8 LEVANT: WHERE POLITICS DEFEAT ALTERNATIVE …
213
cost of subsidies and the annual losses have averaged $1.6-billion in the
past decade. 7 While state officials continuously blame the power sector
for the skyrocketing public debt, eliminating the subsidies has been off
the table due to the acute shortage in electricity supply. The available
generation capacity is 2,060 MW and the peak demand is 3,600 MW.
This has obliged citizens to own or subscribe to high-cost private diesel
generators, averaging $0.3 per kWh, or suffer from an electricity blackout
for 12–18 hours a day. The parliament approved two electricity policy
papers, in 2010 and 2019, aiming to increase power generation and eliminate subsidies. The 2010 paper remained largely unimplemented. The
2019 paper is a revamp of the 2010 paper and anticipates a tariff hike of
51% to an average of $0.1438 per kWh, upon reaching 24 hours daily
supply of electricity.
Both papers focus on centralized thermal power generation and have
been subjected to political bickering, hindering any true reforms, and
accruing more debt in a collapsing economy.
The picture is less gloomy in Jordan yet, the energy sector, mainly electricity, has also been, a main driver of the surge in the kingdom’s public
debt. The kingdom has a power generation capacity of 4,400 MW and
a peak demand of 3,200 MW. Energy accounts for 40% of the state’s
budget. 8 In 2012, petroleum and electricity subsidies stood at 2.8 and
5.5% of GDP respectively. 9 In light of a critical economic crisis then,
influx of Syrian and Iraqi refugees increasing electricity demand and rising
costs of fuel due to interruption of gas supply from Egypt, the losses in
the national electric power company (NEPCO) contributed 19% to the
total debt (equivalent to $7.8 billion). Jordan therefore implemented a
package of fiscal reforms entailing a phased removal of subsidies for gasoline, diesel, and kerosene, and a partial removal of those for liquefied
petroleum gas (LPG). The elimination of the electricity subsidies, which
have been a higher fiscal burden on the state, has taken a slower path.
This is because until end of 2019, electricity subsidies are safeguarded for
the lowest consumers in the residential and industrial sectors. The enduser tariff has become significantly high, as the cost of service in Jordan is
at $0.23 per kWh. The government of Jordan has set a cap of $55 per oil
barrel for which the electricity tariffs would remain unchanged. Higher oil
prices would entail further hikes on electricity tariffs, negatively impacting
the economy’s competitiveness.
Jordan is also vulnerable to natural gas disruptions, which it has
suffered from in the case of imports from Iraq when the latter’s war
213
cost of subsidies and the annual losses have averaged $1.6-billion in the
past decade. 7 While state officials continuously blame the power sector
for the skyrocketing public debt, eliminating the subsidies has been off
the table due to the acute shortage in electricity supply. The available
generation capacity is 2,060 MW and the peak demand is 3,600 MW.
This has obliged citizens to own or subscribe to high-cost private diesel
generators, averaging $0.3 per kWh, or suffer from an electricity blackout
for 12–18 hours a day. The parliament approved two electricity policy
papers, in 2010 and 2019, aiming to increase power generation and eliminate subsidies. The 2010 paper remained largely unimplemented. The
2019 paper is a revamp of the 2010 paper and anticipates a tariff hike of
51% to an average of $0.1438 per kWh, upon reaching 24 hours daily
supply of electricity.
Both papers focus on centralized thermal power generation and have
been subjected to political bickering, hindering any true reforms, and
accruing more debt in a collapsing economy.
The picture is less gloomy in Jordan yet, the energy sector, mainly electricity, has also been, a main driver of the surge in the kingdom’s public
debt. The kingdom has a power generation capacity of 4,400 MW and
a peak demand of 3,200 MW. Energy accounts for 40% of the state’s
budget. 8 In 2012, petroleum and electricity subsidies stood at 2.8 and
5.5% of GDP respectively. 9 In light of a critical economic crisis then,
influx of Syrian and Iraqi refugees increasing electricity demand and rising
costs of fuel due to interruption of gas supply from Egypt, the losses in
the national electric power company (NEPCO) contributed 19% to the
total debt (equivalent to $7.8 billion). Jordan therefore implemented a
package of fiscal reforms entailing a phased removal of subsidies for gasoline, diesel, and kerosene, and a partial removal of those for liquefied
petroleum gas (LPG). The elimination of the electricity subsidies, which
have been a higher fiscal burden on the state, has taken a slower path.
This is because until end of 2019, electricity subsidies are safeguarded for
the lowest consumers in the residential and industrial sectors. The enduser tariff has become significantly high, as the cost of service in Jordan is
at $0.23 per kWh. The government of Jordan has set a cap of $55 per oil
barrel for which the electricity tariffs would remain unchanged. Higher oil
prices would entail further hikes on electricity tariffs, negatively impacting
the economy’s competitiveness.
Jordan is also vulnerable to natural gas disruptions, which it has
suffered from in the case of imports from Iraq when the latter’s war