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Energy issues

Dec 30,2014 - Last updated at Dec 30,2014

The government’s decision to purchase Israeli gas without consulting the public or trying to produce workable alternatives is likely to harden detractors of the political reform process.

Faced with the prospect of raising electricity prices or procuring less expensive (alas, not cheap) Israeli-sourced natural gas, the government opted for the latter.

Israeli natural gas is not favourably priced at $9.3 per mbtu, therefore still requiring an increase in electricity prices (Egypt previously supplied natural gas at $2.5 per mbtu), therefore not causing significant savings for the consumer.

It is also uncertain what additional terms and clauses will be included, but a 15-year agreement and price indexing to oil could cause costs to go up or fall, depending on oil prices.

Recent disputes over water and allegations of water theft by Israel should serve as a reminder of the generally unsatisfactory Jordanian-Israeli joint ventures.

Israel could further attempt to use natural gas as political leverage on Jordan, particularly vis-à-vis its ongoing occupation of the West Bank and Gaza.

With higher electricity prices inevitable, the government should enter a dialogue with civil society organisations and parliamentarians, cooperating on finding diverse and less politically sensitive alternatives to Israeli gas.

Solutions include acquisition of higher efficiency natural gas plants and liquefied natural gas to offset the international price of LNG (which ranges from $14 to $18 per mbtu).

This can be done by phasing out less efficient units and expanding the soon-to-be-completed Aqaba LNG terminal using the Gulf Cooperation Council (GCC) grants.

With Jordan also set to invest in nuclear and renewable energy and shale oil starting with the next decade, long-term Israeli gas purchase could divert funding from one or more of these critical projects.

Investment in long-term energy infrastructure would bring prices down once projects are completed and running.

It is important to foster communication and transparency and thus jump start Jordan’s democratic reform process by enabling a wider public participation in formulating the national energy policy.

Likewise, raising electricity prices would attract greater investment in the sector, which has long been neglected due to low prices.

 

Bahjat Tabbara,

Amman

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