Roadmap under way for NEPCO’s financial sustainability

(Photo: Jordan News)
AMMAN — The International Monetary Fund (IMF) on Friday said that the government is preparing to update the National Electric Power Company’s (NEPCO) financial sustainability roadmap, which is funded by the World Bank, to be approved in the first half of 2022, according to Al-Mamlaka TV.اضافة اعلان

A recent report by the IMF said that the roadmap will look into the option of transferring NEPCO’s debts to the Ministry of Finance in order to reduce its costs.

“The roadmap also might transfer some of NEPCO’s debts to the central government in order to facilitate refunding the debts due in 2022 and 2023 with a lower cost and longer due dates, in addition to reducing the pressure on the national exchange system,” said the report, pointing out that this will require enhancing the companies’ participation in NEPCO’s affairs, including in the current reforms which are supported by the European Bank for Reconstruction and Development.

The report also stressed that the ongoing reform efforts are meant to ensure NEPCO’s financial stability, adding that Jordan signed agreements to export electricity to neighboring countries, including Iraq and Lebanon. Nevertheless, “completing the regional infrastructure overhaul will be important to start the export process”.

According to the report, NEPCO’s losses in 2021 were lower than the estimates, but they are bound to increase in 2022. Moreover, the shift in demand from the business sector to the household sector during the lockdowns reduced NEPCO’s revenues in the first half of 2021, said the report.

“Despite that, the losses were lower than expected due to the delay in launching the Oil Shale Plant, at Attarat Power Company (which was expected to be launched in the middle of 2021). Meanwhile, the long-term supply contract for natural oil protected NEPCO from the rise in global prices,” according to the report, which said that NEPCO’s losses will be limited to 0.5 percent of the GDP in 2021, while they are expected to rise to 1 percent of the GDP in 2022 as a result of Attarat Company’s joining the production line, the report pointed out.

It also said that NEPCO kept accumulating delayed payments (JD90 million at the end of September); hence, the electricity sector accumulated dues were not duly paid in June and September.

Meanwhile, according to Ammon News, the IMF said on Friday that about 15 percent of Jordanian families might be denied partial or complete access to electricity subsidies once the new electricity tariffs start being levied.

According to the IMF, the new electricity tariffs will be charged by the government as of the end of March 2022 with the aim of enhancing private sector competitiveness and reducing cross-subsidization.

At the same time, electricity tariffs for businesses, mostly in the commercial and industrial sectors, are going to be lowered; the planned reductions would amount to JD40 million per year.

The report also pointed out that the government is preparing to launch an online platform so that individuals may lodge complaints and request subsidized electricity.

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