US embassy cable - 05AMMAN5451

C O N F I D E N T I A L AMMAN 005451 
 
SIPDIS 
 
E.O. 12958: DECL: 12/29/2014 
TAGS: EPET, ENRG, EAID, EFIN, PGOV, PREL, JO 
SUBJECT: GOJ TO PARTIALLY ELIMINATE FUEL SUBSIDIES JULY 9 
 
REF: AMMAN 5228 
 
Classified By: Charge d'Affaires David Hale for reasons 1.4 (b) and (d) 
 
1. (C) In Charge's initial courtesy call on recently 
appointed Finance Minister Adel al-Kodah on July 7, Minister 
Kodah stated that the Council of Ministers had finalized its 
decision to raise fuel product prices.  In its first session, 
on July 5, the Cabinet had set July 9 as the date on which 
the price rise would go into effect.  (NOTE: In a separate 
conversation with Charge, King Abdullah noted that the price 
rise would be announced on the evening of Friday, July 8, to 
take advantage of the news cycle and minimize the initial 
posibility of disturbances.) 
 
2. (C) Minister Kodah explained that the price rises would 
vary according to the fuel product in question, and gave the 
rises as follows: 
Gasoline would increase by 10.6% 
Diesel would increase by 30% 
Kerosene would increase by 33.3% 
Fuel oil for electricity would increase by 33% 
Fuel oil for industry would increase by 59.1% 
Jet fuel for Royal Jordanian Airlines (RJ) would increase by 
47.9% 
Jet fuel for carriers other than RJ would increase by 7% 
Fuel for ships would increase by 7.7% 
Cooking gas would increase by 7.7% 
(NOTE: Post has faxed historic price list to NEA/ELA and 
EB/ENR - reftel) 
 
3. (C) To help ameliorate the effects of these price 
increases on the poorest Jordanians, Minister Kodah said that 
the GOJ plans to delay the end of the subsidy on bread and to 
hold the price of electricity constant for the poorest 
consumers who utilized less than 160 kilowatt hours per 
month.  In addition, the GOJ plans to give a stipend of JD 10 
($14) per month to those earning less than JD 100 ($140) per 
month and JD 5 ($7) per month to those earning between JD 100 
($140) and JD 300 ($420) per month. (NOTE: It was unclear 
from the discussion whether these stipends would go to all 
Jordanians or to GOJ employees; past GOJ practice would 
indicate the latter.)  In the longer term, the Ministry of 
Finance is working to restructure the National Aid Fund to 
better target those most in need of it. 
 
4. (C) Minister Kodah noted that he planned two further 
rises: one to take place by March 1, 2006, in which the 
subsidies on the majority of fuel products would be 
eliminated entirely, and one to take place by March 2007, in 
which the subsidies on the remainder of fuel products 
(including kerosene and cooking gas) would be eliminated. 
HALE