, and conditions necessary to the development of
the project as well as to assist MEE in the execution of
international bilateral agreements and necessary protocols.
Contacts assert that the agreement and any associated
contracts should be put to international tender under the
sole control of the ROYG. The signed agreement and any
future projects will not proceed unless approved by the ROYG
Cabinet and Parliament. POLECON contacts believe that these
approvals are unlikely at this time.

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COMMENT
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6. (C) The agreement is not yet ratified by the ROYG Cabinet
or Parliament, and recent developments shed doubt on the
likelihood that the plan will ever come to fruition. Post is
in receipt of the ISN NESS "Background Paper: Yemen and
Nuclear Energy" and will draw on the statement of policy it
includes regarding the USG view of nuclear power in Yemen as
worded.
SECHE