Behind Jordan's high energy prices: it's not just the economy's fault
Jordan's strategy calls for more investment in renewable energy sources, but inefficient middle management structures in the energy sector may be hampering progress in this development (File Archive/Shutterstock)
It has been six years since I have been part of the efforts to revise and update Jordan’s energy strategy. Unfortunately, to this day, very few of the recommended measures, grounded in robust research evidence, have been implemented by the government.
The share of renewable energy as part of Jordan’s energy mix was supposed to increase from 1 per cent in 2007 to 7 per cent in 2015, and the share of locally produced energy from 4 per cent to 25 per cent over the same period.It is the end of 2013 and the rates are still at 1 per cent and 4 per cent respectively.This lack of diversification of energy sources has resulted in one of Jordan’s gravest contemporary problems: high energy prices that are not commensurate with the income generated per capita.The 2007 updated energy strategy delineated clear objectives, assumptions and, above all, a roadmap and timeline for project implementation. It also attested to the financial investment required.
On paper, the expert-drafted strategy looked like a solid plan to diversify energy resources and provide Jordan with energy at the lowest possible cost. Six years later, none of those goals has been achieved.Research has concluded that the strategy has thus far not been implemented due to poor policy management by the government, highlighted by its inability to successfully negotiate with the private sector and create an optimal environment for investment in energy.Research points towards a systematic problem, rather than identifying why the problem exists and why the ministry has not been able to implement the strategy effectively.If the root cause of this issue cannot be identified, then all attempts to find a solution may be futile.
The government’s approach to enhance the performance of the Ministry of Energy and Mineral Resources has been characterised by frequent change of the minister at the head of the organisation. Eight ministers have led the ministry over the past six years, but nothing has changed, which means that something else is holding back progress.The government has failed to realise that while these ministers come and go, the remaining structure of the organisation has not changed, which may represent a major oversight.According to organisational structure and behaviour theory, an organisation that wants to change should aim at the middle. The Ministry of Energy and Mineral Resources is headed by the minister. The secretary general and directors heading specific directorates, such as those concerned with oil, natural gas and renewable energy, form the middle management. On the lowest rank, lower level employees assist the directors.
In mid-level management, most individuals have been holding office for more than 10 years. This denotes a lack of continuity that resulted in a very rigid structure and way of administering policy.If the ministry does not enact change at this level, the performance of the government will remain unchanged.When one is in the system for as long as middle management has been, one is no longer part of the system; one is the system.New ministers rarely lasted longer than 12 months in office. Once they matriculate into the organisation, they are confronted by the secretary general that explains how “the system” works.
No minister has yet challenged the system or addressed the structural faults in it, as this would require more time needed for the implementation of an urgent project. This repeated process, however, continues to perpetuate the failure of both.The current system created high dependence on what seems to be an indispensable and static middle management.The result is mid-level managers becoming, de facto, policy makers, which is the role of top management.The blurred definitions of roles and responsibilities led to a focus on short-term financial gains at the expense of long-term strategic ones.The energy strategy has thus become reactive instead of proactive.
Middle management has always been considered the engine of an organisation. Top managers have a significant role in setting the overall direction, but it is the middle managers who decide which projects are selected and how they are run.Various research shows that middle management has the greatest impact on the performance of any organisation.In certain industries, middle managers accounted for 22.3 per cent of the variation in performance among projects, as opposed to 7 per cent explained by innovators and 21.3 per cent by the organisation itself.The ministry needs to be restructured at the organisational level to redefine the roles, responsibilities and incentives of middle management in order to influence its performance.
For one, middle management should act as the enabler of the energy strategy, as opposed to a dictator.Goal setting needs to be a function of top management, and policy implementation the function of middle and lower management.Defining the roles and responsibilities within the organisation will enable accountability and ultimately faster project implementation. Implementation of such changes has to be authorised at the top level, as the responsibility lies there.Such changes can be challenging, as they do require time, resources, cultural awareness and, most importantly, willingness to change.The first signs of success will be seen when the energy strategy is finally lifted off the shelves of the ministry and put to good use.
By Ayman Z. Sharaiha
- Cheap oil: the antithesis of clean energy?
- Reading the signs behind plummeting oil prices: Saudi-led price war or simple supply and demand?
- The best way to ask for a raise or a promotion...and, God forbid, handle a 'no'
- NBK: Saudi economy continues to prosper with high oil prices and massive investment outlays
- Jordan exerts efforts to implement the recommendations of the IIC