The Japan International Cooperation Agency (JICA) with the government of Jordan on Tuesday signed the loan agreement for a new budget-support Development Policy Loan (DPL), titled “Electricity Sector Reform and Resilience Enhancement Programme Loan (Phase II)” worth 15 billion Japanese Yen, or approximately $100 million.
The Loan Agreement was signed by Zeina Toukan, the Minister of Planning and International Cooperation, on behalf of the Government of Jordan, and Wakui Junji, JICA Chief Representative in Jordan, according to a statement from JICA.
Following His Majesty King Abdullah’s visit to Japan in April 2023, the signing came as a follow up to the Exchange of Notes, signed by Toukanand Hayashi Yoshimasa, Japanese Minister for Foreign Affairs on September 3 during his recent visit to Jordan.
The loan has a value of 15 billion Japanese Yen, or approximately $100 million. Jordan enjoys soft conditions under this loan agreement, which include a 1.75 per cent interest rate, a 20-year repayment period, with the first six years as grace period, the statement said.
As the Jordanian side achieved all prerequisites for disbursement, the loan is expected to be disbursed this year.
Although this loan is a budget-support loan, the related prior actions of the loan are all within the energy and electricity sector, which include the government, represented by the Minister of Energy, approving the 10-year programme for electricity sector reliability, improved governance and foundations of financial viability.
Other actions include the government adopting a time-bounded action plan for cost saving and revenue enhancement, the government adopting a new platform that would enhance coordination between the Ministry of Energy and Ministry of Water and Irrigation over the water-energy nexus, the National Electric Power Company (NEPCO) establishing a special department to update the electricity master plan, among many other action items.
The loan operation is in parallel with financing through the World Bank’s recent loan operation to Jordan, titled “Electricity Sector Efficiency and Supply Reliability Programme for Results (PforR),” according to the statement.