The Arab Spring is still taking a toll on Jordan Petroleum Refinery Company (JPRC).
Continued disruption to supplies of natural gas from Egypt after the revolution has forced JPRC to purchase expensive diesel and jet fuel as alternatives to power the refinery.
The refinery, which has a processing capacity of 90,000 barrels a day, is owed about 633 million dinars by the Jordanian government and power companies.
Jordan, among the smallest economies in the region, imports almost all its energy and relies on foreign investment to support its budget and current account deficits. Power demand in the kingdom is estimated to reach 5,000 megawatts per year by the end of 2020 and then double to 10,000 by 2030. The country uses about 2,500 megawatts annually.
JPRC warned in June it could be forced to stop importing raw materials if payments did not come in time. The company's third-quarter statements showed its debt increased 183 per cent to 674m dinars. Since then, the government has made partial payments through bank loans and treasury bills to relieve some of the refinery's receivables. But that has not helped its share price. JPRC, listed on the Amman Stock Exchange, has declined 3.5 per cent so far this year. The 51-year-old refiner, which has the sole right in the country to refine, store, distribute, transport and sell petroleum derivatives, has been under intense pressure in the aftermath of the Iraq war.
Jordan used to import almost all of its crude needs from Iraq as far back as the 1990s at extremely favourable rates. This arrangement came to an abrupt end after the US-led invasion of Iraq in 2003, leaving JPRC with no alternative other than to buy from its suppliers at market price.
To safeguard itself from similar problems in the future, Jordan's government wants to bring in competition and efficiency by opening up the market. Talks on JPRC's new role began after the recent expiry of its concession agreement with the authorities, which is weighing on the share price, an analyst said.
In January the refiner issued a tender to buy 350,000 tonnes of diesel fuel for delivery this month and next, Reuters reported. The company needs about 200,000 tonnes of diesel this month.
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