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Iraq Suffers Power Cuts as Iran Tries to Monopolize Energy Deals

August 20, 2020
Mahmoud Al-Shamari
5 min read
Iraq Suffers Power Cuts as Iran Tries to Monopolize Energy Deals

The beginning of every summer in Iraq is marked by power cuts. This has been an annual occurrence in most parts of the country since 2003, apart from in Kurdistan. Protests are commonplace, with people in the governorates and cities affected going public with their distaste over the decline in services and the reduced hours during which they can light their houses and use electrical goods. In the Central Euphrates and the southern parts of the country, the average power outage over the summer of 2020 has ranged between eight and 10 hours, while in the capital Baghdad, it has tended to be between five and 12 hours. 

But what’s behind Iraq’s energy crisis, and what does the Islamic Republic of Iran have to do with it? 

With the worsening of the crisis, and given the speculation that the havoc has been caused by administrative and financial corruption, the Presidency of the Council of Representatives has announced the formation of an investigation committee to examine the Ministry of Electricity's contracts from 2003 up to the present day.

 

Corruption Exacerbates Electricity Crisis

"The electricity crisis continues due to corruption,” announced Iraqi government spokesman Ahmad Mulla Talal during a television appearance. “More than $60 billion has been allocated to address it since 2003, but to no avail."

IranWire spoke to former electricity minister Luay Al-Khatib and asked him to comment on Mulla Talal's comments. He denied the accusations. “The previous government worked to complete projects that had been delayed since 2012. It also signed an executive agreement with the German company Siemens, as well as the Gulf Electricity Connection Agreement." Nevertheless, the projects have never come to fruition. 

But Judge Rahim Al-Akili, former Head of the Commission of Integrity, confirmed to IranWire that the electricity sector in Iraq is one of the country's most corrupt sectors, vulnerable to manipulation and influence just as Iraq’s arms and oil sectors continue to be. 

In Al-Akili’s view, corruption in these huge sectors is neither down to one or a few individuals, nor is it down to internal factors. Instead, he said, it is linked to the funding of political and regional agendas. Furthermore, no one has been able to pursue and address the corruption dilemma because those responsible enjoy substantial protection from political powers, including in the wider region — in other words, Iran. 

According to Ayham Al-Samarrai, the minister for electricity in Iyad Alawi’s transitional government in the early 2000s, one Iraqi figure was to blame for the situation."The question over the reasons for the failure of electricity projects in Iraq must be answered by former Prime Minister Nuri al-Maliki,” he told IranWire.

 

Dependence on Iran

Previously, the former minister of electricity Qasim Al-Fahdawi had told the Iraqi media that the Iranian government blocked a lucrative deal for Iraq to import energy from Saudi Arabia. He added that the Saudi minister of energy made an offer of free fuel for six months as well as the purchase of Iraqi gas, which would be reprocessed through Aramco and sold back Iraq for two cents per kWh. Al-Fahdawi further noted that Iran sells gas to Iraq at nine cents per kWh (1,200 Iraqi dinars paid per watt-hour), while Saudi Arabia had offered Iraq electricity at three cents per kWh at a time when the country had been buying it from Tehran at eight cents per kWh.

Al-Fahdawi said that former Prime Minister Haider Al-Abadi welcomed the offer and formed a ministerial delegation to travel to Riyadh. However, on the night that they were meant to travel, an order came through and the visit was canceled. When he inquired about the reason, it became clear that Iran had moved agents into Iraq to apply pressure on the prime minister and prevent him from dealing with Saudi Arabia.

Al-Fahdawi refused to disclose to IranWire the political parties that prevented the government from signing the agreement with Saudi Arabia. Despite IranWire contacting him several times, he declined to comment.

Mashaan Al-Jabouri, a leader in the Sunni Resolution Coalition, highlighted former Minister Qasim Al-Fahdawi's comments about the "generous" Saudi offer. On April 10, 2020, he tweeted that the former minister’s assertion that Iran had played an “obscured role” in the deal’s “rejection,” and in Iraq failing to come to any solution following its collapse, as “very serious." 

For Iran’s part, Fars News Agency reported that Iranian energy minister Reza Ardakanian met with his Iraqi counterpart Majid Hantoush in Tehran in July, where they reached an agreement to finalize two contracts to improve and develop the electricity sector in Iraq, as well as reduce damage to the distribution network in Najaf and Karbala governorates.

Iraq Suffers Power Cuts as Iran Tries to Monopolize Energy Deals

 

Iraqi Energy Sector

1 – Iraqi imports energy from Iran.

2 – Baghdad imports Iranian gas to supply electricity-producing stations.

3 – Baghdad pays $1.5 billion to Tehran annually for the import of electricity.

 

 

Electricity Projects with the Gulf

Tweeting in May, Iraqi finance minister Ali Allawi said that the Iraqi government had agreed on a bilateral arrangement for electricity supply and development of energy contracts with the Kingdom of Saudi Arabia.

Alawi added that he met the Saudi minister of energy, Prince Abdulaziz bin Salman, during his visit to the Kingdom, where it had been agreed on increased investments and the funding of conventional and renewable electric power generation, transmission, and distribution projects in Iraq. 

At the same time, the US Embassy in Iraq renewed its full support for the electricity project between Iraq and the Gulf states, confirming Washington's commitment to facilitating the project and providing support when needed.

In an interview with IranWire, Ahmad Musa, a spokesman for the Iraqi Ministry of Electricity, confirmed that his country had completed 80 percent of the connection requirements necessary to receive the first power package from the Gulf. The first 500 MW are expected to arrive in Basra in October, as preparations from the Gulf side were delayed due to the repercussions of the coronavirus pandemic.

He pointed out that the work entrusted to the Gulf side, including the extension of a line from northern Kuwait to southern Saudi Arabia to connect to Al-Faw gas station, will take between 12 to 14 months before the first 500 MW can be supplied to Iraq, if business returns to normal. 

 

Iraq Suffers Power Cuts as Iran Tries to Monopolize Energy Deals

 

 

 

Electricity Sector in Iraq

- Energy crisis since 2003.

- Production of around 13GW, whereas demand requires more than 23MW to meet residential needs. 

- $14 billion paid annually to three beneficiaries, including Iran, for electricity generation and purchasing (Parliamentary Energy Commission in the Iraqi government).

 

 

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