NEPCO’s debt transfer does not relieve gov’t of responsibility to pay

(Photo: Jordan News)
AMMAN — Transferring the debt owed by the National Electricity Power Company (NEPCO) to the public debt is a formal procedure that does not relieve the government from the cost of this debt nor from the responsibility to pay it, economists interviewed by Al-Ghad News said on Wednesday.اضافة اعلان

The decision does, however, provide more oversight over the company's performance after freeing it of its debt burden.

NEPCO’s director, Amjad Al-Rawashdeh, said that “the company is studying, in partnership with the Ministry of Finance, the transfer of the company’s debt to the public debt,” such that the latter can find ways to repay and/or reschedule the former’s debt.

Mufleh Aqel, a financial expert, called the decision the “best solution” given the reality of the company’s situation, “especially since (NEPCO’s) debts and losses come as a result of a series of government decisions, including the pricing of oil derivatives”.

At the end of 2020, NEPCO owed approximately JD4.98 billion, which exceeds 75 percent of its paid-up capital. By comparison, the company’s accumulated losses at the end of 2019 stood at JD4.92 billion.

To facilitate this transfer, the government will invoke Article 266a of the Companies Law No. 22 of 1997, which states that “if a company’s losses amount to three-quarters of the value of its capital, it must be liquidated unless the general assembly decides in an extraordinary meeting to increase its capital”.

The World Bank is considering giving a $500 million loan to Jordan at the beginning of 2022 under the name of the Jordanian Electricity Sector Sustainability and Reform Program.

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