U.S. Middle Eastern ally Jordan stands to lose several hundred million dollars annually as it purchases energy from a Chinese-owned energy business operating at an antiquated power plant.
According to a report, the Jordanian energy firm Attarat Power Company proposed a power plant in 2012 to supply about 15% of the nation’s electricity needs using the country’s newly discovered large concentration of shale oil. However, the project was more complicated than anticipated and was in dire straits until it was rescued in 2017 with a nearly $2 billion loan from China’s state-owned Guangdong Energy Group.
As part of China’s Belt and Road Initiative (BRI), it paid around $8.4 billion to Jordan to acquire electricity from the Attarat project for the next 30 years. Guangdong also bought a 45 percent ownership in Attarat.
According to the report, Jordan’s Ministry of Energy is challenging the project’s terms in the International Chamber of Commerce (ICC) based on excessive unfairness. The government estimates the project will cost $280 million annually, leading to a 17% increase in the price of energy for Jordanian consumers. Since the facility’s proposal, alternative projects and agreements have been developed, making the plant no longer essential for Jordan’s energy security.
American officials have called China’s readiness to lend enormous sums to developing nations for infrastructure projects a “debt trap.” After offering them loans with high-interest rates to finance projects in the framework of the BRI, China bailed out over two dozen nations over the previous 13 years.
When the BRI was first introduced in 2010, just five percent of Chinese loans were held by countries experiencing financial difficulties; by 2022, that percentage had increased to sixty percent.
A report reveals that between 2008 and 2021, Beijing spent $240 billion on rescue loans in developing nations, almost all of which have taken on substantial debt as a result of China’s “Belt and Road” plan. The Kiel Institute for the World Economy, AidData, the Kennedy School of Government at Harvard University, and the World Bank agree that Beijing is leveraging its status as an emergency lender to challenge the United States financial preeminence.