Current patterns of electricity subsidy to change after 2017

AMMAN — The government's subsidy on electricity for households consuming 600 kilowatts (kW) and less per month will not continue after 2017, according to Minister of Energy and Mineral Resources Mohammad Hamed.

The government currently subsidises the utility for households that consume 600kW per month and less at a total cost of JD500 million.

However, officials will identify narrower segments that will continue benefitting from the government support after the said year, the minister noted in an interview with The Jordan Times last week.

In principle, electricity subsidy will continue after 2017, but “it might be first limited for those consuming 300kW a month and less and maybe later reduced for segments consuming less”, the minister explained.

“We cannot continue subsidising electricity in the current manner. At the end, subsidy will be for households that have a TV, a fridge, a few lamps...we will decide later on who will be a benefactor of the system at the end and our focus will be on the low-income segments who are incapable of affording electricity prices,” said Hamed.

In early 2014, households consuming over 600kW of electricity a month, and whose bill exceeds JD50, were subject to an increase of up to 15 per cent in electricity prices.

In August 2013, the government applied a new tariff system with a 15 per cent increase on all economic sectors, except for agriculture, which was exempted from the hike.

The increase in power tariffs will be implemented over the course of five years to bring the state-owned National Electric Power Company (NEPCO) to cost recovery.

According to the minister, NEPCO’s losses are expected to reach around JD1.35 billion at the end of this year, while the aggregate losses since 2007 are estimated to amount to more than JD4 billion by the end of 2014.