Jordan Petroleum Refinery Co., the Middle East kingdom’s only refiner, may have to stop importing fuel unless it receives money owed by the government and power companies, Chief Executive Officer Abdul Kareem Alaween said.
“Our current debts are unprecedented,” totaling 633 million dinars ($895 million), Alaween said today in a press conference in Amman. Electricity companies owe the refiner 396 million dinars and the rest is receivables unpaid by various government institutions, he said.
Jordan, one of the smallest economies in the Middle East, imports almost all of its energy needs and relies on foreign investment and grants to support its budget and current-account deficits. The kingdom’s electricity demand is forecast to double to 5,000 megawatts by the end of 2020 and again to 10,000 by 2030, Energy Minister Khalid Touqan said June 18.
“Until now the company continues to refine products and we have crude oil, products and derivatives that we are providing in a normal manner, but we are sounding the alarm for what could happen,” Alaween said. “We warn against reaching a point where we cannot continue to import crude oil and derivatives because the consequences will not be easy.”
The refiner has reached the “ceiling” for loans, or 700 million dinars, and will not take any more loans, he said. It recently received a two-year loan from Standard Chartered Plc, Alaween said without revealing its value.
Rising fuel prices, increased government subsidies in the past six months and purchases of oil products to make up for two interruptions to Egyptian natural-gas supplies due to sabotage earlier this year, were cited by Alaween as reasons for the company’s financial woes.
If prices of crude and its derivatives remain at the current levels, Jordan’s energy bill will reach 3 billion dinars this year, or an average of 250 million dinars per month, because power plants will be forced to switch to diesel which is more expensive than gas, he said.
Iraq agreed earlier this month to increase daily crude exports to Jordan to 15,000 barrels from 10,000 barrels. The Jordanian refinery cannot process more than 10,000 barrels a day of the heavier Iraqi heavy oil because it would then face “technical difficulties,” Alaween said.
The plant has a processing capacity of 100,000 barrels a day of crude and is currently refining at an average of 80,000 barrels a day, he said.