The World Bank is studying a request from the Jordanian government for additional funding of up to $200 million for a program aimed at enhancing the efficiency of the electricity sector in Jordan. This is an extension of previous funding amounting to $250 million.
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According to bank data, the proposed additional funding aims to further support the first phase of the government program by achieving more ambitious goals, including new measures to reduce costs, increase revenue, and add activities to improve the reliability and sustainability of electricity supplies, as well as enhancing energy consumption efficiency.
The expected outcomes of the additional funding include reducing operational losses for the National Electric Power Company (NEPCO) through the implementation of cost-reduction and revenue-increasing measures, maintaining the share of renewable energy in the electricity mix, reducing the number of power outages per customer, improving the operational technology and cybersecurity of NEPCO, and strengthening its institutional governance.
The World Bank noted that the Jordanian government's Economic Modernization Vision, launched in June 2022, emphasizes the importance of providing reliable and affordable electricity as a primary priority to enhance the competitiveness of the national economy.
The vision is based on two strategic pillars: stimulating growth by unleashing the full economic potential of the Kingdom and improving the quality of life for citizens. The vision also includes eight economic growth drivers, one of which is sustainable resources aimed at optimizing the use of natural resources to ensure sustainability and foster inclusive sectoral 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% in 2014 to 27% in 2023.
The Kingdom has led the Middle East and North Africa region in developing renewable energy projects linked to transmission networks, as part of its efforts to enhance energy security through the use of local resources.
In March 2023, the Jordanian government approved a comprehensive eight-year program aimed at implementing the energy component of the Economic Modernization Vision.
The program is divided into two phases: the first phase (2023-2025), which focuses on cost efficiency, the reliability of electricity supplies, and improving the corporate governance of NEPCO, the main operator of the electricity transmission network, as well as enhancing the overall performance of the sector.
The second phase (2026-2030) aims to build on these achievements and work towards improving the sector’s costs more efficiently.
On March 31, 2023, the World Bank approved a $250 million loan to support the implementation of the first phase of the government's electricity sector program. The program focuses on improving operational efficiency in the electricity sector by implementing cost-reduction measures, increasing revenues, maintaining renewable energy supplies linked to the transmission grid, enhancing the reliability of electricity services, and improving NEPCO’s governance.
The program has made significant progress, achieving or surpassing its goals within the set timelines, which has helped improve the financial position of NEPCO and enhanced the reliability of the electricity system.
Bank data shows that the value of government support for the program in its first phase amounts to $1.275 billion, while the government proposes to provide nearly $990 million in the second phase, bringing the total government support to $2.264 billion.
The World Bank has disbursed $150 million to the program, which strengthens the efficiency of Jordan’s electricity sector, representing 60% of the total funding.
