At the onset of the Arab Spring, Jordanians feared that a wave of instability
might hit their country. Now, an unfortunate series of domestic and
international events have made economic woes the country’s biggest concern.
اضافة اعلان
The country lacks funds and around a quarter of
Jordanians are unemployed. The figure climbs to 50 percent among youths,
meaning that if today looks dark, the future looks even bleaker.
On the global scale, the war in Ukraine pushed up
the price of numerous essential commodities, especially gas-based energy. And
despite the unbearable situation, the minister of energy announced that gas
prices will go up in Jordan even if the international rate does not.
According to the minister, the current price cap
means Jordan’s average price per liter is $0.13 below the international price.
Due to this, the minister of interior said that the government had lost JD450
million in the first quarter of the year.
Ordinary citizens, members of parliament and
political parties have spoken up against this and other economic policies in
Jordan. But the country is faced with a dilemma. If the government cannot raise
funds, it cannot contribute to the well-being of the nation, which is bad for
the country. But if skilled, intelligent, middle-class citizens cannot afford
life in Jordan, they will leave en masse, which, likewise, is bad for the
country.
Two questions remain to be asked: is there any
scenario where Jordan gets out of the rut; since we cannot pin all our problems
on misfortune, do these prices come from internal mismanagement?
To find out, I spoke to Jawad Jalal Abbasi, an
analytical writer who has countless articles and television appearances
proposing solutions to bring life to a dying economy.
In regards to gas prices, although global events
have made matters worse, Abbasi says it is domestic incompetence that caused
the problem, to begin with.
“There is only one refinery in Jordan, run by the
Jordan Petroleum Refinery Company. It has low market share and inefficient
technology. It is antiquated.”
If the government cannot raise funds, it cannot contribute to the well-being of the nation, which is bad for the country. But if skilled, intelligent, middle-class citizens cannot afford life in Jordan, they will leave en masse, which, likewise, is bad for the country.
Because of this, Jordan imports a considerable
percentage of its gas and crude oil.
“In fact, before 2019, Jordan Petroleum Refinery
Company got a JD15 million grant to refine oil. When this was removed, they
refined less, and made more of a profit. By their own admission, if they stop
refining, they will make more money,” he said.
Aside from the expensive running costs, the
government sets extraordinary margins at which private gas distributors sell, amounting
to JD0.3 per liter. In Abbasi’s words, there is “no competition. You either
introduce competition or you put it all under one government sector, better
than private companies with guaranteed margins. They all make high profits
while the regular citizen suffers”.
It is not just a matter of how the plant operates,
but also what it is selling.
“The refinery produces fuel oil that it cannot sell
because electricity in Jordan runs on gas, and it produces diesel that does not
meet the Jordanian standard. It is bad for vehicles, the environment and
health,” Abbasi said.
In this sense, not only does the refinery’s
operation tear through the wallet of the average Jordanian, it causes
externalities, negative effects on the economy that are not reflected in prices.
Poor health stunts the growth and capability of the
working-age population, and a polluted environment puts a strain on resources
and infrastructure via internal migration.
Although Abbasi acknowledges that gas taxes are an
important source of government revenue, he said that refineries are but a small
part of the distribution industry.
“We need ample distribution of storage facilities,
so we have a reserve if, as a non-oil-producing country, we could not import
oil for a few months.”
Finally, the administration of the company has shown
no innovation in ensuring efficient production and fair prices.
“I think that still calling themselves Jordan
PETROLEUM Refinery Company in 2022 is indicative of a board that is completely
out of touch with the changes happening in the world. All the big petroleum
companies have energy aspects to them, they are looking at renewables,
downstream and sustainability. If I were JPRC, I would call myself Jordan
Energy Company instead, and I would focus on storage facilities, charging
stations for electric vehicles, and on widespread renewable energy.
“But they are still stuck in the past. Recently, the
EU said they will only permit electric vehicles on the road by 2035. In the
meantime, JPRC is still talking about another refinery, preparing for a future
where we will not need gasoline for cars.”
The government is actively sabotaging itself. It
adopts illogical energy policies that cause great deficits and make the people
pay, rather than attempt to critically think and fix the problem. Whether this
is because there is a lack of comprehension, or it enjoys the absurd margins it
imposes, is up to debate.
What is known, however, is that lower prices and
better methods will come via increased competition, which is possible, given
that Jordan has multiple distribution companies.
If the government does away with steep margins,
viability will set in. According to Abbasi, a market diversity does not exist
yet for electricity, and will take a few years to implement, but is necessary,
given that NEPCO, the national electricity company, has been operating at a
loss for 11 years.
Change is urgent and required now, and emotionally
removed officials cannot tell the people to pay for their mistakes when many
Jordanians can barely afford to put food on their table.
The situation is becoming serious and if it
continues, the country’s best will leave for, in Abbasi’s words, “European
residencies, Canadian passports and Turkish apartments”.
Mohammad
Rasoul Kailani is a writer and first year student at the University of Toronto.
Amongst various other topics, his interests are in Middle Eastern affairs.
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