Government to Raise Electricity Prices

Today, an article appeared in the Jordan Times that announced (buried in the third paragraph) that the government intends to raise electricity prices. The article states that “The government’s programme includes comprehensive reforms in the electricity sector through further increases in electricity tariffs and diversification of energy sources.” Raising prices is easy, diversification is easier said than done. To this point, the only “diversification” that has been made recently is a commitment by Iraq to supply 60,000 tonnes of heavy fuel instead of 30,000 tonnes, as well as increased imports of Iraqi gas. The reality is that Jordan remains as dependent on Egyptian natural gas as ever, and the contract under which Egypt commits to supply Jordan with 240 million cubic feet of gas per day expires in 2019.

Diversification of energy sources remains a vital economic interest for Jordan. If steps to diversify energy sources are not made then it is entirely possible that Egypt, with rising domestic demand for gas would seek to reduce the amount that is supplied to Jordan or increase the price. The central card that Jordan held in the recent dispute – the threat to deport Egyptian workers – is serious now because of the unrest in Egypt, but one should not assume that the situation in 2019 won’t be dramatically different. The regime doesn’t seem to be taking any steps to diversify its energy supply.

The government is scrambling to patch up the immediate crisis without a vision for how to make it less likely to recur over the longer term. In order to reduce Jordan’s dependence on energy imports and make the economy less vulnerable, there are important steps that need to be taken, but no one seems to have the political will. For example, one source of more affordable energy could be solar energy, which the government, to it’s credit, sought to encourage through the implementation of net metering regulations in 2010. However, there does not seem to have been anything to encourage the installation of solar energy, and to date it seems that there is only one person selling power back to the grid.

The one man who is selling power back to the grid, Suleiman Nimri, has conducted studies showing that it is profitable for many institutions in Jordan to implement solar power, but they have frequently been scared by the large upfront capital costs. Indeed, if JD24,000 is all it takes for a university in the north of Jordan to save JD7,000 on electrical power, then surely it would be worthwhile for the government to move forward with this project as one of the ones they are supporting with the governorates’ development fund (It is worth noting that Nimri himself expects to recoup his investment in five to six years). However, this doesn’t seem to be happening. There’s no vision. Just one crisis after another. Perhaps the ultimate indictment of this is the fact that the article about Nimri appears in the Jordan Times, a regime newspaper, yet the article seems never to consider the possibility of the government encouraging this type of economic activity, or indeed of it building solar energy facilities itself, and then seeking aid to build more.

Instead what we have is more rate increases, more stalling on reform, and a government that seems determined to go as long as possible without listening to the will of the people.

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