By JT – Jul 12,2015 – Last updated at Jul 12,2015

AMMAN —Jordan’s energy crisis has had its most profound impact on public debt, which rose from less than 60 per cent of the gross domestic product in 2009 to over 80 per cent of the GDP by 2014, according to a report.

In its first report on gas and electricity in the Kingdom, the Jordan Independent Economy Watch, affiliated with Identity Centre, said annual GDP growth remained below 3 per cent in the four years between 2010 and 2013, and it was only when international oil prices fell drastically in the second half of 2014, that GDP growth managed to exceed 3 per cent.

The report is aimed at shedding light on Jordan’s energy situation and the impact energy has on its economy.

It is part of a series of reports, each focusing on different fields in the energy sector, the centre said.

The first report focuses on Jordan’s accessibility to natural gas in addition to its electricity sector, which has been the major driver behind the surge in public debt witnessed over the past five years.

The trade deficit was also affected due to the rising energy bill in this period, increasing by almost 88 per cent between 2009 and 2014.

In addition, foreign currency reserves were impacted, plummeting in 2012 to dangerous and unsustainable levels, according to the report.

The main source of the rising level of public debt were the losses of the National Electric Power Company (NEPCO), which had absorbed most of the rise in energy prices in the electricity sector so that tariff rates were not raised.

By 2014, over 80 per cent of the government’s borrowing was used to cover NEPCO’s losses.

But the profits of electricity generation and distribution companies increased throughout the period when NEPCO was experiencing expanding losses, the report added.

Before 2003, Jordan used to overwhelmingly rely on oil imported from Iraq at discounted prices, and at that time, oil prices were much lower than their level seen in the past decade or so.

Due to the US-led invasion of Iraq in 2003, Jordan had to look elsewhere to meet its energy needs, the report added.

The Kingdom developed the National Energy Strategy with the aim of utilising domestic sources of energy, and signed a natural gas import agreement with Egypt, mainly for electricity generation.

In 2010, more than six years after the signing of the agreement, natural gas imports began to decline drastically until their almost complete halt in 2014.

The spike in domestic oil prices in this period had a deep impact on the domestic economy, both on the public sector and the private sector, according to the report.