Next government to decide electricity prices in Jordan
Jordan's next government will tackle the difficult issue of raising the cost of electricity
The [Jordanian] Cabinet has decided to leave any changes in electricity rates to the next government, energy officials said, warning that a combination of price hikes and power cuts are likely in order to avert a deeper energy crisis.
Energy Minister Alaa Batayneh said the government has moved to defer any changes to electricity rates to the agenda of the next Cabinet, widely expected to be formed by the next parliament.
“Although we have studied several proposals in detail, the current government will not take any action towards changing electricity rates; this will be a matter for the next government to handle,” Batayneh told The Jordan Times in a recent interview.
Officials attribute the decision to the caretaker government’s limited mandate — namely to oversee the January 23 parliamentary elections — and the ongoing impact of a decision to lift fuel subsidies last November.
The decision was taken after weeks of talks over potential measures to slash energy subsidies, which currently cost the government some JD1.2 billion annually.
After extensive study, Batayneh said, officials have concluded that a combination of price hikes and planned power outages are likely needed in order to help the state-backed National Electric Power Company (NEPCO) close a record JD2.38 billion budget deficit.
According to Batayneh, the incoming government will likely have to take the “unpopular measures” in order to curb rising energy subsidies, noting that NEPCO continues to sell electricity to consumers at an average rate of 60 per cent lower than its 188 fils per kilowatt hour generation costs.
“We can no longer afford to tinker with rates and play with numbers for a limited group of consumers,” Batayneh said.
“We have to overhaul our entire approach to the electricity sector in order to face the economic realities that are affecting all countries across the globe — not just Jordan.”
Even with a proposed raise in electricity rates and the return of Egyptian gas supplies, the minister said decision makers will likely have to enforce a series of pre-planned regional power cuts in order to keep up with electricity demand, which continues to grow at an annual rate of 7 per cent.
Under one of the proposals vetted by the government, utilities would enforce a series of geographically limited neighbourhood “black-outs” in order to meet the growing demand on the national grid.
The temporary proposal aims to serve as a “stop-gap” measure to meet the rising energy demand ahead of the completion of a series of oil shale and renewable energy projects expected to add over 1,000 megawatts to the national grid by 2017.
Energy subsidies have become a growing burden for Jordan which imports 97 per cent of its energy needs, due to rising international oil rates and ongoing cuts in the country’s gas supplies from Egypt.
Despite the resumption of Egyptian gas supplies earlier this month, NEPCO’s budget deficit is expected to widen by some JD268 million in 2013.