Negotiations break down over Cegco sell-off

31 March 2006
Negotiations have broken down between the Energy & Mineral Resources Ministry and India's Reliance Energy over the sale of a 51 per cent stake in Central Electricity Generating Company (Cegco - MEED 28:10:05). Officials had been expecting to complete the sale last August but the two sides were unable to reach agreement on the value of the state-owned power generator. 'The government thinks Cegco is worth more than Reliance estimated,' says a source in Amman.
Amman is now looking at an alternative approach. 'The government is considering relaxing the rule on [finding] a strategic investor to allow [the participation] of local investors,' says the source.

The breakdown of negotiations with Reliance has delayed the government's privatisation plan for the energy sector. The Cegco sale had been expected to be completed during 2005 and was to be followed by the sale of a 100 per cent stake in Electricity Distribution Company and a 55.4 per cent stake in Irbid District Electricity Company.

Over the next 20 years, Amman must develop new generating capacity to meet demand growth and replace old generating assets as they are decommissioned. The UK's Rothschild and Germany's Fichtner are advising the government on its power privatisation programme.

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