The 1st New Energy Conference – by EDAMA

September 16th, 2012 / 10:35 am – 11:35 am

Kempinski 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 Events

Management for organizing such an invaluable platform.

It is really my pleasure to be with you today at the 1st New Energy Conference

in Jordan.

Challenges

Now 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 reserves

One very important factor or driver behind all this is the cost of energy

including 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 the

cost of generating electricity upwards.

The government was unable to increase electricity prices until recently.

Causing NEPCO (which is 100% owned by the government) to incur

accumulated losses due to the big gap between the cost of energy and the

selling price of electricity).

According to the IMF fiscal support program, electricity prices will go up

gradually in the coming 4 years in order for NEPCO to be able to recover the

losses and breakeven.

Opportunities

Now, increasing electricity tariffs on one hand is negatively affecting

Jordanians’ disposable income in the immediate short term.

On the flip side, this will make renewable energy power plants projects more

feasible, thus increasing their share in the country’s future energy mix,

accordingly should drive electricity prices down in the future and reduce their

volatility.

(The new energy master plan of Jordan aims to increase the renewable energy

share in the energy mix to 10-20% by 2020).

This is in addition to the favorable effect of renewable energy on environment

due to its efficiency and clean generation of power (green energy).

Also it will definitely have a developmental role in the economy at large. If

Jordan succeeds in growing the renewable energy sector, it will be the

country’s niche, expertise.

Jordan may become a hub for R&D on this sector in the region. Universities

may add special programs on this. With increased demand, Jordan could also

play a role in production of components and parts.

More businesses whether SMEs or corporates will operate and invest in this

sector, in the establishment phase, maintenance phase and so on.

Role of Banks in Jordan

Now Banks can and should play a very important role in providing finance for

this sector.

The banking sector currently has around JD 2 billion in excess liquidity (about

USD 2.8 billion).

Part of this liquidity can be used to finance investments in the renewable

energy sector whether by individual banks, club deals, syndications, bond

offerings, equity offerings …etc.

Off course investment in wind and solar power plants would require a power

purchase agreement under BOT or BOO deals or clear feed-in-tariffs for smaller

scale projects.

Importantly, I think that we should keep in mind that for real renewable energy

transformation in the country, projects of all scales needs to be developed. It is

no coincidence that in Europe for example, and despite lower sun intensity in

many areas, renewable energy projects range from a huge number of very small

scale projects on private residential and commercial properties to larger utility

plants. Banks’ services can range from medium sized loans to interested

parties 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 and

international support, funds, grants, donations as the government is seeking to

invest multi billion dollars by the year 2020.

Capital Bank

As for Capital Bank,we have always given green finance and energy finance a

very important part of our strategy.

We believe that financing the energy sector generates good profits in a sense

that it has a developmental role in the economy as well as it emphasizes our

corporate social responsibility and demonstrates our capacity to keep pace

with global trends and social priorities.

Our benefiting clients range from individuals wanting to buy solar water

heating systems, or energy saving lighting equipment and devices, to SMEs and

corporates investing in solar photo voltaic systems whether suppliers or their

customers (and that includes schools, warehouse facilities, households …etc.).

Our financing is also targeting customers who have the spare space to install

solar cells and want to lease it as well as those who need to reduce their cost of

electricity.

We are also very proud and honored of being the first Jordanian Bank to sign

an agreement with the French Development Agency (AFD) to provide subsidized

and long-term financing for green projects focusing on the main pillars of

renewable energy, energy saving and pollution control.

As part of the agreement, AFD will provide Capital Bank with USD 7 million to

fund these projects. The amount can be increased up to USD 53 million, with a

maximum USD 5 million for each loan. (Financing can be in JOD or USD, and

for 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 solar

power, recycled fuel & oils, waste water treatment facilities and other

businesses, whether being refinanced from the AFD line or from our own

funding.

Distinguished guests

In the last few years, the energy sector has become a promising sector that will

contribute to strengthening Jordan’s national economy while at the same time

preserving the environment.

Finally, allow me to sincerely thank you all for this great gathering. Jordan’s

economy and environment will certainly benefit from your gracious

commitment.

Thank you.