ATTARAT, Jordan (AP) — Jordan’s Attarat power plant was seen as a landmark project that would provide the desert kingdom with a vital source of energy while cementing its ties with China.
But weeks after its official opening, the site, a sea of black, crumbling rock in the barren desert south of the Jordanian capital, is instead a source of heated controversy. Deals related to the power plant will leave Jordan incurring billions of dollars in debt to China – all for a power plant that is no longer needed for power generation due to other agreements reached since the project was conceived.
The result has exacerbated tensions between China and Jordan and caused heartache for the Jordanian government, which is seeking to challenge the deal in an international legal battle. As Chinese influence in the Middle East expands and America retreats, the $2.1 billion shale oil station has become a feature of China’s broader model, which has left many Asian and African nations crippled by debt and served as a cautionary tale for the region .
“Attarat is a representation of what the Belt and Road Initiative was and has become,” said Jesse Marks, a nonresident researcher at the Stimson Center in Washington, citing China’s plan to build global infrastructure and Beijing’s political clout to strengthen.
“Jordan is emerging as an interesting case study, not for China’s success in the region, but for how China is engaging with middle-income countries,” he said.
The Attarat shale oil plant, conceived some 15 years ago as a way of realizing national energy independence ambitions, is now causing trouble in Jordan because of its enormous price. If the original deal goes through, Jordan would have to pay China a whopping $8.4 billion over 30 years to buy the power generated by the plant.
Workers flown in from rural China toil in the shadow of the huge station, about 100 kilometers south of Amman.
When Shi Changqing arrived in the Jordanian desert from northeast China’s Jilin province earlier this year, fears grew in workers’ dormitories that the project could stall and everyone would be abandoned, the 36-year-old welder said.
The story goes on
“It’s very strange to feel that if you’re Chinese, you’re not welcome here,” he said.
With scarce natural resources in a region awash with oil and gas, Jordan appeared to be on the losing list. Then, in the 2000s, it encountered shale oil trapped in the black rock beneath the land. With the fourth largest concentration of shale oil in the world, Jordan had high hopes for a big win.
In 2012, Jordanian energy company Attarat proposed that the government extract shale oil from the desert and build a plant that would provide 15% of the country’s electricity supply. The proposal comes in line with the government’s increasing desire for energy self-sufficiency amid the turmoil of the 2011 Arab uprisings, company officials say.
However, extraction turned out to be expensive, risky and technologically demanding. As the project stalled, Jordan struck a $15 billion deal in 2014 to import large quantities of competitively priced natural gas from Israel. Interest in Attarat waned.
Mohammed Maaitah, CEO of Attarat Power Co., said he has presented the project around the world – from the United States and Europe to Japan and South Korea. Nobody bit, he said.
To Jordan’s surprise, Chinese banks offered Jordan over $1.6 billion in loans to finance the power plant in 2017. A Chinese state-owned company, Guangdong Energy Group, bought a 45% stake in Attarat Power Co., making the white elephant the largest According to the company, a private company is said to be part of President Xi Jinping’s Belt and Road Initiative emerge outside of China.
Guangdong Energy Group did not respond to requests for comment.
The investment is part of China’s broader push into an Arab world starved of foreign investment, experts say. The money for large infrastructure projects was tied to few political conditions.
“China doesn’t bring the baggage of the United States because we do have certain concerns about democratic processes, transparency and corruption,” said David Schenker, a former US assistant secretary of state for Middle East policy. “For authoritarian states, there is a certain appeal in China.”
As talk of America’s unreliability grew, China turned to acquiring strategic assets in the Middle East, even in economically troubled countries. It bought large quantities of Iraqi oil, tendered out a port in northern Lebanon and invested money in President Abdel-Fattah el-Sissi’s new capital in Egypt.
When Syrian President Bashar al-Assad gained the upper hand in his country’s civil war in 2017, China had an interest in investing in the Attarat project in neighboring Jordan as a stepping stone, anticipating a Syrian reconstruction boom that would unlock billions of dollars in investments could, experts say.
As part of its 30-year power purchase agreement, Jordan’s state-owned electricity company must buy electricity from the now de facto Chinese-led Attarat at an exorbitant price, meaning the Jordanian government would lose $280 million a year, the Treasury Ministry estimated. To cover the payments, Jordan would have to raise electricity prices for consumers by 17%, energy experts said – a major blow to an economy already suffering from debt and inflation.
The Jordanian government was appalled by the scale of the casualties to China. In 2020, the Jordanian Ministry of Energy initiated international arbitration proceedings against Attarat Power Co. “due to gross injustice”.
When asked why Jordan agreed to such a one-sided deal from the start, the Jordanian Energy Ministry and the National Electricity Co. declined to comment. In June, hearings were held before an arbitral tribunal at the Paris-based International Chamber of Commerce.
Musa Hantash, a geologist on the parliamentary energy committee, described the deal as a natural outgrowth of corruption and a lack of technical expertise.
“It is very difficult to convince these big companies to invest in Jordan. “There are things that help certain people make a profit,” he said without elaborating.
American officials presented the Attarat agreement as a case of Beijing’s “debt trap diplomacy.”
The Chinese Foreign Ministry declined to comment on the Attarat project. But it has defended Beijing’s investments in developing countries, dismissing accusations that it is putting partners in debt and arguing that China never “forces others to borrow from us by force”.
“We never attach political conditions to loan agreements,” the ministry said, calling on international financial institutions to help with debt relief.
Attarat Power said it expects a decision on the case later this year. World Economic Organization decisions are legally binding and enforceable.
Maaitah and other company officials dismissed Jordan’s claims of unfairly inflated prices and accused Jordan of withdrawing its agreement due to anti-Chinese sentiment.
Since the commissioning of the first of two power plants last fall, the Jordanian government has only paid half of its monthly contributions, Maaitah said.
In Jordan and other poorer Arab states allied with the US, the pace of Chinese investment has slowed in recent years.
Amid opposition abroad and growing concerns domestically, China is changing its approach to the region, Amman-based China expert Samer Khraino said, focusing on the oil-rich Persian Gulf. Wealthy countries like the United Arab Emirates and Saudi Arabia have no problem repaying China’s large loans.
For now, Jordan doesn’t seem willing to take any more risks with China.
In May, Jordan’s telecom company Orange signed a new agreement for 5G equipment. It has been a long-time customer of Huawei, the Chinese telecom giant under American sanctions.
This time the choice fell on Nokia.