Jordan's temporary power price peak

Published May 28th, 2012 - 07:47 GMT
Jordanian government unveiled new electricity rates carrying an average of a 12% increase on selected sectors
Jordanian government unveiled new electricity rates carrying an average of a 12% increase on selected sectors

The Jordanian government unveiled on Sunday new electricity rates it claims will have a limited impact on citizens’ living conditions.

The Electricity Regulatory Commission (ERC) unveiled new electricity rates carrying an average of a 12 per cent increase on selected sectors, exempting citizens, traders, farmers, hospitals, government institutions and small- and medium-scale industries from any price hike. 

Those exempted from the price hikes will continue to pay the rates laid out in the previous tariffs, some 73 fils per kilowatt-hour (kWh), according to the commission. “Commercial, residential and most of the industrial sectors will not witness any increase in their monthly bills, and we believe this is a fair equation,” ERC Chief Commissioner Ahmad Hiyasat said on the sidelines of a press conference to announce the tariffs. 

The government’s decision invited mixed reactions from several sectors, including a limited street protest. Hoteliers warned of layoffs. Meanwhile experts urged the government to proceed with a taxation plan, which also targets the affluent corporate world, including banks and mining firms.

The new tariffs come two months after the government suspended a previously announced tariff that raised rates across all sectors by an average of 9 per cent, a move traders warned would lead to a 20 per cent increase in food prices and industrialists claimed would cost the Kingdom thousands of jobs. 

Under the new rates, which will go into effect on Tuesday, the banking, hotel, telecommunications, water and large industrial sectors will carry the bulk of the price rise, which ranges from 22 to 150 per cent. The water sector will face the lowest increase, some 22 per cent, while telecommunications and large industries such as phosphates and potash will witness a 150 per cent increase in their monthly bills. 

Large-scale industries considered public services such as the Queen Alia International Airport and the Jordan Petroleum Refinery Company will be exempted from the price hike, according to the ERC. 

Hiyasat stressed that under the new rates, the affected sectors will pay an additional 9 fils per kWh — 89 fils in total — less than half of the generation cost incurred by the National Electric Power Company (NEPCO), which stands at 189 fils

The new rates mark a departure from the progressive system laid out in the previously announced tariffs, under which the largest consumers carried the bulk of the price rise according to preset brackets. 

The price hike comes amid ongoing disruptions in Egyptian gas, which have cost the Kingdom some JD5 million per day, pushing the budget deficit to a near-record JD2.08 billion. 

According to Hiyasat, Egyptian gas supplies, which have been the target of a series of acts of sabotage, currently hover around 30 million cubic feet, some 10 per cent of the 300 million cubic feet required to fuel the country’s power plants.  

According to the ERC, the new tariffs will shave JD124 million off NEPCO’s projected JD1.5 billion budget deficit, a number that is likely to drop to JD100 million in light of the recent rise in diesel prices. Under the new rates, NEPCO will be able to close its budget deficit within 11 years, according to Hiyasat, over twice the five-year timetable laid out in the previously announced tariffs.

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