Jordan's government shake up to delay electricity price hike

Published April 30th, 2012 - 06:26 GMT
The formation of the new Jordanian government will suspend the rise of electricity tariffs previously scheduled to go into effect this May
The formation of the new Jordanian government will suspend the rise of electricity tariffs previously scheduled to go into effect this May

The recent change of government will delay a previously planned rise in electricity rates, energy officials say, with the incoming premier expected to review the new tariff.

According to the Electricity Regulatory Commission (ERC), the formation of Prime Minister-designate Fayez Tarawneh’s government will lead to a suspension of a rise in electricity tariffs previously scheduled to go into effect this May.

The ERC intends to hold a series of discussions with the incoming government over the proposed tariff, which is meant to close the National Electricity Power Company’s (NEPCO) burgeoning budget deficit, forecast to reach JD1.7 billion by the end of the year. “We will present the new Cabinet with the tariff we developed with the previous government, discuss the obstacles facing the energy sector, and then it will be up to them to implement it or revise it,” ERC Commissioner Ahmed Hiyasat told The Jordan Times on Sunday.

According to the ERC Chief, the new government may move to overhaul the tariff, developed after a series of consultations between the Ministry of Energy, traders and parliamentarians, or consider alternatives to address the nation’s rising energy bill, expected to reach JD4 billion by the end of the year.

According to an energy ministry source, officials are expecting an extended delay of the planned rise in electricity rates due to the “political sensitivities” surrounding the controversial move. “The new government does not want a rise in electricity rates to be among its first decisions,” said the source, who declined to be named as he was not authorised to speak to the press.

According to the source, electricity officials are bracing for the possibility that decision-makers will put off any price hike until after parliamentary elections slated for later this year. The proposed tariff was to raise rates across all sectors, relying on a progressive bracket system under which the largest consumers would carry a greater burden of the increase.

The suspension marks the second delay in attempts to raise electricity tariffs in less than two months. In March, the government suspended the implementation of a new tariff amid accusations that officials’ claims that the price hike would not affect 89 per cent of traders and 92 per cent of households were “misleading”. The drive to raise electricity rates comes on the backdrop of a series of disruptions to Egyptian gas supplies that have forced the country’s power plants onto heavy oil and diesel reserves at a cost of some JD5 million per day.

According to the ERC, the switch has pushed NEPCO’s electricity generation costs to some 184 fils per kilowatt-hour (kWh), more than twice the 73 fils/kWh rate at which it sells power to consumers.


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