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Resolving Jordan’s Energy Dilemma

Energy is Jordan’s eternal bogeyman; Syria is its immediate threat to stability. Together, they make for a great deal of royal discomfort.

The list of Jordan’s energy woes is a long one. Topping the list is the fact that it has no natural resources to speak of other than oil shale, not to be confused with shale oil (we detail this in a separate report this week). Jordan imports 97% of its energy needs. Dependent on gas pipelines from Egypt to power over 80% of its electricity, ongoing instability in Egypt and the sabotage of pipelines in the Sinai Peninsula has rendered the situation rather desperate. The country is reeling from more than $23 billion in external debt, while at the same time facing the challenge of cutting $2 billion in fiscal deficit this year. It’s an ominous task when it comes simultaneously with cuts in gas supplies from Egypt. This cut in gas supplies means that Jordan is importing heavy fuel to generate power, and the additional price tag for this is up to $1.4 million a day.

Jordan’s responses to its energy crisis are multifaceted:

Raising electricity prices

As of January, Jordan will raise electricity prices by 15%, except for low-use homes. What Jordan most fears is the civil unrest this could spark—as it has in the past. This is where the specter of Syria looms largest. On its own, a rise in electricity prices will not spark enough unrest to translate into instability. But combined with tensions…

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