By Fares Braizat – November 03,2019
Despite the abundance of renewable energy resources in Jordan, energy prices are among the highest globally and this constitutes a significant hurdle to investors. Setting aside legislative instability, taxes and corruption, surveys carried out by NAMA Strategic Intelligence Solutions, in collaboration with Jordan Strategy Forum, on investors’ confidence since 2016 have shown that the cost of energy is the most important “tangible” push factor that drives Jordanian and other Jordan-based investors to move their businesses to neighbouring countries, reduce their operations in Jordan and think of shrinking rather than expanding their businesses.
This state of affairs cannot go on if we are serious about solving our unemployment and weak economic growth problems. While there are some significant steps being taken by the Jordan Investment Board on other issues facing investors, including improving the investment environment by ensuring some legislative stability and reducing bureaucratic hurdles, the cost of energy remains a major challenge.
Today, we know more than ever before that we have a mix of energy that can reduce energy cost, enhance internal energy dependency and remain true to Jordan’s values of commitment to its international obligations and integration to regional and global markets.
Extracting an estimated 40-70 billion tons of oil shale for energy generation, harvesting solar, wind and hydropower in a free market environment and in a monopoly-free manner will definitely reduce the cost of energy, enhance investors’ confidence in energy supply stability and, most importantly, reduce prices for Jordanian households and SMEs.
Heavy dependency on a single supplier is neither practical nor judicious. The 2011-2014 experience with the disruption of gas supplies from Egypt is a case in point. Hence, diversifying suppliers and types of energy sources is a strategic choice for Jordan that goes beyond internal energy politics, ideological differences and emotional stand points.
While conventional oil and gas supplies can be influenced by “manageable” global political and strategic alliances, solar and wind can be influenced by unmanageable and out-of-our-control weather conditions. Therefore, we have to reduce “heavy dependency” on these sources and rely more on “more stable” and “less vulnerable” sources of energy, such as oil shale and hydro power storage, including water desalination, transportation and built-in hydro-power generation and battery storage technology.
A good step in this direction is the 2.1-billion-dollar Al Attarat Oil Shale Power Project, which is financed by a coalition of four Chinese banks. This project serves two purposes: Diversification of energy supply from an internal and a more stable source, and a message to investors. Another step in this direction is linked to Jordan’s global alliances to ensure Jordan’s energy supply stability with the American energy giant Noble Energy.
The US is by far Jordan’s largest donor and diplomatic supporter despite some political flares, ebbs and flows from time to time. The largest global economic giants, the US and China, are investing in Jordan’s energy sector. These investments are not only insurance policies for Jordan’s energy supply stability, they are an invitation for us to work harder on transparency of energy pricing, clarity of direction and more consistent, less invisible and temperamental energy policies. Jordanians deserve cheaper energy and it is doable with less monopiles and more transparency.
The writer is the Chairman of NAMA Strategic Intelligence Solutions, H.E. Dr. Fares Braizat.
This article was originally published in The Jordan Times on November 03, 2019. For the original article source, click here.