WB mulls additional financing to boost Kingdom's electricity sector

AMMAN — The World Bank (WB) is considering a government request for additional funding for Jordan's electricity sector efficiency boosting programme, worth up to $200 million, building on previous funding of $250 million.

The proposed additional financing aims to strengthen the World Bank's support to the first phase of the government programme by achieving new measures to reduce costs and increase revenues, as well as adding activities to improve the reliability and sustainability of electricity supply, and enhance energy efficiency, according to WB data monitored on Sunday by Al Mamlaka TV.

The objectives of the additional financing are to reduce National Electric Power Company's (NEPCO) operating losses by implementing cost reduction and revenue reduction measures, maintaining the proportion of renewable energy in the electricity mix, reducing the number of power outages per subscriber, improving NEPCO's operational technology and cyber security, and enhancing its corporate governance.

The WB pointed out that the Economic Modernisation Vision (EMV) launched by the government in June 2022, stresses the importance of providing "reliable" and "affordable" electricity supply as one of the main priorities to enhance the competitiveness of the national economy.

The EMV is based on two strategic pillars; stimulating growth by unlocking the full economic potential of the Kingdom and improving the quality of life for citizens.

The vision includes eight drivers of economic growth, including sustainable resources that aim to optimise the use of natural resources to ensure sustainability and promote inclusive sectorial growth.

Jordan has made "significant" progress in increasing the share of renewable energy in its electricity mix, with the contribution of solar and wind energy rising from less than 1 per cent in 2014 to 27 per cent in 2023. 

The Kingdom has led the Middle East and North Africa (MENA) region in developing renewable energy projects linked to transmission networks, as part of its efforts to enhance energy security through the exploitation of local resources.

In March 2023, the government approved a comprehensive eight-year programme aimed at implementing the energy pillar of the EMV. 

The programme is divided into two phases: the first (2023-2025) focuses on cost efficiency, reliability of electricity supply, improving the corporate governance of NEPCO, the main operator of the electric transmission network, and enhancing the performance of the sector in general.

The second phase (2020-2026) aims to build on these achievements and work to improve the costs of the electricity sector more efficiently.

On March 31, 2023, the WB approved the financing of the Electricity Sector Supply Efficiency and Reliability Programme in Jordan, with a loan of $250 million to support the implementation of the first phase of the government's programme.

WB data shows that the value of government support for the programme in its first phase amounts to $1.275 billion, while the government proposes to provide about $990 million in the second phase of the programme, bringing the total government support to $2.264 billion.

The WB has disbursed $150 million to the programme, which aims to enhance the efficiency of Jordan's electricity sector, out of a total value of $250 million, representing 60 per cent of the total funding.