Ammon – The former Director General of the Natural Resources Authority, Dr. Maher Hijazin, revealed the details of the “Atarat” power plant project, the reasons for signing the agreement and access to the arbitration case, in an article in which he singled out Ammon.
In his article, Hijazin presented suggested solutions for the project:
introduction
First of all, I want to emphasize that I do not represent any party here, and that the main motive for this article is my unwavering keenness to complete the operation of this pioneering project at the global level, which is very important for the energy sector in the Hashemite Kingdom of Jordan, as well as my unwavering keenness to reach fair solutions for both parties through direct negotiation. ,
Recently, this project has been exposed to a campaign of many fallacies, which may have offended this pioneering project and its impact on the national economy, in addition to offending the possibility of exploiting the oil shale that is available in large quantities and in many areas in generating electricity. The Jordanian government has filed an arbitration case in London against the company, relying on the rules of the International Chamber of Commerce (ICC), claiming “outrageous unfairness”, as the Jordanian government is demanding a reduction in the purchase price of the electricity unit generated by the station by 36% of the price agreed upon in the purchase agreement (Power). Purchasing Agreement signed on 1/10/2014 and the litigation procedures are expected to end during the second quarter of next year, according to the statements of the Ministry of Energy and Mineral Resources, but if the Jordanian government loses the arbitration case filed by it, then this does not and will not entail any financial burdens other than fees on the Jordanian government The lawsuit and its costs. As for what was unfortunately said in the media about hundreds of millions of annual losses, it is completely false
The project is currently, and since 30/5/2023, operating at full capacity and pumping 470 megawatts into the electrical grid.
The government purchases the electricity generated from the station at the agreed prices, and the company is paid monthly. Then the government, represented by the National Electric Power Company, transfers this energy through the electrical system and sells it to the private electricity distribution companies at cost price after adding the transportation cost (about 11 fils), as the distribution companies After that, the distribution of electricity to consumers and the addition of distribution costs and a profit agreed upon with the government, and this is what the government does with all electricity generation companies, whether the stations of these companies operate on fossil or renewable energy.
2 Summary of the project history
In 2006, a bid was issued by a special bidding committee formed by the Council of Ministers, consisting of the Secretary General of the Ministry of Energy and Mineral Resources at the time, Eng. Khaldoun Qutaishat, the Director General of the Natural Resources Authority, Dr. A power station operating on the direct burning of oil shale, but no one submitted this bid, and the committee recommended to the Council of Ministers to allow the Minister of Energy and Mineral Resources to negotiate directly with the Estonian government electricity company for energy, as they are the only ones in the whole world who possess such technology.
Estonia was visited in the month of 11/2007 by the then Minister of Energy and Mineral Resources, His Excellency Dr. Khaled Al-Sharida, the Director General of the Natural Resources Authority, Dr. Maher Hijazin, and the Director General of the National Electricity Company, Dr. Ahmed Hiasat, and a memorandum of cooperation was signed in this field with the Estonian government.
It was agreed with the Estonian side represented by Este Energia (which is the Estonian government electricity company) to carry out economic, technical and environmental studies to build a power station operating on direct burning of oil shale, which was an integral part of the strategy to diversify primary energy sources, and develop local energy sources, which was an embodiment For the National Energy Strategy for the year 2007, where an agreement of principles was signed to carry out these studies on 12/8/2008, and the company was given a period of three years (which was extended for a year) to carry out these studies, and this agreement of principles did not create any obligation on the Jordanian government, and the Jordanian government was given the right Rejection of the project without giving reasons upon completion of studies by the company and submission of its offer.
And after the company carried out, between the years 2008-2012, all technical, environmental and economic studies, and under full supervision and control by the government, a steering committee and technical committees, at a cost of about $30 million, the company submitted an offer to build a power station operating on oil shale and submitted a proposed price for the purchase of electricity by government in the month of 12/2012, as the proposed price is based on capital costs, financing costs, and operational costs, in addition to a reasonable return on investment.
The company was negotiated by specialized teams from various government departments and institutions and with the help of international consultants who were contracted by the (Jordanian) government in law, economy and energy, and a set of agreements were reached covering all aspects of the project, as it included many agreements, including the electricity purchase agreement, The mining agreement, the water agreement, the land lease agreement, the operating agreement, the construction agreement, the electrical connection agreement, the agreement for measuring the quantities of energy purchased ……. etc., more than 600 pages of court agreements, and they were signed on 10/2014 1 That is, after about two years of negotiations, without any commitment to proceed with this project by the government, and this project was given a maximum return on investment of 12% due to the high risks of this project.
The company was given a period of time by the Council of Ministers to find financing for this project, which will cost about 2150 million US dollars, and despite all the attempts of the company and with the support of the Estonian government and with the help of a specialized English financial company to find financial financing, the company was unable to convince any of the banks and money houses in Europe, America Japan, Korea, Arab Gulf countries to finance such a project, which was considered a pioneering and high-risk project, given that the only successful example in the whole world is in the Republic of Estonia, which is wholly owned by the Estonian government, while the Atarat station project will be the first project in the world owned and funded by the private sector, in addition to that The technology of direct burning of oil shale must be engineered, technically and interfacially designed for each type of oil shale, as the chemical specifications of oil shale differ from one region to another within the same country, and the company was forced to search for financing in the Republic of China, and the conditions of Chinese banks were to manufacture as much as possible of The parts of the project are in China and they have a contract, but within European standards.
The Jordanian government has graciously tried to help the company obtain financial financing through letters sent from prime ministers and ministers to countries and financial institutions emphasizing the importance and need for Jordan for this strategic project, and even pointing out the importance of operating this station in 2020.
The company was able to provide financial financing at the beginning of March 2017, about two and a half years after signing the agreement, with a value of $1600 million (Debit) and $550 million paid directly by the partners (Equity), as the capital cost of the project is about $2150 million.
This project is considered the first project in the world outside the Republic of Estonia to generate electricity by direct burning of oil shale. Estonia is owned by the Estonian government.
All financial and bank documents and details of the project costs, including financial transfers and bank credits for the project equipment suppliers, in addition to the costs of the local and international contractors who built all parts of the project, certified by international banks and international financial auditing houses available for the government’s review.
3 Benefits of the project for the national economy
Diversifying the sources of electricity generation by relying on a local energy source, and making a major contribution to the security of electricity supply, as this station will contribute about 16% of Jordan’s need for electric energy.
This project provides about 23 percent of Jordan’s need for imported gas, which is estimated at about $200 million annually. It provides about 1,000 job opportunities directly, compared to 100 job opportunities at a conventional station.
Localizing a new and pioneering technology in the world in the Kingdom and finding qualified local cadres to manage such a station, which may lead to the spread of this technology to brotherly and friendly countries at the hands of local cadres.
Contribute to the stability of the prices of electricity generated in the Kingdom, regardless of the fluctuating prices of fossil energy sources globally, as the price of a unit of electricity generated from this station is only affected by a small percentage that does not exceed 3%, and this is very important in planning all economic projects.
4 Convention
The Este Energia company, wholly owned by the Estonian government, owns 10% of the project, the Malaysian energy company YTL owns 45% of the project, and the Chinese company Guangdong Yudean owns 45% of the project. Chinese banks, with the guarantee of the Chinese government, financed the loan of $1,600 million.
All technical programs of the project operate under the strict supervision of the government, and the government has the right to terminate the agreement if the company violates the agreed programs or environmental conditions, or there are more electrical outages than is permitted.
About 25 million dinars will be paid annually to the Jordanian government in exchange for mining fees and land rent.
The purchase price of a unit of electric power from the station is not a fixed number, but rather is subject to a price equation that takes into account the debt-to-cost ratio, the life of the station, the default temperature at the site, the generation rate compared to the nominal generation capacity, the fixed costs of mining, international oil prices, inflation and many other factors. To mention it here, as for the average purchase price of the electric power unit (kWh) (Levelised Tarrif) throughout the project period with a discount factor of 7%, it is 78 Jordanian fils (11) US cents), and like the rest of the purchase from power plants, the purchase price of an electricity unit is in The start of the project is high and gradually decreases over the years of operation.
5 proposal solutions
I hope that the Jordanian government will hasten to negotiate directly with an open mind with the consortium of companies that own this project to reach a satisfactory agreement for both parties, because the public interest requires that, and I present here some proposals for solutions:
The Jordanian government is negotiating with the Chinese government to try to reduce interest on loans from Chinese government banks, which, if done, will lead to a reduction in the purchase price of an electric power unit.
Reduction or abolition of mining fees by the government, which will lead to a reduction in the purchase price of an electric power unit from the station, as mining fees are added to the cost of purchased electric energy (Pass through).
The agreement extends for a period of 30 years from the date of 3/16/2017, and the reason for this is that the Natural Resources Authority law grants mining rights for a maximum period of 30 years. One of the solutions lies in extending the agreement automatically for a period ranging between 10-20 years, and accordingly, The economics of the project will differ, and thus the purchase price of the electric power unit will be reduced.
Encouraging the company or any other developer and the entry of the government as a partner in the construction of a new power station project operating on oil shale in the same location, where it is expected that the purchase price of an electric power unit will not exceed 50 Jordanian fils (7 US cents), given the availability of infrastructure, And some other technical elements of the project, and the decrease in the elements of financial risk, which leads to a reduction in interest rates. It is expected that financing the second project will be much easier, since the international financing institutions will consider the current existing project as a living example and reference.
Direct negotiation with the company to buy part of the project. The survival of the Estonian and Malaysian partners is very important for the proper operation of the station.
And the God of the intent behind..
* Former Director General of the Natural Resources Authority