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

Could Nemtsov Threaten Putin in Death as in Life?

Dynamic and debonair opposition leader had supported liberal economic reforms, criticized Russian president's aggression in Ukraine More

Oil Smuggling Highlights Challenges in Shutting Down IS Finances

Pentagon spokesman says Islamic State 'certainly continues to get revenue from the oil industry black market' but that airstrikes have made a dent More

India Focuses on Infrastructure, Investment to Propel Economy

Government expects economy to grow at 8 to 8.5 percent in next fiscal year More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Supreme Court Hears Hijab Discrimination Casei
X
Katherine Gypson
February 25, 2015 11:30 PM
The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video US Supreme Court Hears Hijab Discrimination Case

The U.S. Supreme Court has heard opening arguments in a workplace religious discrimination case that examines whether a clothing store can refuse to hire a young woman for wearing the headscarf she says is a symbol of her Muslim faith. Katherine Gypson reports from the Supreme Court.
Video

Video Falling Gas Prices Hurt Nascent Illinois Hydraulic Fracturing Industry

Falling oil prices are helping consumers purchase cheaper petroleum at the pump. But that’s made hydraulic fracturing or “fracking” less economically viable for the companies in the United States invested in the process. VOA’s Kane Farabaugh reports on one Midwestern town that was hoping to change its fortunes by cashing in on the next big U.S. oil boom.
Video

Video Fighting in Sudan's South Kordofan Fuels Mass Displacement

Heavy fighting in Sudan's South Kordofan state is causing hundreds of thousands to flee into uncertain conditions. Local aid organizations estimate as many as 400,000 civilians have been internally displaced since the conflict began more than three years ago, while another 250,000 have fled across the border to refugee camps in South Sudan. VOA's Adam Bailes reports.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.
Video

Video A Filmmaker Discovers Her Biracial Identity in "Little White Lie

Lacey Schwartz grew up in an upper middle-class Jewish family, in a town in upstate New York where almost everyone she knew was white. She assumed that she was, as well. Her recent documentary, Little White Lie, tells the story of how she uncovered the secret of her true racial background. VOA’s Carolyn Weaver has more on the film.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video US-Cuba Normalization Talks Resume Friday

Negotiations aimed at normalizing diplomatic relations between the U.S. and Cuba resume Friday. On the table: lifting a half-century trade embargo and easing banking and travel restrictions. There's opposition in Congress, but some analysts say there may be sufficient political and economic incentives in both nations for a potential breakthrough this year. VOA's Mil Arcega reports.
Video

Video Pakistan's Deadline For SIM Registration Has Cellphone Users Scrambling

Pakistani cell phone users have until midnight Thursday to register their SIM cards, or their service will be cut off. While some privacy experts worry about government intrusion, many Pakistanis are just worried about keeping their phone lines open. VOA Deewa reporter Arshad Muhmand has more from Peshawar.
Video

Video Myanmar Warns Factory Workers to End Strikes

Outside Myanmar's main city Yangon, thousands of workers walked off their jobs earlier this month demanding a doubling of their wages, pay raises after a year and input from labor unions on industrial regulations. Since Friday, the standoff has grown more tense as police moved in to disrupt the sit-ins, resulting in clashes that injured people from both sides. VOA correspondent Steve Herman visited industrial zones which have become a focus of Myanmar's fledgling workers rights movement.
Video

Video Oscar Winners Do More Than Thank the Academy

The Academy Awards presentation is Hollywood’s night to reward the best movies from the previous year. It’s typically a lot of glitter, a lot of thank you’s, a lot of speeches. But many of this year’s speeches carried messages beyond the thank you's. VOA’s Carolyn Presutti takes a look.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More