The 1st New Energy Conference – by EDAMASeptember 16th, 2012 / 10:35 am – 11:35 amKempinski Hotel – Amman “Opportunities for suppliers and investors in Jordan, a gateway to the region”Fellow colleagues,Distinguished guests,Ladies and gentlemen,First of all, I would like to thank EDAMA, ME Orient and Petra EventsManagement for organizing such an invaluable platform.It is really my pleasure to be with you today at the 1st New Energy Conferencein Jordan.ChallengesNow most of us know the fiscal challenges the country is facing including: The Budget deficit The increasing Public debt The increasing pressure on the country’s foreign currency reservesOne very important factor or driver behind all this is the cost of energyincluding oil and gas.
The biggest public FCY spending is being made on importing oil & gas.Add to this, the instability of gas supply coming from Egypt.Another challenge is that although oil prices are increasing, thus pushing thecost of generating electricity upwards.The government was unable to increase electricity prices until recently.Causing NEPCO (which is 100% owned by the government) to incuraccumulated losses due to the big gap between the cost of energy and theselling price of electricity).According to the IMF fiscal support program, electricity prices will go upgradually in the coming 4 years in order for NEPCO to be able to recover thelosses and breakeven.OpportunitiesNow, increasing electricity tariffs on one hand is negatively affectingJordanians’ disposable income in the immediate short term.On the flip side, this will make renewable energy power plants projects morefeasible, thus increasing their share in the country’s future energy mix,accordingly should drive electricity prices down in the future and reduce theirvolatility.(The new energy master plan of Jordan aims to increase the renewable energyshare in the energy mix to 10-20% by 2020).This is in addition to the favorable effect of renewable energy on environmentdue to its efficiency and clean generation of power (green energy).
Also it will definitely have a developmental role in the economy at large. IfJordan succeeds in growing the renewable energy sector, it will be thecountry’s niche, expertise.Jordan may become a hub for R&D on this sector in the region. Universitiesmay add special programs on this. With increased demand, Jordan could alsoplay a role in production of components and parts.More businesses whether SMEs or corporates will operate and invest in thissector, in the establishment phase, maintenance phase and so on.Role of Banks in JordanNow Banks can and should play a very important role in providing finance forthis sector.The banking sector currently has around JD 2 billion in excess liquidity (aboutUSD 2.8 billion).Part of this liquidity can be used to finance investments in the renewableenergy sector whether by individual banks, club deals, syndications, bondofferings, equity offerings …etc.Off course investment in wind and solar power plants would require a powerpurchase agreement under BOT or BOO deals or clear feed-in-tariffs for smallerscale projects.Importantly, I think that we should keep in mind that for real renewable energytransformation in the country, projects of all scales needs to be developed. It isno coincidence that in Europe for example, and despite lower sun intensity inmany areas, renewable energy projects range from a huge number of very small
scale projects on private residential and commercial properties to larger utilityplants. Banks’ services can range from medium sized loans to interestedparties to participating in larger syndications.However and as for the Mega investments in energy projects such as nuclear,oil shale and others, financing would have to come from regional andinternational support, funds, grants, donations as the government is seeking toinvest multi billion dollars by the year 2020.Capital BankAs for Capital Bank,we have always given green finance and energy finance avery important part of our strategy.We believe that financing the energy sector generates good profits in a sensethat it has a developmental role in the economy as well as it emphasizes ourcorporate social responsibility and demonstrates our capacity to keep pacewith global trends and social priorities.Our benefiting clients range from individuals wanting to buy solar waterheating systems, or energy saving lighting equipment and devices, to SMEs andcorporates investing in solar photo voltaic systems whether suppliers or theircustomers (and that includes schools, warehouse facilities, households …etc.).Our financing is also targeting customers who have the spare space to installsolar cells and want to lease it as well as those who need to reduce their cost ofelectricity.We are also very proud and honored of being the first Jordanian Bank to signan agreement with the French Development Agency (AFD) to provide subsidized
and long-term financing for green projects focusing on the main pillars ofrenewable energy, energy saving and pollution control.As part of the agreement, AFD will provide Capital Bank with USD 7 million tofund these projects. The amount can be increased up to USD 53 million, with amaximum USD 5 million for each loan. (Financing can be in JOD or USD, andfor a tenor of 13 years including up to 3 years grace period).And as we speak, we have started financing projects in the fields of solarpower, recycled fuel & oils, waste water treatment facilities and otherbusinesses, whether being refinanced from the AFD line or from our ownfunding.Distinguished guestsIn the last few years, the energy sector has become a promising sector that willcontribute to strengthening Jordan’s national economy while at the same timepreserving the environment.Finally, allow me to sincerely thank you all for this great gathering. Jordan’seconomy and environment will certainly benefit from your graciouscommitment.Thank you.