Restructured power tariffs ‘imperative’

Transmission tower
After the World Bank issued a report highlighting distortions in the price of power, experts have called for a review of the system. (Photo: Jordan News)
AMMAN — Experts have agreed with a World Bank (WB) assessment highlighting distortions in the electricity pricing, calling for a restructuring of the system that ensures supporting the sectors most affected by the coronavirus pandemic and brackets that deserve subsidies.اضافة اعلان

Among the suggestions made is the application of different tariffs that change according the time of the day, which would incentivize consumers and encourage them to shift their usage to the periods where minimal tariffs apply. Such a pattern change would also protect the electrical grid.

In a recent report, the WB said the government had “committed to a three-year plan starting in 2021 to adjust electricity tariffs to better target subsidies for households and reduce the high cost of electricity for businesses.”

“The (government of Jordan) is also assessing options to better manage its power system and low-cost VRE (variable renewable energy), including further investments in transmission infrastructure, storage capacity, and increased electrical interconnections with neighboring countries,” the report said. 

The most recent price adjustment was in 2015, with few subsequent amendments.

Dean of the National University College of Technology Ahmad Al-Salaymeh said the idea of dispensing cash aid to underprivileged consumers in return for removing all kinds of subsidies on electricity bills might be an option.

The fact that there are subsidized brackets opens way for undeserving consumers to benefit from the government fund, and, therefore, a unified bracket and rate might be the most feasible way to ensure that the actual cost is covered.

An official source told Al-Ghad and Jordan News that the existing tariff of some brackets does not cover the cost and the difference is offset by adding it to the bills of the higher brackets and major consumers. The source, who spoke on condition of anonymity, agreed that the subsidies should go directly to the segments deserving them and leave the prices unified for all “to ensure justice” to all consumers.

According to the WB report, the electricity sector accounts for about 20 percent of public debt due to the $7.18 billion in debt accumulated by the National Electric Power Company (NEPCO). Jordan accumulated debt through significant investments in new generation capacity starting in 2007 to meet growing demand and to promote national energy security. 

Director General of the Amman Chamber of Industry Nael Al-Hussami noted that there is excess electricity production and a declining demand, which he attributed to the high cost of electricity. This situation, he said, necessitates a “reengineering of the pricing system,” to introduce different tariffs for different times of the day, and the year.

He said a reduced tariff for big industrial consumers would help these industries gain added value and generate more jobs. 

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