News / Middle East

Lights Go Out in Jordan as Energy Crisis Bites

A view of a power station near Amman, Jordan April 2, 2013.A view of a power station near Amman, Jordan April 2, 2013.
x
A view of a power station near Amman, Jordan April 2, 2013.
A view of a power station near Amman, Jordan April 2, 2013.
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 to Jordan.
       
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 modernize 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 seven 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.
       
"If you don't have enough generation, you have to manage demand. One quick solution is energy efficiency in transport and electricity, where load consumption is high,'' said Khaled Irani, an energy consultant and former energy minister, estimating efficiency steps could save $1 billion.
       
Other measures are painful. The government is considering a new power-rationing scheme for this summer, to cope with an expected influx of tourists on top of over 460,000 refugees from Syria who have fled the civil war there.
       
The government also plans to raise electricity tariffs this summer, a step which could help to curb demand growth while easing the losses of the technically bankrupt state-owned electricity firm, National Electricity Production Co.
       
Reducing the losses at NEPCO, which piled up debts of $2 billion after it was forced to pay independent power producers for energy generated from costly diesel and heavy fuel, are a key performance criterion in Jordan's 36-month standby loan deal with the IMF.

Impetus for Investment
       
The disruption of Egyptian gas flows, which once generated 80 percent of Jordan's electricity, raised the cost of producing a kilowatt of electricity by as much as 600 percent. Gas flows were hit first by sabotage conducted by armed Egyptian militants or bandits, then by bottlenecks within Egypt's gas industry.
       
But the disruption has created an impetus for Jordan to invest in renewable energy projects which, while they will not end the crisis in the short term, appear increasingly feasible.
       
Among the first to emerge was Shams Maan, an equity partnership between Jordan's Kawar Energy, U.S. firm First Solar and Italy's Solar Ventures to build a 100-megawatt solar plant in the southern town of Maan at a cost of $300 million.
       
Hanna Zaghloul, the project's chief executive, said the government would now pay 16.9 U.S. cents for a kilowatt hour of electricity from solar technology, compared to around 24 cents for electricity from heavy fuel and 28 cents from diesel.
       
"That's why renewable energy is feasible for the government these days,'' Zaghloul said.
       
A year ago parliament passed a renewable energy law setting a tariff structure for grid connection. The government is soliciting expressions of interest by April 11 to build a $120 million, 75 MW solar plant at Quwaira in southern Jordan; at least a dozen international firms have submitted proposals to build this and other solar projects.
       
Jordan's ability to proceed with such projects has been given a boost in recent months by a $5 billion fund contributed by wealthy Gulf states to support its development amid regional instability.
       
The fund may also help finance construction of a $100 million liquefied natural gas terminal that is expected to be ready by the second half of 2014 and receive gas supplies from Qatar.
       
Meanwhile, Jordan plans to build a strategic reserve of 100,000 tons of oil to increase its critically low stockpile, currently at just three weeks of supply.
       
A 1,000-kilometer crude oil pipeline is being planned to export at least 1.5 million bpd of Iraqi crude through Jordan and its port of Aqaba to other countries. Technical studies have been made and tender documents are expected soon.
       
Oil Shale
       
In the very long term, industry experts say Jordan hopes to find oil shale and natural gas reserves large enough to reduce its dependence on energy imports.
       
Oil shale development has already begun with Estonia's Enefit planning to finance, build and operate a 430 MW power station using fuel from oil shale by the end of 2016. Royal Dutch Shell has invested $100 million to explore for oil shale in Jordan's east and north.
       
Jordan's oil shale projects focus on obtaining liquid hydrocarbons from fine-grained sedimentary rock, and are different from the shale oil industry in the United States, which blasts non-porous rock through hydraulic fracturing and is revolutionising the U.S. energy outlook.
       
Meanwhile, BP has invested $260 million in Jordan's Risha gas field near the border with Iraq; the company has dug a well and plans two more this year.
       
Jordanian officials say seismic studies suggest the field could in 2020 be commercially producing between 300 million and one billion cubic feet of natural gas per day, turning the country into a gas exporter.
       
Even Jordan's controversial effort to build a 1,000 MW nuclear plant has seen some progress, although the financing challenge means completion of the project is by no means certain. The government is expected to choose in coming weeks between two preferred bidders to supply the reactor, a French-Japanese consortium including Areva and Mitsubishi Heavy Industries, and Russia's Rosatom.
       
For now, however, Jordan will have no option but to grapple with an energy bottleneck that weighs on its economy and worsens its political risks.
       
"We face definitely a tough situation regarding energy. It will remain an alarming issue for the coming three or four years, until some of the projects such as oil shale kick in,'' said Alaa Batayneh, who led the drive for energy self-sufficiency as energy minister in the last government.

You May Like

Unpaid Kurdish Fighters Sign of Economic Woes

Sharp cuts in Kurdistan's budget by Baghdad, falling oil revenue, coping with refugees, inflated public sector have hit regional economy hard More

Koreas Exchange List of Envoys for Family Reunion Talks

Officials will discuss date, venue and number of participants for reunion; Seoul hopes to hold event late this month More

China Targets 197 in Online Speech Crackdown

Nearly 200 punished for 'spreading rumors' online in ongoing crackdown on free speech More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Calais School Offers Another Face of Europe’s Migrant Crisisi
X
Lisa Bryant
September 02, 2015 6:19 PM
Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.

VOA Blogs