AMMAN -- Industrialists grumble that the majority of local factories are at risk due to "unbearable" fuel prices, calling on the government to rescue the "ailing" sector through well-planned comprehensive policies.
Over the past few months, the government has kept the prices of fuel derivatives unchanged but tended to increase the prices of heavy fuel used by industries. The current price of industrial heavy fuel is JD505 per tonne.
Last week, the government also decided to raise electricity tariffs by 16 per cent on subscribers consuming over 750 kilowatts in a bid to help the state-owned electricity company, the National Electricity Power Company, which suffers financial troubles due to the government subsidy.
Representatives from the industrial sector insist factories will be the most affected by the decision.
Nazzal Armouti, deputy chairman of the Jordan Chamber of Industry (JCI), told The Jordan Times yesterday that the recent decisions to raise prices of heavy fuel and electricity will force many factories to close down and "go out of business".
"The sector is paying the price of the accumulated mistakes of governments over the past years," he charged, adding: "We find it extremely difficult to keep the sector in check."
Armouti said that by increasing power tariffs and the prices of heavy fuel, "the government is shooting itself in the foot".
He explained that raising electricity tariffs on private sector to generate more revenues and to rescue the electricity company will not offset the revenues the treasury is expected to lose due to the drop in exports to be caused by higher production costs.
The Kingdom's exports last year reached around JD5 billion, he said, indicating that 90 per cent of which was from the industrial sector.
What the country needs is a comprehensive government vision rather than partial remedies to economic troubles, Armouti said, warning that many business owners are protesting against the government's "confusion" in its stand on the sector.
International prices of heavy fuel are 30 per cent cheaper than those sold by the country's sole oil supplier, the Jordan Petroleum Refinery Company, Armouti said, suggesting the government allow the private sector to import fuel.
Minister of Industry and Trade Hani Mulki said that the ministry has already lifted restrictions on fuel imports by allowing industrialists to import their oil needs.
They have to apply for licences at the Ministry of Energy and Mineral Resources and they can obtain approvals on the same day, he remarked.
Musa Saket, a JCI board member, echoed the same remarks of Armouti.
He cited a study conducted by the chamber finding that the recent hike on electricity tariffs has put additional 8 per cent on the production costs of small factories, 25 per cent on medium-sized plants and over 50 per cent on large industrial firms.
According to Saket, around 55 per cent of the sector is comprised of small-sized factories while 40 per cent are medium-sized establishments.
This limits the chances that industrialists can import their fuel needs, Saket added.
"We need long-term planning and sincere efforts to revive and boost the sector," he stressed, stating that five years ago, the government told industrialists that factories will be supplied by natural gas from Egypt but since then all the supplies went to feed electricity generation plants.
© Jordan Times 2011
