Jordan adopts austerity measures after Egypt gas supply cut

Apr 28, 2011, 11:45 GMT

Amman - The Jordanian cabinet on Thursday adopted a package of measures that seek to reduce the country's energy consumption after supplies of natural gas from Egypt were cut following a pipeline explosion.

Energy Minister Khalid Touqan told an emergency cabinet session that Jordan would have to resort to heavy fuel for power generation to make up for the loss.

The cabinet discussed steps 'to address the additional burdens on the Treasury as well as moving swiftly to find alternative resources for boosting the country's reserves of fuel and oil derivatives,' a statement from the premier's office said.

Touqan said that resorting to heavy fuel would increase the financial burden of the cash-strapped country, which imports almost all its energy requirements from Arab Gulf states, particularly Saudi Arabia.

Egypt's Petroleum Minister Abdullah Ghorab said the country was not obliged to compensate Jordan and Israel for the non-delivery of gas because the explosion occurred under an 'exceptional circumstance,' according to al-Shorouk newspaper.

Surging oil prices over the past few months have threatened to increase Jordan's budget deficit, which exceeded 2 billion dollars in 2010.

The budget gap grew when the government failed to raise fuel prices to avert further protests, which have swept over the country in the last four months, finding inspiration from the uprisings in Tunisia and Egypt.

Jordanian officials visited oil-rich Gulf states recently in an apparent effort to muster financial aid to help plug the budget deficit.

Wednesday's explosion in the Egyptian gas pipeline, the second in two months, gave the impression that gas supplies from Egypt could be unreliable in the short term, energy experts have said.

Under an agreement concluded in 2001, Egypt pledged to supply Jordan with natural gas supplies for 15 years at fixed prices.

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