SANAA/ADEN (Reuters) - Loyalists to wounded President Ali Abdullah Saleh celebrated reports that he would soon return to Yemen, but opponents said they were working to ensure that, even if he does, he will no longer be in power.
U.S. and Yemeni officials have said Saleh, 69, was burned on 40 percent of his body in a rocket or bomb attack at his palace last Friday -- injuries which, depending on the depth of wounds, could be fatal and would probably curb his ability to rule.
Saleh, who has ruled Yemen for three decades, has not been seen since being flown for surgery to Saudi Arabia.
But after months of factional violence and pro-democracy protests, he has resisted Western and Arab pressure to step down and a government website dismissed dire assessments of Saleh's condition, said his injuries were minor and announced on Thursday that preparations for his return were under way.
"He has overcome the health difficulties after successful surgery to remove shrapnel ... Sources expected him to return soon after completing his recovery and treating some light surface burns," the government website 26 September said.
Opposition figures said their main concern was for Saleh to transfer his powers, regardless of whether he returned.
Even before the wave of pro-democracy protests, Saleh was struggling to quell a separatist rebellion in the south and a Shi'ite insurgency in the north.
Mohammed al-Mutawakkil of the coalition of opposition parties said the opposition had informed Saleh's ruling General People's Congress party on Wednesday that it would seek to establish its own transitional assembly after one week if action was not taken on transferring power to his deputy, Ab-Rabbu Mansour Hadi, who was named acting president on June 4.
"More important than Saleh's return is that the ruling party transfers power and begins implementing the Gulf initiative," he said, referring to a Gulf Arab plan for Saleh to begin a power transfer which stalled in the days before he was wounded.
Political analyst Ali Seif Hassan said he was not convinced by state media reports that Saleh was about to come back but said that his return could help cement a new order.
"I'm not worried if he comes back since the important thing is that he signs an agreement to transfer power, whether he does that in Sanaa or Riyadh," he said.
The Yemeni government website said preparations were being made around the country to welcome back Saleh, who wavered between accepting Arab and international calls for him to step down and accusing his opponents of staging a coup.
Army units and supporters were heard in many areas of the capital Sanaa firing shots in the air overnight in celebration and the General People's Congress said it would organize a "Friday of Loyalty" demonstration after Friday prayers.
The site described statements by U.S. and Yemeni officials that Saleh's health was in a dire state as fabrications, saying he was being treated for burns to his face and had had shrapnel removed from his chest.
The volatile situation in a country that lies on oil shipping lanes alarms Western nations and neighboring oil giant Saudi Arabia, who fear the chaos could give al Qaeda freer rein to establish itself in the impoverished mountain state.
More than 40 percent of Yemenis live on less than $2 a day while a third face chronic hunger. Dwindling water and oil supplies are also problems.
A ceasefire has held in Sanaa since Saleh left, after more than 200 people were killed and thousands fled over two weeks in clashes between Saleh loyalists and the forces of tribal leader Sheikh Sadeq al-Ahmar, who backs the protesters.
Many government ministries are not functioning as staff stay away and the city is suffering from cuts in electricity, fuel and water supplies, while fighting rages in the southern town of Zinjibar where Islamist militants have taken over.
Some of Saleh's opponents have accused the president of deliberately allowing al Qaeda militants to take over Zinjibar, capital of Abyan province, to demonstrate the security risks if he were to lose power.
A government statement said on Thursday 12 members of Al Qaeda in the Arabian Peninsula had died in clashes, including some leading figures.
Health officials and residents described dire scenes in Zinjibar this week, as dead bodies were left on the streets and wild dogs roamed. Once home to more than 50,000 people, now it is a ghost town without power or running water.
Yemen's state news agency Saba said on Thursday the United Nations High Commissioner for Refugees had begun the process of offering humanitarian aid to 10,000 people fleeing the Abyan province after the attacks from al Qaeda.
Saudi's state news agency quoted a Yemeni health ministry official as saying he estimated the number of people fleeing Abyan to be as high as 20,000.
There has been no word from Western powers, regional allies and Yemeni opposition parties on any efforts to take advantage of Saleh's absence to move toward implementing the Gulf Arab peace initiative -- by which Saleh was to step down one month after allowing a new opposition-led cabinet to be formed.
The U.N.'s World Food Programme (WFP) said Yemenis are going hungry as the fighting disrupts food supplies and pushes up the price of gas, water, fuel and other basic commodities.