| Country : | JORDAN |
| Type of project : | Loan |
Increasing electricity generation in Jordan
Area of intervention: electricity generation
Project carried out by: QATRANA ELECTRICITY POWER COMPANY
Country: Jordan
Context
To face the significant growth it has recently experienced (+8.9% pa) which is expected to continue up to 2025, Jordan has increased its dependency on oil imports from Irak and Saudi Arabia, its main partners, at preferential tariffs. As a consequence of the increase of the international cost of energy and of the IMF’s pressure to sell the energy at prices reflecting the real production costs, the Jordanian authorities have launched a policy aiming to improve the national power generation capacity and developing private initiatives for the sector. In such context, Ministry of Energy and Mineral Resources of Jordan issued a tender for the construction and operating of a gas combined cycle power plant, to be erected at Al Qatrana.
Objectives
The project will improve on a sustainable and significant basis the power capacity of Jordan by providing 17% of the national genration capacity by 2011.
Project description
The project consists of the construction of a gas-fired combined cycle power plant with a capacity of 373MW, to be located in Al Qatrana, ninety kilometres south of Amman. The site is in an ideal location, being closed to the gas pipeline as well as across the road from an existing substation of National Electric Power Company (NEPCO) and Jordan transmission network.
It will be implemented by QEPC, a private shareholding company established and registered in Jordan by Korea Electric Power Corporation (KEPCO), the national electric power company of Korea, and Xenel Industries Ltd. (XENEL), a Saudi Arabian industrial and manufacturing conglomerate. QEPC has entered into a lease contract with the Jordanian Government to lease the land of the site for 25 years and has concluded a 25 year “take or pay” purchase contract of the power produced with NEPCO.
The total cost of the project amounts to 465 million US dollars. A loan of 47 million US dollars provided by PROPARCO forms part of a global financing amounting to 335 million dollars involving the Islamic Development Bank (IDB), the Korea Export Import Bank (KEXIM) as well as BNP Paribas of France and KfW of Germany.
Impacts
The major impact of the Al Qatrana project is a developmental one: it will allow the country to secure its power generation capacity to face its required needs. The power station will be the cheapest source the country could get with a generation cost of 5,2 US cent/kWh. Furthermore, the project will have indirect economic impacts by virtue of local expenditures during both the construction and operating phases, and through taxes granted to the Jordanian Government. The project will also have positive employment impacts, creating 600 jobs during the peak of the construction phase and around 75 skilled and semi-skilled labor during the 25 year operation phase. As the second IPP of the country, the project confirms the policy of the Jordanian Government in terms of modernisation of the power sector through introduction of competitiveness in the generation capacity in the private sector.
Regarding the environmental aspects, the construction of a combined cycle gas plant is currently the best environmental solution for the country to generate electricity to meet the base demand, compared to other solutions such as fuel oil and coal.
Dates and amounts
Start of construction: April 2009
Financing: 47 million dollar loan from the AFD group