Jordan bit hard by energy crisis
In the long run, Jordan hopes to find oil sale and natural gas reserves large enough to reduce its dependence
April 4, 2013 10:59 by Reuters
After midnight on one of Jordan’s busiest highways, only the beaming headlights of vehicles driving between the capital Amman and the Dead Sea pierce the gloom.
The highway is lined with street lights as it weaves down from Amman to the valley floor below sea level, but none are switched on. The government can no longer afford the bill.
The resource-poor kingdom, which imports 97 percent of its energy, has in the past two years seen the annual cost of those purchases soar above $5 billion – equivalent to about 15 percent of its gross domestic product – after supplies of cheap Egyptian gas were disrupted by sabotage of a pipeline toJordan.
Dependent now on costly diesel and fuel oil, Jordan is considering wider electricity rationing and is preparing a hike in electricity prices in June, a politically fraught move in a country which saw street protests last year over fuel subsidy cuts imposed as a condition for a $2 billion IMF loan.
“Energy is the Achilles heel of the Jordanian economy, it’s a huge vulnerability for Jordan…the biggest drain on the economy,” Nemat Shafik, deputy head of the International Monetary Fund, said during a visit to Jordan last month.
It is not just cost but capacity which the government is struggling to manage.
Jordan’s failure to modernise its decades-old oil refinery, which handles 140,000 barrels per day of crude imports but has only a limited ability to refine high-quality diesel, has worsened the crisis, experts say.
Meanwhile, foreign investment in independent power plants, which produce over 60 percent of the country’s installed power capacity of 3,300 megawatts, is barely keeping up with a 7 percent annual rise in consumption, experts say.
So in the short term, the government is being forced to tackle the other side of the supply/demand equation and find ways to reduce consumption.
Some steps are relatively painless; last month authorities asked for bids from firms to introduce 600,000 energy-saving light bulbs in public buildings, and they plan a nationwide campaign to distribute 1.5 million of those bulbs to households.