AMMAN —
Minister of Energy and Mineral Resources
Saleh Al-Kharabsheh’s letter to 29
renewable energy production companies requesting negotiations on decreasing the
price of electricity has not been favorably welcomed by energy investors,
saying the move would adversely affect the credibility of the sector for future
national and international investors.
اضافة اعلان
According to a
source at the energy ministry,
NEPCO’s consumption of electricity produced
through renewable energy has reached 26 percent. He said that under an
agreement between the government and renewable energy producers the government
buys electricity at a price ranging between 3.4 to 11.5 piasters/ kilowatt, “to
be equally fair to all renewable energy companies as well as with NEPCO, in
addition to creating an attractive and stable investment climate.”
Renewable energy
investor Firas Balasmeh told
Jordan News that the re-negotiation is
“absurd.” He believes that this step has been taken to appease MPs regarding
the controversy over the original energy agreements.
“I expect that it
was directed towards the people and the parliament because they have been
critical of energy agreements,” Balasmeh said. “Legally, there is no way that
it will happen.”
Balasmeh said
that he doubted the government could revisit and renegotiate a contract that
has been in place for seven years and has another 13 years to expire, adding
that this step would discourage investment in the renewable energy sector.
“How come after
seven years you ask to renegotiate? I have loans from banks; I have obligations
and a team. These were the prices at the time; you cannot compare 2012 with
2021; there’s a big difference in the prices between these years,” Balasmeh
said.
Expert and
economic analyst on oil and energy Hashem Akel told
Jordan News that he
welcomed this step and views it as positive. However, he asserted that the
government and these companies must reach an understanding on amending the
price of purchased energy from electricity production companies to benefit
NEPCO.
“Most sectors are
complaining about the energy costs, so when there’s a decrease in electricity
production, this would encourage more investments and promote competition, incentivizing
economic growth and creating more job opportunities,” Akel said.
Akel said that
the current prices are the outcome of errors in the contracts signed more than
10 years ago, when it was costly to produce power using renewable energy,
adding that the agreement between the government and renewable energy producers
was based on fixed
energy prices. However, the agreement did not take into
consideration that prices would drop down in the future. Therefore, according
to Akel, the government should have included a provision, at the time of
signing the agreement, ensuring the ability to amend prices commensurate with
production cost.
“This is either ignorance
or mismanagement, and both resulted in the same thing; high energy prices,”
Akel added.
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