Jordan’s plans to expand its power industry have been delayed by the region’s instability and conflict, but though progress is slow it has not been halted.

Jordan has very few indigenous energy resources, so energy imports account for much of the country’s import bill – costing up to ten per cent of GDP, according to the Ministry of Energy and Mineral Resources (MEMR). In 2005, for example, energy imports from Saudi Arabia cost Jordan nearly $2.5 billion.

Almost all of Jordan’s 1.8 GW demand for power is met from a dozen power stations owned by the Central Electricity Generating Company (Cegco), whose contribution is around 95 per cent. The remainder is from dedicated power stations owned and operated by large industrial users. In the coming years, however, Jordan anticipates that energy demand will grow rapidly – it is already increasing by around six per cent annually and Jordan expects it to increase by 50 per cent over the next 20 years.

Master plan

In response, MEMR developed an ‘energy master plan’ in the first half of this decade, approved by the Council of Ministers in December 2004. It envisages construction of an additional 2100 MW of gas fired generating capacity (some of which will replace existing, aging plants), a huge investment in transmission and distribution, a new initiative to develop renewable energy sources, and an energy efficiency programme.


The structure of Jordan’s electricity sector, 2005
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The master plan was built on reforms begun several years earlier with the reorganization of the existing electricity supply industry. This involved separating the generation, transmission and distribution activities to clarify their roles, make it easier for external investors and private companies to enter the market, and promote competition.

The reforms resulted in the separation of a National Electric Power Company (Nepco) from the power generating company Cegco. The new company is owned by the government and it is responsible for transmission via the high voltage network from the generating plants to the distribution networks and load centres. It is also responsible for managing and operating the control centre, and for buying power from the generators and selling it on to the distribution companies. When it was established, Nepco owned 75 per cent of Cegco’s shares, and the remainder were owned by the government.

There are three distribution companies. The largest is the Jordan Electric Power company, which was set up in 1997 and serves around 57 per cent of the country, mostly in Amman and central Jordan. The Irbid District Electricity Company, set up in 1961, covers the north of the country and has around nine per cent of the market. A third Electricity Distribution Company was spun off from Nepco when it was set up in 1999 and this covers the remainder of the country, namely the south and east regions and the Jordan Valley.

The new companies are overseen by the Electricity Sector Regulatory Body, an independent body that fixes electricity prices and the costs of electric distribution services and licences companies working in the sector.

The plan envisaged the sell-off of the three distribution companies and 51 per cent of Cegco. Nepco would remain in government ownership. The divestment programme underwent several false starts, but talks over the stake in Cecgo have now been under way for nearly a year. The likely investors are a consortium composed of Amman-based JD Capital, Kuwait’s Kharafi National, and Dubai-based Abraaj Capital.

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Now that the generating function has been separated from the transmission of electricity, Jordan is expecting independent power producers to come forward to invest in the 2100 MW of new capacity planned for the next 15 years. To support it, the government has planned investment in new transmission assets and the infrastructure, including fuel supply, required by the new power stations.

The extended transmission system will also support the five per cent of power expected to come from renewables, which is likely to come almost entirely from wind and biogas, although there will be initiatives to support domestic solar PV and hot water. MEMR recently received a $350 000 grant from the Global Environ-ment Facility (GEF) to study wind power development and energy efficiency but at the moment, Jordan has just three renewable energy plants. They are a 1 MW biogas plant that recycles waste methane into electricity and around 2 MW of wind power capacity at the Hofa and Al-Ibrahimiyah wind farms, in the north, both are owned by Cecgo.

The government estimates that the planned new gas fired generating plants will cost around $870 million, while the transmission investment will stand at $386 million and renewable energy investment will be around $450 million.


Jordan’s electricity generation by type 2005
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Meanwhile, the government has funded its own generation projects, which include Cegco’s Rehab power station. This power station was converted to burn natural gas and extended. It was also linked to the gas pipeline in March 2006. The combined-cycle set began operation in the second quarter of 2005, raising the total capacity of the station to 360 MW, of which 300 MW is a combined-cycle unit and the remainder is two gas turbines of 30 MW each.

In addition, Al-Risha power station was upgraded to 150 MW capacity (although the Energy Information Administration reports that the nearby Risha field is not producing sufficient gas to power the added capacity). The 200 MW gas fired Is-Samra power plant (originally an independent power plant – IPP) came online in September 2005, and is currently undergoing an upgrade that will include at least one additional 100 MW steam turbine, to be online by 2008. The contract for the expansion of the facility was awarded to USA-based General Electric. Is-Samra has also begun distribution of power under a new subsidiary distribution company, Sepgco, established in 2003. Sepgco will reportedly be privatized through competitive tender.

Initial IPP

Contracts with independent power producers have been fairly slow to materialize. Several potential projects have collapsed. But in late 2005, Jordan announced the first successful IPP: a combined-cycle gas turbine rated at 280-400 MW for the Amman East-Al-Manakher area. The concession was awarded to Dubai-based AES Oasis and the Japan’s Mitsui & Company. This $280 million project is expected to add capacity within the next two years. According to the MEMR, plans are in place for a second IPP, which will also be rated at up to 400 MW and will be operational by 2010. Now the government of Jordan is seeking another $1 billion investment for four additional power plants, with a total capacity of 1500 MW, to be online by 2015.

While part of the energy master plan is focused on expanding the electricity industry, more broadly the plan aims to exploit Jordan’s few indigenous energy resources more fully and use those that exist more efficiently. In the past, for example, oil imports were used for power generation, but the plans to switch to gas fired generation mean that oil will instead be refined for transport purposes.

A gas pipeline installed in 2003 to bring gas to the Aqaba power station will be expanded to north Jordan to bring gas to new and converted stations in the area. MEMR has estimated that an investment of around $300 million was required to expand the network.

Energy resources

The Kingdom does have one small gas field in the eastern desert near the Iraq border, whose output is used to fuel the nearby power station (Risha, as mentioned above). The Ministry believes that output from this field could be increased up to fourfold, and is seeking new investors to expand the field. Three other exploration blocks, in Araq, Sirhan and the Northern Highlands, have also been offered for oil and gas exploration. Finally, Jordan has proposed tapping its reserves of oil shale, which are estimated currently at around 40 billion tonnes.

Politically, Jordan has strong links to the USA, which has long provided economic aid to the Kingdom. Last year, for example, the United States provided $500 million in financial and military assistance. The Kingdom has maintained a careful diplomatic equation over the past few years as it balanced its close USA links with ties to the rest of the eastern Mediterranean region and the broader Arab world. That balance has been disturbed by an influx of nearly a million refugees from the fighting in Iraq, which have been both a diplomatic and economic test. However, Jordan’s continued political ties with its neighbours are the foundation for physical links and the electricity sector is a leading example.

Vital links

In October 1998 the Egyptian and Jordanian power grids were linked via subsea cable across the Gulf of Aqaba, and Egypt exported 750 GWh across that link in 2005. Jordan is also linked to Syria and Libya.

Much more ambitious, however, is a “seven countries interconnection project” that would connect the electricity networks of Turkey, Syria, Lebanon, Libya, Jordan, Iraq and Egypt. That plan has been on hold, not least because of the Iraq war, but may be revived. In the meantime, Jordan has been developing links with its energy-rich neighbours in the Arab world. A planned free trade agreement with the Gulf Co-operation Council (GCC) is still on the table, for example, and it and similar agreements should help secure the energy imports that Jordan will need to maintain the planned growth in its power industry.