$28 Billion Allegedly Squandered on Electricity Projects in Iraq

Despite promises by Iraqi PM Nouri al-Maliki to reform the electricity sector, the country’s power situation is still dire, with inconsistent service across the country, writes Nasir Hassoun reports. Iraqi civilians are said to have spent billions more on private generators over the past eight years, and the government has overspent on a variety of public power projects.

al-monitor An electrician uses an Avometer to check wires connected to his local generator on a street in Baghdad, 2011.  Photo by REUTERS/Saad Shalash.

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nouri al-maliki, electricity shortages

Aug 3, 2012

Iraqi citizens have confirmed that they do not trust the statements made by government officials with regard to reforming the power sector. They noted that Prime Minister Nouri al-Maliki had promised to improve the state of the power sector by the middle of this year, but in fact the exact opposite occurred. In light of that, the Ministry of Electricity attempted to justify the spending of $28 billion over the past eight years, and denied that the money was spent on crooked deals. On the other hand, politicians noted that the electricity issue in Iraq had less to do with offering services and more to do with politics. They added that regional and international states interfered in these issues, a claim admitted to by the government.

Rashad Ahmad, an electrical engineer, said in a statement to Al-Hayat that the ministry tends to adopt temporary solutions. According to Ahmed, these involve installing medium capacity systems in the provinces so that the load on the central system is adequately divided, while at the same time production is gradually increased. He cast doubt on the plan’s chances of success, further reporting that production had actually decreased from 9000 megawatts in 2005 to less than 6000 today, as a result of the grid’s need for updates.

[Former] electricity minister Ra’ad Shalal, tries, at the approach of summer each year, to reassure the populace. He affirmed in a recently-issued statement that the electricity crisis in Iraq would end in the middle of 2015, when the long-term plan implemented by the ministry comes to fruition. He said: “electricity rationing will be reduced to eight hours [per day] in 15 months, when the ministry’s short term plan is concluded.”

In mid-February of last year, Maliki confirmed that the electricity crisis would be resolved within the next 15 months. However government spokesman, Ali al-Dabbagh, said that the prime minister was only alluding to the Ministry of Electricity’s short term plan. This plan aims to increase the number of hours during which electricity is supplied, and will not end the crisis.

The short term plan, scheduled to be concluded by the middle of next year, includes projects to build fifty power stations in various provinces, each capable of producing 100 megawatts.

$80 Billion on Private Generators

Suzanne al-Saad, a member of the Parliamentary Committee of Oil and Energy, said: “The money spent on the power sector in Iraq surpass by tens of times the total budgets of some neighboring countries. The government spent close to $27 billion on electric power projects, while Iraqi citizens spent approximately $80 billion during the past eight years buying electricity produced by private generators.”

Member of the Parliamentary Economic Committee, Nora Bijari, confirmed to Al-Hayat that the electricity issue had sullied the image of the government, and that of parliament as well. She said that problems in the electricity sector were not due to the past years’ security situation, which hindered project completion, and have nothing to do with money or anything else of that nature. She said: “Our problem is due to two main factors: corruption and the presence of local and international players who are manipulating this issue.”

Leaders of the Islamic Dawa (Calling) Party declared that they had uncovered rings of people working in the Ministry of Electricity who take their orders from foreign countries, including those in the region and beyond, and intentionally block the implementation of projects meant to improve electricity production.

Member of Parliament, Furat al-Shraa, expected the government to fail in solving the electricity problem. He said that all indications point toward a solution actually being reached, but only in four more years. He noted that the country’s electricity needs amounted to 17000 megawatts, while actual production did not exceed 6000 megawatts. Fatima Zibari, member of the Parliamentary Committee of Oil and Energy, claimed that the electricity issue in Iraq was political more than technical or service oriented. She said: “Unfortunately, we discovered that some elements inside the Ministry of Electricity were working on impeding power projects, such as building power generating plants and servicing the pants already in existence, at the behest of regional and international countries.” She clarified that these countries realized that the electricity issue was among the most sensitive issues for the Iraqi population, and thus they attempted to exploit the heightened tensions by spending money to sabotage shipping lines and use the ever-present problem at the time of their choosing to create a crisis of confidence between the people and the government.

A spokesman from the Ministry of Electricity, Musab al-Mudaress, stated that the electricity sector’s problem was not new and had in fact grown in complexity over the years. He noted that the only power production and distribution grid in Iraq was destroyed during the Second Gulf War. He stressed that the Ministry of Electricity has been working for years to build new generating plants, and was in fact successful in completing some of them, while others are still under construction or in the planning stage. He said that once the grid is completed “we will have a surplus of electricity.” He clarified that the demand gradually increased to its current estimate of 15000 megawatts, with production being 7200 megawatts.

The Eight Country Interconnection Project

Mudaress clarified that Iraq was benefiting from the Eight Country Interconnection Project that provides 450 megawatts from Egypt through a marine cable. He added that “the level of current production amounts to 5500 megawatts and we import from Iran, Turkey and via ship born power generation plants an additional 1200 megawatts. While the overall demand nearly equals 12000 megawatts, it can rise to more than 14000 megawatts during the summer.” He noted that the number of plants currently operating numbered 28, and that the plants that are under construction will add an extra 12000 megawatts to the grid.

The Minister of Electricity, Abdul Karim Aftan al-Jumeili, pointed out that the ministry’s goal was to raise production to 9000 megawatts by the end of this month. He blamed the work delays caused by some companies for the tardiness in the completion of projects expected to be finalized in the coming months. He stated that half of the cumulative budgets allocated for the Ministry of Electricity since 2003, equaling $37 billion, was earmarked for operational and investment expenses. He noted that the operational budget of $16 billion was spent on salaries and wages, among which $1 billion is spent each year on behalf of the oil ministry. The operational budget also included expenses related to buying electricity from Iran and Turkey, in addition to other amounts allocated for maintenance.

He added: “The investment budget consisted of $21 billion, $7 billion of which are currently held by the Development Fund for Iraq in Washington in the form of bank guarantees for companies that have already signed agreements with our ministry.”

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More from  Nasir Hassoun is a contributor to Al-Hayat

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