Jordan Advances Energy Reforms to Enhance Financial Sustainability and Expand Reliance on Domestic Sourcesاضافة اعلان
Government pledges comprehensive energy sector reforms, including a new tariff and the expansion of renewable energy.
Government pledges to implement a Time-of-Use (TOU) electricity tariff for the residential sector following the completion of smart meter installations.
Government plan aims to enhance energy security, reduce electricity costs, and expand renewable energy projects.
IMF: The government has developed an integrated plan for electricity demand management and peak load reduction.
Jordan aims for natural gas self-sufficiency by developing the Risha field by 2029.
Government pledges to establish an automated energy control center to improve power grid management.
The government has pledged to continue implementing a wide range of reforms in the energy and electricity sector as part of its program with the International Monetary Fund (IMF). These reforms aim to enhance the financial sustainability of the National Electric Power Company (NEPCO), improve power grid efficiency, expand reliance on domestic and renewable energy sources, and bolster medium- and long-term energy security.
According to the review documents for the fifth review of the Extended Fund Facility (EFF) and the second review of the Resilience and Sustainability Facility (RSF), NEPCO's financial performance improved during 2025, as operating losses decreased to JOD 351 million, driven by lower electricity generation costs.
The government indicated significant progress in the smart meter installation project, with coverage reaching 95% of end-consumers. The installation is expected to be fully completed by mid-2026, which represents one of the structural benchmarks in the program.
The government confirmed that following the completion of the smart meter rollout, it will implement the Time-of-Use (TOU) electricity tariff across all sectors, including the residential sector, by the end of this year. This measure aims to lower peak loads and reduce the need for higher-cost conventional generation capacities.
Last June, the Ministry of Energy and Mineral Resources confirmed that it is working to complete the smart meter installations in preparation for implementing the time-linked tariff. This will contribute to better load management, alongside expanding energy storage systems through an upcoming 100 MW battery project with a 4-hour storage capacity, in addition to a strategic 450 MW pumped-storage hydropower project.
The IMF explained that the war in the Middle East temporarily affected NEPCO’s financial performance following the disruption of natural gas supplies from the Eastern Mediterranean in March 2026. This forced the company to substitute natural gas with fuel oil and Liquefied Natural Gas (LNG) purchased at spot prices, resulting in an additional loss of JOD 87 million during that month.
The government projected NEPCO’s losses for the year 2026 to reach approximately JOD 573 million, equivalent to 1.2% of GDP. This marks an increase of 0.3 percentage points of GDP compared to the target set in the fourth review of the EFF program.
To ensure uninterrupted electricity supply, the government permitted NEPCO to utilize the state's strategic diesel fuel reserves when necessary and exempted the company's energy imports from customs duties and taxes.
The documents confirmed that government efforts to diversify electricity production sources helped mitigate the impact of energy supply disruptions, with renewable energy accounting for about 27% of electricity and oil shale providing around 15%.
The government stated that natural gas supplies began returning gradually starting April 3, 2026, leading to a decrease in generation costs compared to the levels recorded in March. However, it expected expenditures to remain slightly elevated for the remainder of 2026 due to the gradual recovery of energy supplies and the continued rise in global oil prices compared to pre-war forecasts.
It added that no further supply disruptions are anticipated, as a detailed contingency plan has been prepared. This plan outlines measures that vary based on the duration of any potential disruptions, including utilizing strategic energy reserves for short-term disruptions, as well as energy rationing and demand management measures if disruptions persist for a longer period.
Medium-Term Reforms and Strategic Projects
As part of medium-term reforms, the government affirmed its commitment to continuing the reduction of technical and commercial losses in the electricity sector, improving grid efficiency, and lowering generation costs.
It also pledged to establish an automated energy control center in cooperation with the Energy and Minerals Regulatory Commission (EMRC) and electricity distribution companies. The center aims to enhance the monitoring and management of renewable energy, improve load management, raise grid operational efficiency, and boost power system reliability. The tender is expected to be awarded during September 2026 after completing the technical and financial aspects.
Furthermore, the government confirmed the ongoing development of the Risha gas field, where a contract has been signed to drill 80 new productive wells. Preparations are also underway to construct a pipeline connecting the field to the Arab Gas Pipeline. These projects are expected to be completed by 2029, raising the field's production to approximately 418 million cubic feet per day—a quantity the government stated is sufficient to meet Jordan's entire annual natural gas requirements.
Under the Resilience and Sustainability Facility (RSF) program, the Cabinet adopted the National Energy Strategy for the years 2026–2035. The strategy focuses on expanding domestic resources, supporting economic competitiveness, and building a more resilient and sustainable energy system. It also includes the ongoing evaluation of several energy storage technologies, such as the pumped-storage hydropower project at the Mujib Dam, based on the least-cost principle and public-private partnership (PPP) models.
The government committed to issuing two Requests for Expressions of Interest (EOI): the first for the pumped-storage hydropower project, and the second for constructing a 200 MW solar photovoltaic (PV) plant. Additionally, a tender will be launched to establish 100 MW of battery storage capacity to support grid stability and enable greater integration of variable renewable energy sources before October 2027.
It also intends to float a tender for the construction of a 100 MW wind power plant. The tender documents will include clear technical and financial requirements to ensure bankability, attract private sector investments, and facilitate knowledge transfer, thereby supporting Jordan's transition to a low-carbon and more resilient energy sector.
Demand Management and Peak Reduction
In the context of demand management, the government explained that 24 months after implementing the TOU tariff in sectors representing at least 30% of total electricity consumption, it will conduct a review to measure the impact of the new tariff in shifting consumption away from peak hours, targeted for mid-2027.
Based on the results of that review, the Ministry of Energy and Mineral Resources will begin implementing a time-bound action plan by the end of 2027 to reduce demand during peak hours. This plan will include energy efficiency standards, public awareness campaigns, and more dynamic electricity pricing models, aiming to reduce grid congestion and enhance renewable energy utilization while protecting the most vulnerable segments.
According to the documents, these measures target a cumulative reduction of approximately 300 MWh in electricity demand during peak hours over a three-year period, thereby enhancing the financial sustainability of the electricity sector and easing constraints on integrating new renewable energy projects.
Al-Mamlaka
