VZCZCXRO2716
RR RUEHDE RUEHDIR
DE RUEHAM #4378/01 3030949
ZNR UUUUU ZZH
R 300949Z OCT 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 0742
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 0562
RUEHLB/AMEMBASSY BEIRUT 2729
RUEHEG/AMEMBASSY CAIRO 3407
RUEHDM/AMEMBASSY DAMASCUS 3714
RUEHGB/AMEMBASSY BAGHDAD 5513
RUEHTV/AMEMBASSY TEL AVIV 0831
RUEHTH/AMEMBASSY ATHENS 0774
RUEHKL/AMEMBASSY KUALA LUMPUR 0035
RUEHJM/AMCONSUL JERUSALEM 4675
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 AMMAN 004378 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB, NEA/ELA, AND NEA/I 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON EINV KPRV JO
SUBJECT: Jordan Completes First Privatization Deal in its Energy 
Sector 
 
REFS: A) Amman 3812 
      B) Amman 2752 
 
Sensitive but unclassified; please protect accordingly.  Not for 
distribution outside the USG. 
 
¶1. (SBU) Summary:  On October 17, the Government of Jordan (GOJ) 
finalized the privatization sale of the Central Electric Generating 
Company (CEGCO) - the first in Jordan's energy sector as part of a 
privatization program underway since 1996 (ref A).  No immediate 
lay-offs of CEGCO's 1,600 employees are expected.  The newly formed 
Enara company, which now owns 51 percent of CEGCO, plans to invest 
in personnel training, improve efficiency, and expand operations 
outside Jordan.  End Summary. 
 
Enara Buys 51 Percent of CEGCO 
------------------------------ 
 
¶2.  (U) In a deal valued at USD 320 million, the energy investment 
arm of Jordan Dubai Capital (JCD - JD Energy), the Malaysian 
Malakoff electricity company, and the Athens-based Consolidated 
Contractors Company (CCC) signed the paperwork on October 17 to 
finalize their joint purchase of 51 percent of CEGCO from the GOJ 
after months of negotiations.  The three companies formed a 
consortium called Enara, offering the technical expertise of 
Malakoff, JCD's financial expertise, and CCC's experience in 
investing in the energy sector.  The GOJ also transferred nine 
percent of its remaining share to the Investment Unit of the Social 
Security Corporation (SSC). 
 
No Lay-offs 
----------- 
 
¶3.  (U) CEGCO currently has 1,600 employees, 70 percent of whom are 
technicians or engineers.  During an October 25 meeting with 
Econoff, CEGCO Director General Abdel Fattah Al-Nsour said that his 
staff is highly trained and critical to ongoing operations, so he 
did not expect any near term lay-offs. 
 
1,763 MW Installed Capacity 
--------------------------- 
 
¶4.  (U) Nsour noted that CEGCO has an installed capacity of 1763 MW 
generated from five main power plants and a few smaller operations, 
including the 656 MW Aqaba Thermal Power Station in southern Jordan, 
the 396 MW Hussein Thermal Power Station in Zarka, the 150 MW Risha 
Power Station in Mafraq district, the 357 MW Rehab Single and 
Combined Cycle Power Stations in northern Jordan, and the 92 MW 
Marka Power Station near Amman. 
 
¶5.  (U) The government-owned National Electric Power Company (NEPCO) 
is the sole purchaser of electricity from CEGCO (ref B).  In turn, 
NEPCO sells the purchased electricity to the distribution companies, 
who then sell it to households.  CEGCO sold 8,486 GWh in 2006, 
contributing approximately 80 percent of the total electricity 
produced in Jordan in 2006.  Nsour proudly reported that CEGCO has 
maintained above 92 percent availability this past year, exceeding 
international standards. 
 
Greatest Challenge: Improving Efficiency 
---------------------------------------- 
 
¶6.  (SBU) According to Nsour, CEGCO's greatest challenge will be 
remaining competitive with the other power plants, including its 
largest competitor Samra Electric Power Generating Company and the 
new Independent Power Producer (IPP) in East Amman run by American 
firm AES and Japan's Mitsui.  Although there is a regulated formula 
for the price that allows NEPCO to buy electricity from CEGCO, Nsour 
explained that CEGCO needs to focus on increasing efficiency, 
especially since its equipment is older than many of the newer power 
plants and requires significant maintenance.  He added that CEGCO's 
plants have the advantage of being able to use diverse resources to 
produce electricity, including heavy fuel oil, diesel, wind, hydro, 
and natural gas, whereas the IPP's in Jordan are dependent on a 
single source, natural gas. 
 
 
AMMAN 00004378  002 OF 002 
 
 
Enara Plans to Expand Outside Jordan 
------------------------------------ 
 
¶7.  (U) In the October edition of Jordan Business magazine, JDC's 
Chief Executive Officer Samir Rifai noted that the privatization 
deal will yield better service to the average Jordanian consumer but 
not necessarily lower costs, unless the government decides to lower 
what it charges consumers.  Rifai indicated that significant 
investment would be spent on upgrading the skills of CEGCO employees 
and finding more efficient ways to run the operation.  Enara plans 
to look for business opportunities outside Jordan, and present an 
aggressive expansion plan to the Jordanian government for 
consideration. 
 
Visit Amman's Classified Website at: 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
Hale