February 5, 2011 / 1:19 PM / 9 years ago

UPDATE 1-Jordan gas supplies to be halted a week after blast

* Higher energy prices can add to social tensions

* Halt in supplies expected to last a week

(Adds details and background, edits)

By Suleiman al-Khalidi

AMMAN, Feb 5 (Reuters) - Jordan said on Saturday gas supplies from Egypt were expected to remain halted for one week after a blast hit a pipeline that supplies Israel and Jordan.

Jordan depends on relatively cheap Egyptian energy supplies that have helped the government avoid price increases at a time when people are already frustrated with rising food costs.

Inspired by unrest elsewhere in the region, people in Jordan have held protests in past weeks over high food and utility prices. The kingdom has witnessed civil unrest in the past over fuel price hikes and when it sought to end bread subsidies.

Overnight, saboteurs blew up the gas pipeline running through Egypt’s North Sinai after Islamist groups called on militants to exploit unrest in Egypt.

The head of Jordan’s national electricity company, Ghaleb al-Maabara, told the state news agency Petra that the Egyptian side had notified Amman the halt in gas supplies was expected to last a week until the pipeline is repaired.

Jordan imports 96 percent of its energy needs and Egyptian gas supplies generate 80 percent of electricity generation.

An energy source told Reuters that Jordan had switched its power stations as a precautionary step to using fuel oil and diesel after the suspension.

The source said Jordan had enough fuel oil and diesel reserves to cover electricity needs for at least three weeks.

Jordan switched to Egyptian gas three years ago away from the more expensive fuel oil which it has traditionally relied on for its electricity generation. Officials say Egypt resisted increasing supplies beyond 250 million cubic metres last year citing its own growing demand and low prices.

Jordan already allocates hundreds of millions of dinars to various subsidies, from food to water and electricity, as a safety net against rising food and energy costs in a country almost entirely dependent on imports.

Officials say the country would incur around $4.2 million of extra costs a day for switching to more expensive fuel oil, adding an extra burden on an already cash strapped budget with a record deficit. (Writing by Suleiman al-Khalidi; Editing by Maria Golovnina)

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