Controversial Power Plant Deal Sparks Tensions Between China and Jordan
ATTARAT, Jordan – Jordan’s Attarat power plant, initially seen as a promising project for energy production and strengthening ties with China, has become a source of heated controversy. The plant, which has already cost Jordan billions of dollars in debt to China, is no longer needed for its energy due to other agreements made since the project’s conception.
The result has fueled tensions between the two countries and caused distress for the Jordanian government, which is now engaged in an international legal battle to contest the deal. This situation has highlighted China’s growing influence in the Middle East and serves as a warning for other countries in the region regarding the potential consequences of large-scale Chinese investments.
The Attarat power plant, valued at $2.1 billion, was intended to provide Jordan with a significant source of energy. However, deals surrounding the project have burdened Jordan with massive debt to China. The plant has now become a symbol of China’s wider model of burdening countries with excessive debt, particularly in Asia and Africa.
Jesse Marks, a nonresident fellow at the Stimson Center, described Attarat as a representation of China’s Belt and Road Initiative, which aims to build global infrastructure and increase Beijing’s political influence. He sees Jordan as an interesting case study of how China engages with middle-income countries.
The Attarat shale oil plant, originally conceived 15 years ago, faced numerous challenges in its implementation. As Jordan struck an agreement to import natural gas from Israel, the interest in Attarat waned. However, in 2017, Chinese banks offered over $1.6 billion in loans to finance the project, demonstrating China’s keen interest in investing in the Arab world.
The investment in Attarat was part of China’s wider push into the region, where it sought to acquire strategic assets in economically troubled states. China’s investment came with few political strings attached, making it appealing for authoritarian states.
Under the power purchase deal, Jordan’s state-run electricity company is obliged to buy electricity from the Chinese-led Attarat power plant at an exorbitant rate. The Jordanian government estimates that it would lose $280 million annually, and electricity prices for consumers would increase by 17% to cover the payments.
The extent of losses to China shocked the Jordanian government, leading them to launch an international arbitration against Attarat Power Co. in 2020. However, the Jordanian government declined to explain why they agreed to such an unfavorable contract initially.
American officials have deemed the Attarat contract an example of China’s “debt trap diplomacy.” Chinese officials have denied these allegations, stating that China does not attach political strings to loan agreements and urging international financial institutions to provide debt relief.
The Attarat Power Co. expects a decision in the case later this year. In the meantime, tensions between China and Jordan continue to rise, with the Jordanian government paying only half of its monthly dues to the power company.
China’s investment in Jordan and other poorer Arab states allied with the U.S. has slowed in recent years due to pushback and growing concerns. China is now shifting its focus to wealthy states in the oil-rich Persian Gulf.
For Jordan, the controversy surrounding the Attarat power plant has made the country cautious about future dealings with China. In May, Jordan’s telecommunications company Orange chose Nokia over Huawei for its 5G equipment, signaling a shift away from Chinese companies.
As the legal battle continues, it remains to be seen how this contentious power plant deal will impact China’s relationship with Jordan and serve as a cautionary tale for other countries considering large-scale investments from China.