AMMAN – Prices of water and electricity along with various other commodities and services are expected to rise soon as a result of the government’s decision to lift fuel subsidies, economists and officials said yesterday.The Electricity Regulatory Commission (ERC), which is authorised to determine electricity prices, has completed a study suggesting three pricing scenarios, according to Ghaleb Maabreh, ERC commissioner and spokesperson.
“The three proposed prices are expected to be presented to the Cabinet soon in order to decide on new electricity tariffs,” Maabreh told The Jordan Times on Sunday, adding that a final date for the decision has not been set as yet.
Based on the government’s recommendations, the three scenarios excluded consumers who use less than 160 kilowatts a month and will mainly target customers who consume more electricity, he said.
A rise in electricity prices was inevitable after the cost of heavy oil used for power generators increased by 110.9 per cent, from JD165 to JD348 per tonne.
“Heavy oil constitutes 15 per cent of the overall amount of fuel used in power generation, while Egyptian gas accounts for 85 per cent,” Maabreh said.
Accordingly, water prices will also increase, based on the new electricity pricing structure.
Water Ministry Assistant Secretary General and Spokesperson Adnan Zu’bi yesterday said the ministry will decide on new water prices, noting that around 70 per cent of water revenue is allocated for energy costs.
“Around one-third of energy in the Kingdom is consumed by the water sector, and the Water Ministry’s budget cannot afford the difference in heavy oil prices,” Zu’bi told The Jordan Times yesterday.
Just as with electricity, those who consume more water are expected to shoulder the higher cost of price rises, according to Zu’bi.
Around 74 per cent of water subscribers consume less than 50 cubic metres every three-month cycle and the increase for them will be minor, he said, adding that those with higher water consumption rates will shoulder more of the rising costs.
Meanwhile, an economist predicted an unprecedented increase of 25 to 35 per cent in prices of other commodities and services.
Hossam Ayesh told The Jordan Times that the lifting of fuel subsidies will also have direct implications on the country’s economy.
“The decision to link prices of fuel derivatives to international markets was designed to tackle the around JD1 billion deficit in the state budget,” he said.
But the increases in salaries under the government’s Social Safety Net will only halve the deficit to JD500 million, Ayesh said, adding that the lifting of subsidies combined with the existing deficit will lead to inflation, which might exceed 12-13 per cent rather than the 9 per cent estimated by government officials earlier.
Meanwhile, citizens are already starting to feel the effect of new fuel prices in various aspects of life.
For example, water tankers used to charge car wash owners JD17 per load, but now each tank costs JD25. Consequently, car wash owners raised prices by 30 per cent, from JD3 to JD4, according to Zarqa resident Nasser Hanandeh.
By Hani Hazaimeh (www.jordantimes.com)