Business News

A Troubled New Power Plant Leaves Jordan In Debt To China, Raising Concerns Over Beijing’s Influence

Attarat power plant is seen Wednesday, June 7, 2023, some 100 kilometers (60 miles) south of Amman, Jordan. The $2.1 billion Attarat power plant that began officially operating on May 26 has fueled tensions between Beijing and the resource-poor kingdom and set off an international legal battle. (AP Photo/Raad Adayleh)

Attarat power plant is seen Wednesday, June 7, 2023, some 100 kilometers (60 miles) south of Amman, Jordan. The $2.1 billion Attarat power plant that began officially operating on May 26 has fueled tensions between Beijing and the resource-poor kingdom and set off an international legal battle. (AP Photo/Raad Adayleh)

ATTARAT, Jordan (AP) — Jordan’s Attarat power plant was envisioned as a landmark project promising to provide the desert kingdom with a major source of energy while solidifying its relations with China.

But weeks after its official opening, the site, a sea of black, crumbly rock in the barren desert south of Jordan’s capital, is instead a source of heated controversy. Deals surrounding the plant put Jordan on the hook for billions of dollars in debt to China — all for a plant that is no longer needed for its energy, because of other agreements made since the project’s conception.

The result is fueling tensions between China and Jordan and causing grief for the Jordanian government as it tries to contest the deal in an international legal battle. As Chinese influence grows in the Middle East and America withdraws, the $2.1 billion shale oil station has come to characterize China’s wider model that has burdened many Asian and African states with crippling debt and served as a cautionary tale for the region.

“Attarat is a representation of what the Belt and Road Initiative was and has become,” said Jesse Marks, a nonresident fellow at the Washington-based Stimson Center, referring to China’s scheme to build global infrastructure and boost Beijing’s political sway.

“Jordan evolves as an interesting case study not for China’s success in the region but for how China engages in middle-income countries,” he said.

First conceived some 15 years ago as a way to fulfill national ambitions of energy independence, the Attarat shale oil plant is now causing anger in Jordan because of its enormous price tag. If the original agreement holds, Jordan would have to pay China a staggering $8.4 billion over 30 years to buy the electricity generated by the plant.

Laborers flown from rural China toil in the shadow of the giant station, some 100 kilometers (60 miles) south of Amman.

When Shi Changqing arrived in the Jordanian desert earlier this year from the Jilin province in China’s northeast, fears were mounting in the workers’ dormitories that the project could grind to a halt, leaving everyone in the lurch, the 36-year-old welder said.

“It’s very strange to feel that, being from China, you are not wanted here,” he said.

With its meager natural resources in a region awash with oil and gas, Jordan seemed to have drawn a losing ticket. Then in the 2000s, it struck shale oil trapped in the black rock that underlies the country. With the fourth-largest concentration of shale oil in the world, Jordan had high hopes for a big pay-off.

In 2012, the Jordanian Attarat Power Company proposed to the government to extract shale oil from the desert and build a plant using it to provide 15% of the country’s electricity supply. The proposal fit the government’s intensifying desire for energy self-sufficiency amid the turmoil of the 2011 Arab uprisings, company officials say.

But extraction proved expensive, risky and technologically challenging. As the project lagged, Jordan struck a $15 billion agreement to import vast amounts of natural gas at competitive prices from Israel in 2014. Interest in Attarat waned.

Attarat Power Co. board member Mohammed Maaitah said he pitched the project the world over — from the United States and Europe to Japan and South Korea. No one bit, he said.

To Jordan’s surprise, Chinese banks offered Jordan over $1.6 billion in loans to finance the plant in 2017. A Chinese state-owned firm, Guangdong Energy Group, bought a 45% stake in the Attarat Power Co., turning the white elephant into the largest private enterprise to come out of President Xi Jinping’s Belt and Road Initiative outside China, according to the company.

Advertisement. Scroll to continue reading.

Guangdong Energy Group did not respond to requests for comment.

The investment was part of China’s wider push into an Arab world hungry for foreign investment, experts say. The money for large infrastructure projects came with few political strings attached.

“China doesn’t bring with it the baggage of the United States in that we actually have some concern about democratic processes, transparency, corruption,” said David Schenker, a former U.S. assistant secretary of state for Middle East policy. “For authoritarian states, there’s some appeal in China.”

As talk grew of American unreliability, China turned to acquiring strategic assets in the Middle East, even in economically troubled states. It bought lots of Iraqi oil, tendered a port in northern Lebanon and poured money into President Abdel-Fattah el-Sissi’s new capital in Egypt.

With Syrian President Bashar Assad in 2017 gaining the upper hand in his country’s civil war, China had an interest in investing in the Attarat project in neighboring Jordan as a springboard, anticipating a Syrian reconstruction boom that could unlock billions of dollars in investments, experts say.

Under their 30-year power purchase deal, Jordan’s state-run electricity company will have to buy electricity from the now effectively Chinese-led Attarat at an exorbitant rate that means the Jordanian government would lose $280 million annually, the treasury estimated. To cover the payments, Jordan would have to raise electricity prices for consumers by 17%, energy experts said — a severe blow to an economy already saddled with debt and inflation.

The extent of losses to China appalled the Jordanian government. Jordan’s Ministry of Energy launched international arbitration against Attarat Power Co. in 2020 “on the grounds of gross unfairness.”

When asked why Jordan had agreed to such a lopsided contract to begin with, Jordan’s Ministry of Energy declined to comment, as did the National Electricity Co. As of June, hearings were being held at an arbitration tribunal of the Paris-based International Chamber of Commerce.

Musa Hantash, a geologist on the parliamentary energy committee, described the deal as the natural outcome of corruption and a lack of technical expertise.

“It’s very difficult to convince these big companies to invest in Jordan. There are things to help certain people make a profit,” he said, without elaborating.

American officials portrayed the Attarat contract as a case of Beijing’s “ debt trap diplomacy.”

The Chinese Foreign Ministry declined to comment on the Attarat project. But it defended Beijing’s investment in developing countries, denying allegations it ensnares partners in debt and arguing that China never compels “others to borrow from us forcibly.”

“We never attach any political strings to loan agreements,” the ministry said, urging international financial institutions to help provide debt relief.

Attarat Power said it expects a decision in the case later this year. Rulings by the world business organization are legally binding and enforceable.

Maaitah and other company officials dismissed Jordan’s claims of unjustly inflated prices, accusing Jordan of backtracking on its agreement due to anti-China sentiment.

Advertisement. Scroll to continue reading.

Since the first of two power units went live last fall, the Jordanian government has paid only half its monthly dues, Maaitah said.

In Jordan and other poorer Arab states allied with the U.S., the pace of Chinese investment in recent years has slowed.

Faced with pushback abroad and rising concerns at home, China is shifting its approach in the region, said Amman-based China expert Samer Khraino, focusing on the oil-rich Persian Gulf. Wealthy states like the United Arab Emirates and Saudi Arabia have no issue paying back China’s big loans.

For now, Jordan appears unwilling to take any more chances with China.

In May, Jordan’s telecommunications company Orange signed a new agreement for 5G equipment. It had long been a customer of Huawei, the Chinese telecoms giant under American sanctions.

Copyright 2021 Associated Press. All rights reserved.

Source: https://hosted.ap.org/article/d80f4801e61560a897cc5ef3b4524ac3/troubled-new-power-plant-leaves-jordan-debt-china-raising

Click to comment

You May Also Like

Business News

TAMPA, Fla. (AP) — A fight between two groups turned deadly in Florida when a shooting in a Tampa street during Halloween festivities resulted...

Business News

PORTO-NOVO, Benin (AP) — For many people in Benin, the forests empowered them before they were born, or in the first months of their...

Business News

WASHINGTON (AP) — As the 3-week-old Israel-Hamas war enters what Israeli Prime Minister Benjamin Netanyahu says could be a “long and difficult” new stage, President Joe Biden is calling on Israeli and...

Business News

DEIR AL-BALAH, Gaza Strip (AP) — Thousands of people broke into aid warehouses in Gaza to take flour and basic hygiene products, a U.N....

Copyright © 2023 Newsworthy News | Global | Political | Local | All News | Website By: Top Search SEO

Exit mobile version