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Can electricity subsidies be smart?

Jul 24,2016 - Last updated at Jul 24,2016

A general perception exists among Jordanians that Hani Mulki was brought in as prime minister to dispense World Bank prescriptions, with a primary duty to lift subsidies on electricity. 

Most Jordanians know that the issue of electricity subsidies is a very sensitive file, and that any prime minister who proposes to even partially cancel subsidies has to face, alongside the interior minister, police and security forces, the wrath of the citizens. 

Lifting the subsidies for the lowest sections of consumption would be the easiest route to compliance with World Bank demands. But it is also a death wish. This is why government after government has postponed this move.

There is, however, a smart way to subsidise electricity and save money.

In Jordan, only 12 per cent of households own solar water heaters. Next door, the percentage reaches 90 per cent, while in Cyprus it reaches 92 per cent. 

As a non-industrial nation, our households consume more than 50 per cent of the produced electricity. It is also well known that heating bathwater with electric geysers consumes a large portion — up to 30 per cent — of the monthly electricity bill. 

Meanwhile, a large portion of the low electricity consumption sector who pays JD0.033 per kilowatt-hour are employed by the public sector.

The smart way would be to keep the subsidies but decrease household consumption and monthly bills. The way to do that would be for the Mulki government to dispense a soft loan of JD300 for each of the hundreds of thousands of employees who work in the public sector: a soft loan in the form of solar water heaters installed on rooftops. 

This loan would not cost the Treasury much, as it would be paid back through a monthly JD25 deduction from the salaries of public sector employees. 

It is also a very safe loan, since the salaries of public sector employees warrant it. It is a very positive loan, as it creates jobs for the suppliers of solar heaters and metal workers. 

It will not take long for the electricity bills of the subsidised consumers to drop by 30 per cent. With an average monthly bill of around JD40, and at 500,000 households (out of the total of 1 million households) then, with the new solar water heaters, the Mulki government is likely to save around JD70 million annually.

Some may argue that rooftops will not fit such a project. This is not true. 

An average rooftop is around 400 square metres. Solar heaters are only 2x2 metres in size, and if pathways are added, they will not need more than 6sq.m. 

An average residential building of 120sq.m apartments has three apartments per floor and would be a total of 12-15 flats. So 6sq.m. x 15 apartments would require 90sq.m., allowing an ample space of 310sq.m. for water tanks. 

Solar heaters can also be raised off the ground and assembled above hot water storage tanks to save space. This project will clean up the rooftops of Jordanian households, currently filled with scrap and garbage.

This solution is fast, efficient, and will save millions. 

Of course, it will not be appreciated by our three electricity distribution companies, which are expected to lobby aggressively against it, as it will slightly reduce their profits. 

But at the same time, this is a solution that will spare the Mulki government the need to open the dangerous door of lifting electricity subsidies.

Jordan is capable of finding self-reliant and localised solutions. We need to emphasise our sovereignty by showing that we are independently capable of the smart management of our energy consumption. 

More importantly, we need to purge ourselves of the perceived needs for impractical and expensive projects like the nuclear one, and of having to carry the heavy burden of long-term agreements for gas imports from Israel; both projects are heavily promoted by the government but will destroy national and sovereign solutions that are very abundant.



The writer is president of Jordanian Friends of Environment. He contributed this article to The Jordan Times.

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