AMMAN - Jordan has been left like a headless chicken trying to find a solution to its severe shortage of natural gas after the Islamist-led government in Cairo opted to reduce the amounts pumped to Jordan.
The government uses Egyptian gas to provide electricity for domestic and industrial use. Egyptian gas accounts for 90 percent of energy sources needed to generate electricity in Jordan, according to officials from the National Electric Power Company.
Ever since Egyptian gas was cut due to sabotage and Cairo’s lack of commitment to the deal, the government was forced to use more costly fuels, raising the annual cost of fuel subsidies to a staggering $2.5 billion.
The National Electric Power Company says it was selling electricity to citizens at a price 60 per cent less than generation costs.
Meanwhile, the industrial sector is paying the price. The government earlier this year raised the price of electricity for industry, which pushed up production costs.
In the dusty industrial area in Sahab, east Amman, businessmen struggle to absorb rising fuel prices.
Abdul Rahman Talhouni, 55, owns a small chemical processing factory in the industrial compound. His is one of many businesses facing an uncertain future.
“We already suffer from cutthroat competition with products from China, the Gulf and other countries that dump products in Jordan at much lower prices. Now production costs are greater,” Talhouni told The Media Line as he flipped through his audit books.
The middle class in Jordan, which contributes to the country’s stability, could be the hardest hit if electricity prices rise.
“Over the past five years the middle class has suffered greatly from rising prices and now it is losing its economic power and joining the lower class,’ analyst and human rights activist May Qawtaneh told The Media Line. ‘The government should support this group and not allow it to descend into poverty.”
Eager to cut fuel subsidies, the government said this week it was considering an austerity policy to trim the nation’s fuel consumption. Measures may include blackouts, driving restrictions and raising electricity prices.
Talhouni fears a new spike in fuel prices will drive him out of business, but his concern is greater about the social impact of such a decision.
“The nation is already suffering from rising poverty and a lack of economic opportunities. [To raise prices] would be a recipe for disaster. Unemployment will increase and the cost of living will also jump,” he added.