Jordan to raise electricity tariffs to approach crisis
The Jordanian government will raise electricity tariffs to counter an expected loss of more than JD1.5 billion in the energy sector resulting from the halt in Egyptian gas supplies, a Cabinet official said Monday.
Minister of Public Works and Housing Yahya Kisbi, also acting minister of energy, noted that the Kingdom’s energy bill exceeded JD4 billion in 2011 and stressed that everyone must share responsibility in addressing the financial burden of increasing energy import costs. The announcement was made during a press conference held by Minister of State for Media Affairs and Communications Rakan Majali along with Kisbi, Minister of Industry and Trade Sami Gammoh, Chief Commissioner of the Electricity Regulatory Commission Ahmad Hiyasat and Ministry of Energy Secretary General Farouq Hiyari.
“Last year, the energy consumption bill reached alarming figures compared with previous years, so we started taking measures that should not have a direct impact on the lower and middle classes. We are counting on the citizens’ understanding and their sense of responsibility to do their part as well and ration their energy consumption,” Kisbi said. He added that the Kingdom’s electricity sector had incurred losses of over JD1 billion last year and is expected to lose JD1.5 billion this year if the situation continues as is.
“The government has taken several austerity measures aimed at rationing consumption in order to address the budget deficit. In the meantime, we are working on finding alternatives to offset the shortage in supply of Egyptian gas, and in that regard we have received some positive signs from several Gulf states and from Iraq,” added Gammoh, who is also acting finance minister.
Hiyasat said the government plans to raise the electricity tariff to compensate for part of the loss incurred by the sector, adding that the cost of energy imports this year is expected to exceed JD5 billion. “Practically, we have dropped the Egyptian gas supply from our calculations, due to the fact that in 12 months the gas pipeline has been attacked more than 14 times. Therefore, we have to admit that we have a problem and a challenge that everyone must take part in addressing,” Hiyasat said.
He said that producing one kilowatt-hour of electricity costs JD0.189, while the public on average pays JD0.073 per KWH with the government subsidising the difference. “The amount of losses incurred by the National Electric Power Company (NEPCO) gave the government no choice but to reconsider the electricity tariffs to partially pay for the losses and reschedule the rest over the coming years,” Kisbi said.
Hiyari, for his part, highlighted the challenges facing the energy sector and their impact on the economy, pointing out that more than 98 per cent of the country’s energy is imported. He pointed out that the unexpected increase in the cost of oil derivatives since the beginning of the year had compelled the ministry to take action.
The energy ministry official noted that the government spent JD555 million on fuel subsidies last year in addition to JD1 billion in support for NEPCO, which is expected to double this year if nothing is done to address the underlying problem.
“We have devised a two-way plan that aims at raising the public’s awareness on the ramifications of the current financial burden resulting from the challenges facing the electricity sector as well as enlightening citizens on the best means of rationing power consumption,” he said, adding that this plan is currently awaiting the Cabinet’s endorsement.