## _wp15115

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---

### Overview and context
- Jordan’s broader energy strategy analyzed: LNG terminal in Aqaba, Eastern Mediterranean gas, renewable energies, oil shale, nuclear energy, and a pipeline from Iraqi Basra fields to the Jordanian port of Aqaba.
- Macroeconomic impact of new energy sources will crucially depend on international oil prices through 2025.
- Projects could substantially reduce Jordan’s energy dependency and create significant fiscal benefits if soundly completed, but bear significant uncertainties: security, price volatility, contractual liabilities, need for refinery/upgrades.

### The Planned Pipeline Between Basra and Aqaba — project description and magnitudes
- Agreement signed in mid-2013 between Iraq and Jordan on a pipeline from the Iraqi Basra fields to Aqaba.
- Pipeline initial capacity: up to one million barrel per day (bbl/d), with around 150,000 bbl/d available for use inside Jordan.
- A natural gas pipeline along the same route would make up to 100 MMcf/d available for use in Jordan (sufficient to cover generation of around 20 percent of Jordan’s current electricity demand).
- Jordanian section expected to be funded through a Build, Operate and Transfer (BOT) agreement with an international investor; investor reportedly to operate the pipeline for twenty years or more before transfer.
- Transit fee preliminary estimate: up to $500 million per year (1.4 percent of GDP).
- Transit fee would represent around 7 percent of 2013 domestic revenue.
- Jordan’s refinery current processing capacity: about 24,000 bbl/d; country’s oil demand is above 100,000 bbl/d.
- Estimated cost to upgrade the refinery: about $1.5 billion.
- Potential refinery shortfall: with potential imports of 150,000 bbl/d through the pipeline, a significant expansion and/or additional refineries would be needed.

### Fiscal and macroeconomic considerations
- Import bill impact:
  - Iraqi crude and gas market prices are likely to be lower than international price of Arab light and LNG, so import bill could be reduced, but actual savings depend on international prices and any discount on Jordanian imports.
  - Low oil prices for a prolonged period might lead to lower transit prices and could delay or halt pipeline completion.
- Long-term liabilities:
  - Under the BOT, Jordan would not pay upfront construction costs but would provide “transit right” including land and maintenance rights and would be expected to take over operation (and associated costs) in the distant future—raising the possibility of long-term liabilities.
- Fiscal policy framework:
  - Transit fee is exhaustible-resource revenue; authorities need to decide what revenue share to invest, save, or use for debt repayments.
  - Consideration of alternative fiscal benchmarks that take into account resource exhaustibility, e.g., Permanent Income Hypothesis, and targets such as a non-resource primary balance or the structural primary balance.
  - Strengthen fiscal institutions for efficient and transparent use of pipeline revenue; proper accounting of revenue and underlying non-resource fiscal position required.
- In-kind vs cash transit revenue:
  - Transit revenue could be paid in kind or in cash. In-kind proceeds provide insurance against price changes but should be monetized through standard domestic taxation or tariffication rather than earmarked to subsidize energy and electricity consumption.

### Contractual and PPP design issues (policy recommendations)
- BOT contract design is critical:
  - Carefully examine project at every stage to avoid unforeseen liabilities upon ownership transfer, with particular attention to any guarantees provided by the government.
  - Design of termination clause (including force-majeure or default by private party) is critical as it affects effective risk-sharing.
- Review fiscal framework and budgeting procedures:
  - Use conservative assumptions and avoid counting on additional revenue until supplies are reliable and proceeds will materialize.
  - Consider appropriate saving/investment rules for exhaustible-resource revenue.
- Institutional transparency and governance:
  - Ensure transparent mechanisms at all stages of investment execution so that revenue supports growth and equity efficiently.
  - Proper accounting and fiscal planning prior to committing to spending of transit revenues.
- Refinery and market considerations:
  - Given private monopoly and regulated profits of current privately-owned refinery, authorities should consider private sector management of upgrades.
  - Authorities could consider liberalizing the market and promoting new refineries, but the small size of the Jordanian market might deter investors.
- Reassess the unconditional choice of PPPs; establish a framework for evaluation and management of PPPs with a central role for the ministry of finance.
- Record the project value of all PPPs as on-budget public investment to ensure transparency.

### Renewable generation, oil shale, and nuclear — capacity, costs, and impacts
- Renewable generation and grid constraints:
  - 1.8 GW additional generation capacity from renewable energies in the next ten years.
  - Network can accommodate the first round of new plants, but grid connection capacity likely to become a constraint in the next few years.
  - A third round of expression of interest for a total 800MW capacity will take place only after the network has been upgraded.
  - Necessary grid improvements could cost around $150 million (0.5 percent of GDP) and would be spread over three years during 2014–16.
- Oil shale and shale oil:
  - Jordan’s proven reserves of oil shale are amongst the largest in the world.
  - First oil shale power plant to start operations by 2018 under a Build Own and Operate (BOO) contract; NEPCO will pay the generator an “average tariff” through a Power Purchase Agreement.
  - Commercial exploitation of shale oil could start toward the end of the decade; two concessions under consideration.
  - Preliminary estimates put oil shale tariffs at around two thirds of the current cost-recovery tariff.
  - Oil shale competitive if Brent oil prices stay above $50/bbl on average for the next 10 years.
  - The first plant would produce 230 MW (compared with a peak demand at over 3,000 MW by 2018).
  - As additional capacity is added, NEPCO would save as much as $130 million a year (0.2 percent of 2020 GDP).
  - The import bill would be lowered by a larger amount (up to $500 million per year) because imports are fully substituted with domestically-sourced fuel.
  - Successful exploitation of shale oil could yield large current account benefits and fiscal revenue, but not yet quantified.
- Nuclear power:
  - Strategy to build two nuclear reactors generating 1,000 MW each in the next decade; a preferred bidder selected to conduct further studies and risk assessments; negotiations on the final contract would possibly start within two years.
  - Construction would require an investment of about $10 billion, including grid improvements.
  - The foreign operator would bear about half of the cost, and the Jordanian government would retain 51 percent of equity in the joint venture, of which 25 percent would be immediately sold to a third-party investor.
  - All design, construction and maintenance costs will be subsumed in the feed-in tariff the government would commit to pay in exchange for an agreed amount of generated electricity for up to 60 years.
  - Cost per kilowatt of electricity generated by a nuclear plant could be as low as half of current NEPCO unit costs.
  - Savings could amount to up to $300 million a year (1 percent of 2014 GDP) for the external account and about $150 million for NEPCO, but only half of the yearly savings will materialize by 2025, as the second reactor will be built only after completion of the first.
  - If uranium needed is sourced in Jordan, current account and fiscal savings could be higher; if oil prices remain at low levels, savings compared to traditional fuels could be halved.

### Risks and constraints
- Security risks and operational disruptions could delay or interrupt oil and gas supplies even if the pipeline is completed.
- Low international oil prices could:
  - Make pipeline economics less attractive, potentially delaying or stopping completion.
  - Reduce fiscal revenues from transit fees if transit fees move with volumes and/or prices.
  - Reduce incentives for shale and other investments.
- Execution risk and contingent liabilities from PPP/BOT arrangements if contract design is weak.
- Structural bottleneck: domestic refinery capacity insufficient for projected pipeline-sourced crude volumes.
- Environmental and water constraints:
  - Oil shale exploitation requires large amounts of water; Jordan’s water scarcity necessitates water-saving technologies and careful accounting of water costs and foregone water uses.
  - Nuclear plants require large amounts of water; planned use of waste water for cooling likely to increase costs and requires proximity to urban centers and careful safety assessment.
- Potential large contingent liabilities from environmental, safety, decommissioning, and contractual risks; many liabilities are impossible to quantify at this stage.

### Quantified macroeconomic impacts, scenarios, and model assumptions
- Total annual fiscal savings could range between less than 1 to about 4 percent of GDP, depending on oil price levels.
- Import savings could reach about 5 percent of GDP provided all announced projects are implemented.
- Annex assumptions and model notes:
  - Revenue from the Basra-Aqaba pipeline is $1.5/bbl.
  - The construction cost of the nuclear plant to be paid by the government is JD2.5 billion over 5 years, financed through debt issuance with an interest of 7 percent.
  - NEPCO savings from the introduction of each alternative source are computed by multiplying its assumed share in generation capacity by the difference between the 2015 bulk supply tariff (computed assuming the same fuel mix of 2014 and at different oil price levels) and the feed-in tariffs expected to be paid to non-conventional generators.
  - Import cost savings equal generation costs savings for LNG and gas imports. For domestic sources (renewable energies, oil shale and nuclear), complete import substitution is assumed: import savings equal the value of fuel imports NEPCO would be required to purchase to generate as much electricity with the current generation mix.
- Macroeconomic impacts under oil price scenarios (examples cited):
  - If oil prices stay above $70/bbl in the medium term, fiscal savings (NEPCO savings) from LNG and other technologies would be substantial.
  - If prices approach $100 (as in 2014), savings could be in excess of 1 percent of GDP annually and could exceed 2 percent of GDP in outer years.
  - If Brent prices stayed below $70/bbl, LNG might not be cost-competitive; if prices stayed at about $45/bbl for the next 10 years, NEPCO would probably be better off holding on to conventional power plants in the medium term.

### Feed-in tariff and cost-recovery assumptions (JD fils per kW)
- Cost recovery bulk supply tariff 2015 1/: 87 116 153 169 (for oil prices $45 $70 $99 $115 respectively).
- Feed in tariff renewables - 1st phase: 120 120 120 120.
- Feed in tariff renewables - 2nd phase wind: 100 100 100 100.
- Feed in tariff renewables - 2nd phase solar: 80 80 80 80.
- Feed in tariff oil shale: 100 100 100 100.
- Feed in tariff nuclear: 80 80 80 80.
- 1/ Assuming same fuel mix as 2014; estimate cost recovery tariff in 2014: 146.

### Policy recommendations (conclusions)
- Reassess the unconditional choice of PPPs as the contractual form to implement energy projects; establish a framework for evaluation and management of PPPs with a central role for the ministry of finance.
- Focus PPP assessment on all known and implicit costs and their impact on fiscal accounts; employ financial and economic cost-benefit analyses to inform choice between PPPs and traditional public financing.
- Record the project value of all PPPs as on-budget public investment to ensure transparency (consistent with IPSAS 32 guidance).
- Prepare contractual frameworks and consider appropriate taxation regimes for natural resource extraction soon; balance investment attractiveness and benefits to Jordan.
- Revise the fiscal framework in view of potential revenue streams from the pipeline and shale oil: identify an appropriate fiscal anchor to guide decisions on spending or saving resource-related revenue, taking into account high uncertainty.
- Quantify and factor in long-term contingent liabilities; strengthen fiscal institutions to transparently report additional revenue and its uses.
- Consider market liberalization and allowing small power plants to sell directly to the private sector as part of broader energy sector reform.

*Source: IMF staff analysis in "_wp15115."_*

### References .............................................................................................................

### _wp15115 - References

### Text Figures
- Energy Imports Volume, 2010–13 .......................................................................................4
- Energy Imports, 2010–13.....................................................................................................4
- Potential Long-Term Generation Capacity and Peak Demand ............................................4

### Tables
- 1.   NEPCO Cost Recovery Under Different International Oil Price Assumptions ..................6
- 2.   Price Per Unit of Energy of Alternative Fuel Imports ($/MMBTU) Under 
      Different      International      Oil Prices Assumptions ...................................................................8

### Figures
- 1.   Macroeconomic Impact of New Energy Source Under Different  
 Oil Price Scenarios, 2015–25 ...............................................................................................7

*Source: _wp15115 - References.*

### 2.   The Planned Pipeline Between Basra and Aqaba ..............................................................10

### 2.   The Planned Pipeline Between Basra and Aqaba

### Overview and context
- The paper analyzes Jordan’s broader energy strategy which includes: LNG terminal in Aqaba, Eastern Mediterranean gas, renewable energies, oil shale, nuclear energy, and a pipeline from Iraqi Basra fields to the Jordanian port of Aqaba.
- The analysis highlights that macroeconomic impact of new energy sources will crucially depend on international oil prices through 2025.
- If soundly completed, projects could substantially reduce Jordan’s energy dependency and create significant fiscal benefits, but projects bear significant uncertainties (security, price volatility, contractual liabilities, need for refinery/upgrades).

### Pipeline project description
- Agreement signed in mid-2013 between Iraq and Jordan on a pipeline from the Iraqi Basra fields to Aqaba.
- Pipeline initial capacity: up to one million barrel per day (bbl/d), with around 150,000 bbl/d available for use inside Jordan.
- A natural gas pipeline along the same route would make up to 100 MMcf/d available for use in Jordan (sufficient to cover generation of around 20 percent of Jordan’s current electricity demand).
- Jordanian section expected to be funded through a Build, Operate and Transfer (BOT) agreement with an international investor; investor reportedly to operate the pipeline for twenty years or more before transfer.

### Potential economic impacts and magnitudes
- Transit fee preliminary estimate: up to $500 million per year (1.4 percent of GDP).
- Transit fee would represent around 7 percent of 2013 domestic revenue.
- Jordan’s refinery current processing capacity: about 24,000 bbl/d; country’s oil demand is above 100,000 bbl/d.
- Estimated cost to upgrade the refinery: about $1.5 billion.
- Potential refinery shortfall: with potential imports of 150,000 bbl/d through the pipeline, a significant expansion and/or additional refineries would be needed.

### Key fiscal and macroeconomic considerations
- Import bill impact:
  - Iraqi crude and gas market prices are likely to be lower than international price of Arab light and LNG, so import bill could be reduced, but actual savings depend on international prices and any discount on Jordanian imports.
  - Low oil prices for a prolonged period might lead to lower transit prices and could delay or halt pipeline completion.
- Long-term liabilities:
  - Jordan would not pay upfront construction costs under the BOT, but would provide “transit right” including land and maintenance rights and would be expected to take over operation (and associated costs) in the distant future—raising the possibility of long-term liabilities.
- Fiscal policy framework:
  - Transit fee is exhaustible-resource revenue; authorities need to decide what revenue share to invest, save, or use for debt repayments.
  - Consideration of alternative fiscal benchmarks that take into account resource exhaustibility, e.g., Permanent Income Hypothesis, and targets such as a non-resource primary balance or the structural primary balance.
  - Strengthen fiscal institutions for efficient and transparent use of pipeline revenue; proper accounting of revenue and underlying non-resource fiscal position required.
- In-kind vs cash transit revenue:
  - Transit revenue could be paid in kind or in cash. In-kind proceeds provide insurance against price changes but should be monetized through standard domestic taxation or tariffication rather than earmarked to subsidize energy and electricity consumption.

### Contractual and PPP design issues (policy recommendations)
- BOT contract design is critical:
  - Carefully examine project at every stage to avoid unforeseen liabilities upon ownership transfer, with particular attention to any guarantees provided by the government.
  - Design of termination clause (including force-majeure or default by private party) is critical as it affects effective risk-sharing.
- Review fiscal framework and budgeting procedures:
  - Use conservative assumptions and avoid counting on additional revenue until supplies are reliable and proceeds will materialize.
  - Consider appropriate saving/investment rules for exhaustible-resource revenue.
- Institutional transparency and governance:
  - Ensure transparent mechanisms at all stages of investment execution so that revenue supports growth and equity efficiently.
  - Proper accounting and fiscal planning prior to committing to spending of transit revenues.
- Refinery and market considerations:
  - Given private monopoly and regulated profits of current privately-owned refinery, authorities should consider private sector management of upgrades.
  - Authorities could consider liberalizing the market and promoting new refineries, but the small size of the Jordanian market might deter investors.

### Risks highlighted
- Security risks and operational disruptions could delay or interrupt oil and gas supplies even if the pipeline is completed.
- Low international oil prices could:
  - Make pipeline economics less attractive, potentially delaying or stopping completion.
  - Reduce fiscal revenues from transit fees if transit fees move with volumes and/or prices.
  - Reduce incentives for shale and other investments.
- Execution risk and contingent liabilities from PPP/BO T arrangements if contract design is weak.
- Structural bottleneck: domestic refinery capacity insufficient for projected pipeline-sourced crude volumes.

### Interaction with broader energy strategy and price scenarios
- Wider energy strategy includes LNG terminal (up to 400 MMcf/d gaseous equivalent), Eastern Mediterranean gas, renewables, oil shale, and nuclear.
- LNG terminal expected to start operations at the latest in mid-2015 and could supply up to 400 MMcf/d; LNG would replace diesel and heavy fuel oil.
- Macroeconomic impacts depend on oil price scenarios (examples cited across the paper):
  - If oil prices stay above $70/bbl in the medium term, fiscal savings (NEPCO savings) from LNG and other technologies would be substantial.
  - If prices approach $100 (as in 2014), savings could be in excess of 1 percent of GDP annually and could exceed 2 percent of GDP in outer years.
  - If Brent prices stayed below $70/bbl, LNG might not be cost-competitive; if prices stayed at about $45/bbl for the next 10 years, NEPCO would probably be better off holding on to conventional power plants in the medium term.
- Interaction with renewables and other sources:
  - Renewable energy and oil shale may still improve the current account by reducing energy import bill even if they are not cost-competitive in a low oil-price environment.
  - Grid and contractual arrangements (e.g., feed-in tariffs, PPAs) need careful design to avoid unexpected long-term liabilities for NEPCO/government.

*Source: IMF staff analysis in "2.   The Planned Pipeline Between Basra and Aqaba."*

### 1.8 GW additional generation capacity from renewable energies in the next ten years. The

### _wp15115 - 1.8 GW additional generation capacity from renewable energies in the next ten years. The

### Renewable generation and grid constraints
- 1.8 GW additional generation capacity from renewable energies in the next ten years.
- The network can accommodate the first round of new plants coming online, but in the next few years grid connection capacity is likely to become a constraint to renewable energy development.
- A third round of expression of interest for a total 800MW capacity will take place only after the network has been upgraded.
- Significant infrastructure investments will be needed to transmit power from the south (where solar farms will be concentrated) to Amman and the north (where energy demand is most intense).
- The necessary improvements could cost around $150 million (0.5 percent of GDP) and would be spread over three years during 2014–16.
- Several donors are active in the energy sector and some have expressed interest in funding such investments; these and other projects are part of the so called “Green Corridor,” specifically designed to support the network when renewable energies come online.

### Oil shale and shale oil: resource potential and project plans
- Jordan’s proven reserves of oil shale are amongst the largest in the world.
- Shale formations allow both for the use of oil shale directly in power plants and for the extraction of synthetic crude (shale oil) from the rocks through a chemical process.
- The viability of most of the reserves is still under study; several explorations are under way.
- The first oil shale power plant is to start operations by 2018 under a Build Own and Operate (BOO) contract with a foreign investor. NEPCO will pay the generator an “average tariff” through a Power Purchase Agreement.
- Commercial exploitation of shale oil could start toward the end of the decade. Two concessions are under consideration to extract shale oil via surface retorting and a longer-term project might exploit deep-seated oil shale. The eventual size and output of these projects are uncertain.
- External and fiscal accounts would improve, with significant upward potential from shale oil exploitation.

### Economic and fiscal impacts of oil shale power
- Preliminary estimates put oil shale tariffs at around two thirds of the current cost-recovery tariff.
- Oil shale will be a competitive alternative to traditional fuels, provided Brent oil prices stay above $50/bbl on average for the next 10 years.
- The first plant would produce 230 MW (compared with a peak demand at over 3,000 MW by 2018).
- As additional capacity is added, NEPCO would save as much as $130 million a year (0.2 percent of 2020 GDP).
- The import bill would be lowered by a larger amount (up to $500 million per year), because imports are fully substituted with domestically-sourced fuel.
- Any successful exploitation of shale oil could yield large additional current account benefits as well as fiscal revenue, but this currently cannot be quantified.
- Refining upgraded shale oil in Jordan for domestic consumption and even export could yield further benefits.

### Risks, contingent liabilities, and resource constraints
- Contingent liabilities of oil-shale power generation could be large.
- Environmental issues related to oil shale could lead to potentially large public liabilities, which need careful analysis.
- A major caveat stems from the large amounts of water required for shale oil exploitation; given Jordan’s water scarcity, there is a need for promoting water-saving technologies, including in electricity generation.
- Direct monetary costs of water supplies to shale oil projects, even if charged well above cost recovery, could underestimate the costs of foregone water in the future.
- Investment in logistical infrastructure needs to be factored in, and careful planning should avoid port congestion in Aqaba. If all ventures are fully realized, Aqaba could become a hub for fuel trade in the Eastern Mediterranean, bringing LNG imports, crude from Iraq for exports and potentially shale oil distilled within Jordan for upgrade and/or refinement abroad. The small and environmentally delicate area of the port of Aqaba requires full accounting of associated costs and environmental risks and any potential repercussion on tourism.

### Public-private partnerships (PPPs) and fiscal reporting
- The BOO contract is equivalent in many ways to traditional public procurement with debt financing.
- The full fiscal implication of the PPP should be incorporated in the fiscal framework.
- The obligations arising from the PPPs should be included in the medium-term fiscal framework and in the debt sustainability analyses.
- To ensure transparency, the project value of all PPPs should be recorded as on-budget public investment (consistent with accounting guidance of IPSAS 32).
- The choice of PPPs over traditional public investment should be based on what provides the highest value for money to the government.

### Taxation and fiscal regime for extractive activities
- Fiscal policy implications of shale oil exploitation could be major; if commercial exploitation is viable, the fiscal framework should be reconsidered and an appropriate taxation regime developed.
- A balance is needed between maximizing fiscal revenue and minimizing its volatility, maintaining adequate remuneration for investors, and keeping administration simple.
- Contract stability should be ensured to attract investors.
- Details of taxation regimes (depreciation rules, royalty rates and basis, government equity participation, presence of VAT or corporate tax) can substantially change the government’s share of economic benefits accruing from exploitation projects.

### Nuclear power: plans, costs, and benefits
- Strategy to build two nuclear reactors generating 1,000 MW each in the next decade; a preferred bidder has been selected to conduct further studies and risk assessments; negotiations on the final contract would possibly start within two years.
- Construction would require an investment of about $10 billion, including grid improvements.
- The foreign operator would bear about half of the cost, and the Jordanian government would retain 51 percent of equity in the joint venture, of which 25 percent would be immediately sold to a third-party investor.
- All design, construction and maintenance costs will be subsumed in the feed-in tariff the government would commit to pay in exchange for an agreed amount of generated electricity for up to 60 years.
- The cost per kilowatt of electricity generated by a nuclear plant could be as low as half of current NEPCO unit costs.
- Savings could amount to up to $300 million a year (1 percent of 2014 GDP) for the external account and about $150 million for NEPCO, but only half of the yearly savings will materialize by 2025, as the second reactor will be built only after completion of the first.
- If the uranium needed for the reactors is sourced in Jordan, current account and fiscal savings could be higher; if oil prices remain at low levels, savings compared to traditional fuels could be halved.

### Nuclear risks and resource considerations
- Environmental and safety risks could be enormous; significant implicit liabilities should be priced in (over-estimation of future electricity demand; under-estimation of costs associated with waste disposal, force majeure, and decommissioning).
- A nuclear plant requires large amounts of water; authorities are planning to cool the plant with waste water to minimize impact on Jordan’s scarce fresh-water deposits. This solution is likely to increase costs and requires close proximity of the plants to urban centers, increasing the need for a careful safety assessment.
- Large upfront costs would substantially increase public debt. Current estimates put the share of costs to be borne by the public sector at well over 10 percent of 2013 GDP.
- Further debt-like obligations might arise if costs increase and should be appropriately reported in the fiscal accounts.
- Consideration should be given to alternative smaller projects, including in renewable energies, which would not require direct government involvement.
- To spur smaller projects, small power plants could be allowed to sell directly to the private sector, rather than to NEPCO. Exiting from the single buyer model (NEPCO is by law the single buyer) would align Jordan with best practices and complete energy sector reform started in the early 2000s.

### Quantified macroeconomic impacts and scenarios (summary)
- Total annual fiscal savings could range between less than 1 to about 4 percent of GDP, depending on oil price levels.
- Import savings could reach about 5 percent of GDP provided all announced projects are implemented.
- Contingent liabilities could be large but are impossible to quantify at this stage.
- Annex assumptions and model notes:
  - Revenue from the Basra-Aqaba pipeline is $1.5/bbl.
  - The construction cost of the nuclear plant to be paid by the government is JD2.5 billion over 5 years, financed through debt issuance with an interest of 7 percent.
  - NEPCO savings from the introduction of each alternative source are computed by multiplying its assumed share in generation capacity by the difference between the 2015 bulk supply tariff (computed assuming the same fuel mix of 2014 and at different oil price levels) and the feed-in tariffs expected to be paid to non-conventional generators.
  - Import cost savings equal generation costs savings for LNG and gas imports. For domestic sources (renewable energies, oil shale and nuclear), complete import substitution is assumed: import savings equal the value of fuel imports NEPCO would be required to purchase to generate as much electricity with the current generation mix.

### Feed-in tariff and cost-recovery assumptions (JD fils per kW)
- Cost recovery bulk supply tariff 2015 1/: 87 116 153 169 (for oil prices $45 $70 $99 $115 respectively).
- Feed in tariff renewables - 1st phase: 120 120 120 120.
- Feed in tariff renewables - 2nd phase wind: 100 100 100 100.
- Feed in tariff renewables - 2nd phase solar: 80 80 80 80.
- Feed in tariff oil shale: 100 100 100 100.
- Feed in tariff nuclear: 80 80 80 80.
- 1/ Assuming same fuel mix as 2014; estimate cost recovery tariff in 2014: 146.

### Policy recommendations (conclusions)
- Reassess the unconditional choice of PPPs as the contractual form to implement energy projects; establish a framework for evaluation and management of PPPs with a central role for the ministry of finance.
- Focus PPP assessment on all known and implicit costs and their impact on fiscal accounts; employ financial and economic cost-benefit analyses to inform choice between PPPs and traditional public financing.
- Record the project value of all PPPs as on-budget public investment to ensure transparency.
- Prepare contractual frameworks and consider appropriate taxation regimes for natural resource extraction soon; look at other country experiences to balance investment attractiveness and benefits to Jordan.
- Revise the fiscal framework in view of potential revenue streams from the pipeline and shale oil: identify an appropriate fiscal anchor to guide decisions on spending or saving resource-related revenue, taking into account high uncertainty.
- Quantify and factor in long-term contingent liabilities; strengthen fiscal institutions to transparently report additional revenue and its uses.

*Source: IMF staff calculations and analysis in _wp15115.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2015/_wp15115.pdf_