Energy Arabia (Enara), a consortium of Arab and Asian investors, has bought a majority 51 percent stake in Jordan's government-owned Central Electricity Generating Company (CEGCO), officials said.

They said the deal includes a cash payment of $120 million and settling over $200 million of the state-owned company's debts incurred from two decades of financing construction of the country's largest power plants.

The sale gives the consortium a majority share of 1,700 MW of generating capacity from four large power stations in Aqaba, Rehab, Hussein and Risha and from four smaller power stations across the country.

Amman-based Energy Arabia is 65 percent owned by Jordan Dubai Capital (JD Capital), a $300 million investment company that targets private equity opportunities in the Jordanian economy.

"The energy sector has a huge potential ... There has not been much investment in the energy sector in the last two decades," said Samir Z. Al-Rifai, CEO of Jordan Dubai Capital, told Reuters after signing the acquisition deal with the government.

Energy Arabia's other shareholders are Malaysia's Malakoff Bhd, a leading independent power producer in Asia and Consolidated Contractors Co, one of the Middle East's largest construction companies.

"We are interested in opportunities in Jordan and the region where there is a great potential because of the economic boom," said Ahmad Jauhari Yahya, CEO of Malakoff, whose company acquired a 25 percent stake in Energy Arabia.

Under the agreement, the government of Jordan would own 40 percent of CEGCO, while the Social Security Corporation, the government's pension fund, would take the remaining 9 percent.

JD Capital is an affiliate of Dubai International Capital, a Dubai-based international investment firm that is a wholly owned subsidiary of government owned Dubai Holding.

The deal will pave the way for the government to speed the privatisation of the electricity sector by moving to divest a 55 percent stake in the Irbid District Electricity Company <IREL.AM>, a listed company that owns and operates the electricity distribution network in the north of the kingdom.

 Mohammad Abu Hammour, the head of Jordan's Executive Privatisation Commission, said three firms including JD Capital had submitted bids in a tender to local and foreign firms which closed on Sept. 20 to buy the 55 percent holding.

The government also sought to sell to local and foreign  investors its 100 percent shareholding in the Electricity Distribution Company, which owns and operates a distribution network covering southern and eastern Jordan.

"We hope by the end of the year we will have privatised the two electricity distribution firms," Abu Hammour told Reuters. 

At the completion of the privatisation of the electricity firms, Jordan hopes to offer investors wider opportunities to build privately run power plants, Abu Hammour said.

Energy dependent Jordan is struggling to meet the booming demand for electricity from its fast growing population.

The privatisation of energy companies had faced criticism from MPs on grounds the government was selling the country's key assets to foreigners.

Some politicians fear job losses and higher tariffs but the government says privatisation brings much needed revenues and helps develop a more efficient energy sector. - Reuters