Jordan is looking into a partial privatization of its phosphates industry, a backbone of the economy, which posted nearly $40 million dollars in losses for 2000. For a country not blessed with many natural resources, Jordan always relied on foreign currency earnings from phosphates exports, which placed the tiny desert kingdom among the world's leaders in production and sales.
But a drop in world market prices, rising extraction costs and poor management have put the phosphates industry in the red, prompting one damning report after the other in the local press and complaints in parliament.
Last week the managing director of the monopoly Jordan Phosphates Mines Company (JPMC) Khalid Sheyyab admitted that losses for 2000 stood at 26 million dinars ($37 million) while debts reached 350 million dinars ($490 million). Sheyyab blamed the crisis on "technical reasons" and a production backlog.
"The company is now examining ways to improve its situation, including bringing in private sector partners to take over some activities such as extraction, transport and maintenance," Sheyyab told Petra news agency.
The government holds a majority stake in JPMC but Prime Minister Ali Abu Raghib recently said in separate meetings with Jordanian businessmen and journalists that the company would be restructured.
Expressing surprise over the losses incurred by JPMC, Abu Ragheb told businessmen a plan to "privatize the production and transport activities" of the company would be implemented soon. He hoped the restructuring process, set to include an in-depth study of the company's finances, will help restore JPMC, which Abu Ragheb described as "a backbone of the national economy".
In November, Abu Ragheb met company officials to gauge the extent of the problem and chart a rescue plan after the firm's mid-year report showed net losses of 59 million dinars, press reports said.
The crisis facing JPMC was exacerbated in early December when the Norwegian industrial giant Norsk Hydro announced it was pulling out of a joint project to build a fertilizer plant in Jordan. In an apparent move to calm the jitters that followed, Sheyyab and Industry Minister Wassef Azar issued separate statements to say that Norsk Hydro's "production priorities" lie in energy schemes.
Nevertheless more than 50 out of the 80 members of the lower house of parliament petitioned the speaker, demanding a "public debate on the financial, administrative and technical situation" of JPMC. The deputies also requested the trial of those responsible for the crisis.
A damning report released earlier this year by Jordan's Export and Finance Bank and quoted by the Jordan Times said "the government carries considerable blame for JPMC's unfavorable performance". "The Jordanian government holds a controlling interest in the company and as a major stakeholder has been more interested in taxes and job creation than in efficiency and competitiveness," the report said.
The report estimated that the seven-dollars per ton fee levied by the authorities was seven times higher than in the United States and a major burden for the company.
In 1999, Jordan's exports of phosphates declined by 17.6 percent to 24.5 million dinars ($34.5 million), according to the annual Central Bank report released in August. Phosphates represented 11 percent of the country's total exports, trailing behind potash, another mainstay of the economy.
Government revenues from the mining sector (phosphates and potash) has resulted in a 13.6 million dinar ($19 million) drop for the first nine months of 2000 compared to the same period last year.
JPMC is the world's third largest exporter of phosphates after Russia and Morocco and the sixth largest producer of phosphate rock. According to experts, JPMC has proven reserves of around 934 million tons of phosphates which could last for more than 90 years with a production rate running at around six million tons per year. — (AFP, Amman)
by Hala Boncompagni
© Agence France Presse 2000
© 2001 Mena Report (www.menareport.com)
