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Jordan hikes power prices as Egypt gas disrupted

Sabotage of Egypt's Sinai pipeline is forcing the kingdom to rely on more expensive fossil fuel to cover its power-making needs

Reuters, Monday 30 Jan 2012

Jordan will raise electricity prices as of next month to cover the rising burden of imported fuel costs after loss of regular Egyptian gas supplies, officials said on Monday.

Jordan's total imported energy bill has jumped by at least 60 per cent last year to around $4.5 billion after a pipeline that carries Egyptian gas to Jordan was blown up 10 times since the start of the Egyptian uprising last year.

It has been forced to import more fuel oil to compensate for Egyptian gas that previously covered nearly eighty per cent of its electricity generation.

The explosions have sometimes led to weeks-long shutdowns along the pipeline that also supplies Israel, run by Egypt's gas transport company Gasco, a subsidiary of the national gas compnay EGAS.

Jordan's Electricity Regulatory Authority, which sets tariffs to local generating companies, said the prices hikes that will be implemented from the first of February and start from 9 to 17 per cent will affect household consumers whose monthly consumption exceeds 600 kilowatt hours per month.

A majority of the country's household consumers usage is below that level, it said.

Corporate electricity rates will also go up between 8 to 15 per cent depending on usage with consumers with less than 1200 kilowatt hours per month exempted. Large industrial firms that consume almost a third of total consumption will also see their bill rise by 16 per cent.

"The hikes were necessited by the challenges faceing the electricity sector and the huge losses that have exceeded $1.4 billion as a result of the rupture of Egyptian gas supplies and the growing dependence on fuel oil," said Ahmad Hayasat, who heads the government regulatory body.

The move has raised an outcry by business and industrial lobbies who say the hikes will raise costs and reduce the competitiveness of exports.

The government's move to raise electricity prices was also part of efforts to curb a worrying budget deficit that soared last year after the authorities raised food subsidies and froze gasoline price hikes to ward off potential civil unrest inspired by uprisings sweeping the region.

Egyptian gas supplies fell to an average of 80 million cubic feet of gas a day in 2011 from 220 million cubic feet of gas the previous year.

Even after these increases, prices are still not high enough to cover power generation costs of the state run Jordan Electricity Company, which has incurred at least $1.4 billion in losses last year as a result of the switch to more expensive imported fuel oil, according to officials.

"The hikes were necessited by the challenges facing the electricity sector and the huge losses as a result of the rupture of Egyptian gas supplies and the growing dependence on fuel oil," said Ahmad Hayasat, who heads the government electricity regulatory body.

Jordan's Minister of Energy Resources Kutaiba Abu Qura held talks in Doha earlier this month on prospects of setting up liquefied natural gas (LNG) terminal at Aqaba port that would facilitate the import of Qatari gas.

Officials say the expoloratory talks were promising but it would take several years before Qatari LNG could be imported.

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