VZCZCXRO5942
RR RUEHDE RUEHDIR
DE RUEHAM #2752/01 1771153
ZNR UUUUU ZZH
R 261153Z JUN 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 9301
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHEG/AMEMBASSY CAIRO 3241
RUEHTV/AMEMBASSY TEL AVIV 0648
RUEHDM/AMEMBASSY DAMASCUS 3627
RUEHJM/AMCONSUL JERUSALEM 4511
RUEHLB/AMEMBASSY BEIRUT 2645

UNCLAS SECTION 01 OF 03 AMMAN 002752 
 
SIPDIS 
 
USLO TRIPOLI 
AMEMBASSY TALLINN 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA, NEA/RA, AND EEB/ESC 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON JO
SUBJECT: Jordan's Electricity Sector Prepares to Meet Increasing 
Demand 
 
Sensitive but unclassified; please protect accordingly. Contains 
proprietary information - not for distribution outside the USG. 
 
Refs: A) AMMAN 2442; 
B) AMMAN 138; 
C) 06 AMMAN 7695; 
D) 06 JERUSALEM 4335; 
E) 06 JERSUALEM 2604 
 
¶1.  (SBU) SUMMARY: Jordan's national electric utility expects the 
country's electricity needs to grow by 10 percent annually due to 
increases in real economic growth and population (especially of 
Iraqis), and a rising standard of living for some Jordanians.  To 
meet growing demand, electricity transformation units were expanded 
and new ones installed this past year.  Other projects are underway 
to establish new power generation plants.  Jordan is also looking to 
expand energy cooperation with its neighbors and exploit the 
country's untapped but modest natural resources to generate 
electricity as it reviews its overall energy strategy (Ref A).  END 
SUMMARY. 
 
¶2.  (SBU) National Electric Power Company (NEPCO) Director General 
Ahmad Hiasat told Econoffs in a June 17 meeting that measures have 
been taken at Jordan's power generation and distribution plants to 
ensure a constant supply of power through the upcoming peak summer 
season and beyond.  Hiasat noted that in 2006, the peak electricity 
load was 1,900 MW.  In addition to traditional high demand in July, 
a new trend emerged last year of having another surge in December 
due to a consumer shift to electricity for heating after an increase 
in heavy fuel oil (HFO) prices.  Expecting a continuing rise in 
electricity demand of 10 percent per annum, Hiasat projected that 
peak electricity load in 2007 would reach 2050 MW.  He attributed 
rising demand mainly to real economic growth and rising wages in 
Jordan that are driving the purchases of larger equipment and 
electrical appliances.  The growth in population attributed to 
Iraqis also is fueling demand, as those Iraqis with the financial 
wherewithal are buying large houses and starting businesses that 
consume large amounts of electricity. 
 
¶3.  (SBU) Hiasat stated that Jordan possesses adequate generating 
capacity to meet its needs, but currently imports 5 percent of its 
electricity from Egypt and Syria -- both cheaper sources -- given 
the high cost of operating HFO- or diesel-fueled power plants. 
 
Organization of the Electricity Sector 
-------------------------------------- 
 
¶4.  (U) BACKGROUND: Hiasat noted that Jordan's electricity is 
produced through three entities: 1) Central Electricity Generating 
Company (CEGCO), whose four main power plants produce 1700 megawatts 
(MW); 2) Samra Electric Power Generating Company (SEPGCO) which 
produces 300 MW from the one power station in Al-Samra; and 3) 
AES/Mitsui's Independent Power Producer (IPP) in East Amman, 
scheduled to begin producing 370 MW in 2008 (ref B).  An additional 
300 MW power station at Al-Samra is under construction.  Hiasat 
commented that the GOJ has been pleased with its relationship and 
work with AES-Mitsui, and therefore is considering extending the 
contract to include another 370 MW power station as well. 
 
¶5.  (U) NEPCO acts as the middle man between the generating and the 
country's three distributing companies: Jordanian Electric Power 
Company (JEPCO), covering central Jordan and 70 percent of 
customers; Irbid District Electricity Company (IDECO) operating in 
the four northern governorates; and Electrical Distribution Company 
(EDCO) operating in the south of Jordan.  NEPCO also has 
responsibility for planning, construction, development, operation 
and maintenance of the electrical transmission grids; purchasing 
energy from the generating companies and selling this energy to the 
distribution companies; importing and exporting of the electric 
power; management of the national electricity grid and the process 
of transmitting the electricity inside Jordan and to neighboring 
countries; and purchasing natural gas from the seller and supplying 
it to the power generating companies.  NEPCO provides similar 
services to Jordan Bromine Co., Arab Potash Co., Jordan Cement 
Factory, Jordan Petroleum Refinery Co., and Queen Alia International 
Airport. 
 
¶6.  (SBU) Hiasat said that all electricity companies with the 
 
AMMAN 00002752  002 OF 003 
 
 
exception of NEPCO are slated for, or already have been privatized. 
The GOJ has made a deal to sell 51 percent of CEGCO, and plans to 
sell 100 percent of EDCO and 55 percent of IDECO.   SEPGCO probably 
will be privatized after the second 300 MW sub-station at Al-Samra 
is completed, since the project currently depends on financing by 
the Arab Fund which cannot fund private developments.  JEPCO has 
been completely private since its establishment. 
END BACKGROUND 
 
Other Potential Sources for Generating Electricity 
--------------------------------------------- ----- 
 
¶7.  (SBU) In Hiasat's view, Jordan should make better use of its 
modest natural.  He reported that the Risha power station in the 
Mafraq area of northern Jordan is not able to run at full capacity 
because of the lack of natural gas supplied from the nearby gas 
field.  Hiasat speculated that the lack of progress to date on U.S. 
oil company Anadarko's proposal to develop the Risha gas field is 
due to the inefficiency of the National Petroleum Company.  He also 
commented that Estonia has the technology needed to exploit oil 
shale, and intimated that the GOJ might seek assistance from Estonia 
to tap Jordan's oil shale reserves estimated at 42 billion tons by 
Khaldoun Qutishat, Secretary General of the Ministry of Energy and 
Mineral Resources (MEMR) (ref A).  Hiasat reaffirmed Jordan's plans 
to build a 400 MW nuclear power plant by 2020 and felt that NEPCO 
would be able to ensure a high voltage network to support it (ref 
A).  NOTE: The GOJ is also planning to open bidding in the coming 
months for three wind power projects.  END NOTE. 
 
Pricing 
------- 
 
¶8.  (SBU) Regarding consumer subsidies, Hiasat noted that the first 
160 kilowatt hours (KWH)/month enjoy an indirect subsidy because of 
graduated pricing, since the GOJ considers those who consume less 
than this amount to be in the poorest income bracket.  Rates 
increase incrementally, and the highest charges are for electricity 
use over 500 KWH/month.  Hiasat personally believes that those who 
consume amounts over 500 KWH/month can afford to pay the full rate 
for all KWH, and should not receive the first 160 KWH at a 
discounted rate.  He also stated that the GOJ plans to increase the 
price of electricity in 2007, but by less than 10 percent. 
 
Regional Cooperation 
-------------------- 
 
¶9.  (SBU) Hiasat recalled JEPCO's September 2006 agreement with the 
Palestinian Electric Company for JEPCO to supply the Jericho 
Governorate with electricity, which is currently being supplied by 
the Israeli Electric Company (ref D).  He indicated that the 
agreement has been delayed four-to-five months for financial reasons 
on the Palestinian side.  According to Hiasat, the Israelis are 
currently building the cables and the overhead lines to connect the 
substations in Jericho with those in Jordan.  Hiasat said this 
project, when finished, will disconnect the Jericho Governorate from 
the Israeli electrical grid. 
 
¶10.  (SBU) Hiasat discussed the Arab Gas Pipeline (AGP) that has 
been completed through its second stage up to the Jordan-Syria 
border.  About 80 percent of Jordan's power plants now use Egyptian 
gas to produce electricity.  COMMENT: This is in contrast to the 89 
percent of Jordan's electricity generated by HFO in 2005.  Many of 
these plants had to be restructured to run off of natural gas 
starting in 2003 when the AGP began operating in Aqaba.  END 
COMMENT.  MEMR has been in negotiations with Egypt for the past year 
to increase its imports of natural gas further, and to establish new 
pricing schemes.  Hiasat noted that the AGP's capacity is 10 billion 
cubic meters (BCM) per year, with Jordan currently using 1.7 BCM per 
year.  He estimates that Jordan will need up to 2.5 BCM per year. 
 
¶11.  (SBU) Hiasat noted that Jordan's electricity grid is currently 
interconnected via a 500/400 kilovolt transmission line with Egypt, 
Iraq, Lebanon, Libya, Syria, and Turkey.  On possible future 
connections with the Gulf Cooperation Council (GCC) countries, 
Hiasat indicated that the countries were not yet well connected 
among themselves and Jordan had no immediate plans to interconnect 
with any GCC country, but was not opposed to the idea. 
 
 
AMMAN 00002752  003 OF 003 
 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman 
 
HALE