US embassy cable - 04AMMAN3293

UNCLAS SECTION 01 OF 02 AMMAN 003293 
 
SIPDIS 
 
SENSITIVE 
 
PASS TO TDA FOR FOR CYBIL SIGLER/HENRY STEINGASS 
 
E.O. 12958: N/A 
TAGS: ENRG, EINV, JO, IZ 
SUBJECT: JORDAN-IRAQ POWER SECTOR COOPERATION: MORE SMOKE 
THAN FIRE 
 
REF: 02 AMMAN 7299 
 
1. (SBU) SUMMARY: Over the past eight months, the Jordanian 
Ministry of Energy (JMOE) and the Iraqi Ministry of 
Electricity (IMOE) have engaged in a series of meetings on 
power sector cooperation that has received substantial 
publicity in the Jordanian press.   The talks that have been 
held have resulted in agreements to move forward on 
cooperation in three concrete ways: the establishment of a 
power sector coordination office in Amman, the training of 
IMOE employees by JMOE and JMOE-owned entities, and the 
linking of the Jordanian and Iraqi power grids.  While the 
first of these aims has been achieved, the other two remain 
prospects for the fairly distant future.  END SUMMARY. 
 
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COORDINATION OFFICE 
------------------- 
 
2. The highly touted Iraq-Jordan coordination office, set up 
by a bilateral MOU signed at the end of November 2003, is 
based at the National Electric Power Company (NEPCO), 
Jordan's state-owned electricity transmission monopoly. 
(NOTE: The only section of Jordan's electricity industry that 
Jordan has no plans to privatize, NEPCO should remain a 
suitable vehicle from which the JMOE can drive Jordan-Iraq 
power sector cooperation for the foreseeable future, and it 
is accordingly the base for all of the JMOE's cooperation 
initiatives.)  The office, composed of four rooms at the end 
of a wing of the NEPCO headquarters building, is permanently 
staffed by two NEPCO employees, an engineer and a secretary, 
and one or two IMOE officials, who rotate every two to three 
weeks.  The stated purpose of the office is to provide a 
place where the IMOE can communicate effectively with the 
outside world, with reliable phone and data links and in a 
location where the IMOE can hold meetings with potential 
investors and contractors who are not yet comfortable with 
the ability to travel to Baghdad.  For Jordan, there is the 
added benefit of direct communication with the IMOE, which 
allows NEPCO to stay abreast of - and forward to Jordanian 
newspapers - tenders for power sector-related contracts in 
Iraq, which the JMOE complains had previously been badly 
circulated and easy to miss. 
 
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TRAINING PROGRAMS 
----------------- 
 
3. A secondary purpose for the Iraqi-Jordanian coordination 
office - so far hypothetical - is to facilitate Jordanian 
training of IMOE employees.  NEPCO has indicated its 
willingness to provide such training at cost at its training 
center in Zarqa.  The Japanese International Cooperation 
Agency (JICA) has indicated its willingness to cover 60% of 
the training and lodging costs of the trainees as part of its 
assistance committed to Iraq, and that the UNDP will cover 
the remainder.  NEPCO has also offered to instruct IMOE 
employees in the operation of its electricity transmission 
dispatching center, whose technology is substantially more 
advanced than that of Iraq's existing dispatching centers and 
closer to what Iraq will ikely be purchasing as it upgrades 
its power grid.  IMOE is currently planning to send 40 
engineers to attend 10-day courses offered in these areas by 
NEPCO during the months of May and June; JICA and UNDP will 
cover the remainder. 
 
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POWER GRID LINK 
--------------- 
 
4. The centerpiece of Jordanian-Iraqi power sector 
cooperation, a several hundred million-dollar proposal to 
connect the Iraqi and Jordanian power grids, is still in its 
early stages.  The GOJ has already approached the U.S. Trade 
Development Authority to fund a feasibility study of the 
entire 3-stage proposal, which envisions the installation of 
a 400-kV line between the Risha substation in eastern Jordan 
and the Al-Qaim substation in western Iraq, the upgrading of 
the Risha substation, and the provision of backup capacity 
through the installation of a 400-kV line between Risha and 
another of Jordan's power stations.  NEPCO personnel claim 
that they have already secured financial backing from an 
Iraqi private sector investor (NFI) for the first phase of 
the project, for which a preliminary feasibility study had 
already been completed prior to the war. 
 
5. The linking of the Jordanian and Iraqi power grids would 
help to complete the mutual interconnection of the nations in 
the proposed six-nation power grid (reftel), a project whose 
primary immediate utility appears to be political rather than 
technical.  However, technical shortcomings seem likely to 
limit the effectiveness of a Jordan-Iraq power connection in 
the short term.  Even if a connection project were to move 
ahead at a high rate of speed (unlikely given recent events 
in Al-Anbar province), the initial phase of the project would 
not be completed before late in the year.  Even if it were 
completed, weaknesses in the Iraqi power transmission system 
and the unique frequency at which Iraqi stations generate 
power would mean that the area of the Iraqi grid drawing from 
exported Jordanian power would have to be isolated from the 
rest of the Iraqi grid, cancelling in large part the 
rationale for the project.  In the long run, of course, these 
obstacles will likely be worked out as the capacity of the 
Iraqi grid is increased, and there will be some benefit both 
to the Iraqis and to the Jordanians from the diversification 
of their grids.  But the benefit will be fairly marginal: 
even when the project has been completed, and all obstacles 
removed, NEPCO does not envision exporting more than 300 MW 
of power to Iraq, of which 150 MW would come from Egypt.  On 
the other hand, the completion of the full three-stage 
project will substantially strengthen Jordan's domestic power 
grid. 
 
 
6. (SBU) COMMENT: While significantly less substantial than 
JMOE press releases might imply, power sector cooperation 
between the Jordanians and Iraqis to date can serve as a 
starting point for initiatives that benefit both the 
Jordanian and Iraqi power sectors in the years ahead.  It is 
also one of very few Iraqi-Jordanian bilateral cooperation 
programs driven by Iraqi ministerial personnel, and 
presumably therefore implies a substantial degree of buy-in 
from the Iraqis that should make future cooperation fairly 
secure. 
GNEHM