EIB signs EUR 45m loan agreement for energy efficiency projects in Jordan

Reducing energy consumption and cost will allow municipalities to reallocate those energy savings to other priority needs for the benefit of the local population.

The European Investment Bank (EIB), the lending arm of the European Union, and the Cities and Villages Development Bank (CDVB) have signed a loan agreement of EUR 45 million to finance energy efficiency projects targeting municipal, building and lighting infrastructure in Jordan.

The financing agreement was signed today during a ceremony hosted by the EU delegation in Amman by Flavia Palanza, Director for Eastern and Southern Neighbourhood at the European Investment Bank and CVDB Director General H.E. Osama Al Azzam in the presence and under the high patronage of the EU Ambassador to Jordan, H.E. Maria Hadjitheodosiou.

This first EIB loan to municipalities in Jordan, through CVDB which will allocate an additional 45 million from its own resources to the project, will have a substantial impact on the sustainable development of municipalities in Jordan, especially those most affected by the refugee crisis and far from economic centers. It will concretely reduce the energy costs for municipalities by boosting the implementation of renewable energy and energy efficiency projects such as rooftop solar PV, street lighting refurbishments, energy efficiency building and other similar types of investments. Only for the public lighting component, the project is expected to reduce energy consumption by half through the replacement of nearly 450 thousand older lamps by new LED technologies, which represents significant energy savings (estimated at 126 GWh).  Reducing energy consumption and cost will allow municipalities to reallocate those energy savings to other priority needs for the benefit of the local population.

This initiative supports the objectives of the current EU-Jordan Partnership Priorities and Compact, especially achieving “a sustainable use and management of natural resources”, as it will contribute to the objective of developing energy efficiency and renewable energy investments to attain reduction of energy use by 2020 by 20% and improve contribution of renewables in electricity generation to 15%.

Commenting on the signature, Osama Al Azzam said; “Cities and Villages Development bank (CVDB) seeks to reduce the financial burdens of municipalities. As the electricity bill is considered one of the major expenses for municipalities. The agreement between CVDB and EIB will provide financing for the project of energy efficiency and renewable energy in the municipalities at low-interest rates in order to reduce the electricity consumption bill. Saving can be used in other development projects that will improve the livelihood of local communities and mitigate the environmental impacts resulting from the use of traditional energy sources.

“Investment in the energy transition is crucial for Jordan’s future. This is why the European Investment Bank is very pleased to support for the first time Jordanian municipalities and help them boost the implementation of sustainable projects which will have a real impact on the local population’s daily life,” said  EIB Director Flavia Palanza. She added: “The EU bank is strongly committed to supporting Jordan’s growth and resilience. With this financing agreement, we further strengthen our engagement to finance projects, which will benefit some of the most vulnerable groups in Jordan and have a positive environmental impact in the country.“

For her part, EU Ambassador to Jordan H.E Maria Hadjitheodosiou, said "The EU attaches great importance to green energy and is helping the Government of Jordan achieve its green energy targets by 2020, with over €160 million provided in bilateral and regional support. Bringing sustainable energy to the municipality level is crucial to this and we welcome this additional European support." She added: "The EIB loan comes on top of EU support to the development of Jordan's Green Energy sector over the past decade, through which we are helping mainstream green energy within electricity generation and transmission, energy efficiency in buildings, and water supply and pumping."

The EU Guarantee covers the EIB’s loan under the External Lending Mandate 2014-2020. The project is fully in line with the Mandate specifically the ELM Climate Strategy 2014-2020 which calls for the development of energy efficiency and renewable energy investments. It supports Jordan to reach its renewable energy and energy efficiency targets for 2025.  The project is also part of the Economic Resilience Initiative (ERI), as it contributes to the objective of “improving the long-term economic Resilience of refugees.

The EIB has significantly been supporting Jordan’s economic development over the years by investing in key sectors of the economy such as industry, water, education, and energy in addition to private sector operations. The EIB pledged, as part of its contribution to the EU’s support to Jordan, EUR 870 million of loans and grants for2019-2020 to support key infrastructures in Jordan and the development of the private sector.

The EIB has reinforced its presence in the country with the opening of an office in Amman at the end of 2018 to coordinate and liaise with the Jordanian government as well as business associations and investors in the country.