The impact of oil on the Jordanian economy

The impact of oil on the Jordanian economy
The impact of oil on the Jordanian economy
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Jafra News – The Middle East Institute for Media and Political Studies hosted, the day before yesterday, Director of Electricity and Renewable Energy at the Energy and Minerals Regulatory Authority, Engineer Muhammad Al-Maayah, and energy expert Hashim Akl, in a symposium entitled “Oil Prices and Their Impacts on the Region.”

Hashem Akl said that both governments and citizens suffer from the high costs of oil derivatives.

And he elaborated by saying: The government suffers because of the hard currencies that pay for the import of materials and the cost of the budget, and the citizen who pays suffers from his income, which barely covers his needs.

Akl pointed to the fuel tax, which burdens the citizen and is added to the high price of oil products.

He pointed out that there are many demands to reconsider the tax and activate items that reduce the cost of oil derivatives.

He said that the government imposed the tax on derivatives in 2019 when the price of a barrel was $64, which is the price that the government should adopt as a reference price in determining the tax. And that is by reducing the tax in the event that the price of a barrel of oil exceeds this amount and raising it when the price of a barrel falls below this amount, “so that the tax is flexible and borne by the citizen.”

Akl referred to the oil derivatives price liberalization law that was approved in 2008 and is expected to be fully implemented by the end of this year. He pointed out that it was supposed to be applied in previous years, so that governments would get out of the issue of fuel pricing and leave competition between companies to control the price of fuel, which would increase transparency, reduce citizens’ complaints, and solve the crisis of confidence between the government and citizens regarding the issue of fuel.

He explained that the most important provisions of this law are the government’s determination of price ceilings and then allowing companies to compete within the limits of the specified price through discounts offered to attract citizens to buy from them, which creates great competition between companies.

Akl referred to the royal directives to go to the stock exchange with the lowest price, pointing out that Jordan follows the “Plast” stock exchange, although the prices on the Gulf Stock Exchange are lower by a difference ranging from seven to nine dollars.

And he demanded that the pricing be weekly, not monthly, “so that the citizen can benefit from a reduction in fuel prices during the month in the event that the price of a barrel of oil decreases.”

Akl pointed out that the consumption of 95-octane does not exceed two and a half percent of the volume of gasoline consumption in Jordan due to the high tax imposed on it and the low purchasing power of citizens.

Therefore, Akl calls for a reduction in the 95-gasoline tax from 57 to 40 piasters, thus “higher revenues will be achieved for the government and the goal of preserving the health of the citizen and the environment will be achieved.”

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Akl confirmed the end of the life span of the Jordan Petroleum Refinery, and believed that it was more beneficial, instead of establishing the fourth phase of the expansion at a cost of $3.2 billion, to “establish a new refinery in Aqaba,” which he estimated would cost $3.5 billion and be repeated from 250 to 350 thousand barrels per day. Which, in his estimation, will make Jordan a regional center if the Iraqi-Jordanian oil pipeline succeeds.

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And he stressed that the oil refineries should be on a waterfront or near consumption areas, and that the issue be dealt with in its various elements such as profit and loss, the environment and community health.

Akl stressed that with the restructuring of electricity pricing, the aim of which was to support the economic sectors, however, “it did not reflect the declines in its products.”

As for electricity prices, Akl believes that the main problem lies in the long-term agreements signed between the government and electricity generation companies, whether in the traditional way or through renewable energy. He believed that there should be a period of review and rectification every five years.

Akl urged the necessity of exporting energy and activating electrical interconnection with neighboring countries. Because it is the most important element of trade in the world that can generate revenue for the National Electric Power Company.

For his part, Al-Maayah revealed that the authority and the Ministry of Energy and Mineral Resources are working on preparing the third national map for energy efficiency to be an indicative map for energy efficiency measures in all sectors for the period 2023-2025. Al-Maayah indicated that one of the main objectives of the energy strategy 2020-2030 is to improve energy efficiency by 9%.

Al-Maayah alerted citizens to the need to pay attention to the energy efficiency label that is placed on electrical appliances to classify them according to their consumption of electrical energy from G to A, meaning A is the least consuming electricity and the most efficient, so the consumer is advised to use the devices closest to it.

He pointed out that the authority is working in cooperation with electricity distribution companies to educate consumers about energy rationalization and demand management. It also prepares, through the Energy Conservation Department, educational brochures on energy efficiency to educate consumers, such as “controlling your bill,” in addition to lectures to educate consumers. With regard to charging electric vehicles, Al-Maayah said that the authority has prepared instructions for licensing electric vehicles, and these instructions are divided into public and private charging stations.

Al-Maayah indicated that the authority made a decision in 2018 that, for the purposes of obtaining an operating license for any fuel station, it must “have electric charging stations.”

He explained that private electric vehicle charging stations are the ones that provide charging service for electric vehicles and are not intended for sale purposes, and the authority determines the monthly charging tariff for electric vehicles for these stations.

As for public electric vehicle charging stations; They are intended for sale purposes, and the Authority determines the monthly charging tariff for electric vehicles for these stations and determines their profit margin.

Al-Maayah indicated that the commission set by the authority for the tariff for charging electricity at fuel stations is 112 fils/kWh, in addition to 50 fils/kWh for fast charging, and 35 fils/kWh for slow charging. The tariff for charging electric vehicles at home is 117 fils/kWh. The licensee to operate public charging stations shall be required to provide the service continuously without discrimination between customers. According to the test, the number of electric vehicles in Jordan is 45,000, with 41 public charging stations and 270 private charging stations, in addition to 1,700 approvals to install a scarcity meter. for electric vehicles in homes.

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