Iraq wrestles with long-standing electricity crisis

Salah Nasrawi , Friday 10 May 2019

Iraq is one of the richest nations on earth, yet power outages still make life intolerable in summer heat

Electricity crisis in Iraq
Iraqi men hang a cable attached to a private generator in central Baghdad (Photo: AFP)

It is telling that some historical accounts have it that the world’s first electrochemical battery may had been invented in Babylon, and it has been suggested that the cells might have been used to electroplate metal or as an igniter.

The Babylon battery, a six-inch clay pot sealed with bitumen and containing a copper cylinder surrounding an iron rod, was supposedly discovered at a Mesopotamian archaeological dig near Baghdad dating back some 2,500 years.

Few archaeologists (possibly none) accept that the jar is a real battery, but the device demonstrates how civilisation flourished in the Tigris-Euphrates River Valley in antiquity and in the land now called Iraq.

Today, however, this country, known as the “cradle of civilisation” and also sitting on some of the world’s largest oil and gas fields, is suffering from endemic electricity shortages that have made life unbearable for millions of Iraqis.

The chronic power outages are the result of myriad factors, including the destruction of power plants in the US-led war on Iraq in 1991, the UN sanctions, the US-led invasion in 2003, civil struggle and corruption, and ultimately a dysfunctional government in Iraq that remains in a state of deadlock.

Before the Iraqi invasion of Kuwait in 1990, Iraq had the capacity to produce 9,295 megawatts (MW) of power. By 2003, after American bombing and years of stringent international sanctions imposed after the invasion, it was half that.

The destruction of more power stations and the country’s electricity grid in the 2003 invasion and in the series of conflicts that followed it reduced production further even as Iraq’s population nearly doubled.

The shortages have forced Iraqis to buy electricity from private entrepreneurs who run power generators that can be seen in most neighbourhoods across the country.

The crisis has generated much disillusionment and dissent, including protests that often spark violence. Last summer, protesters in the southern Iraqi city of Basra attacked or set fire to nearly every government building in the city.

Like all previous ones, Iraqi Prime Minister Adil Abdel-Mahdi’s government, which came to power after last year’s elections, has promised to end the outages that have hobbled economic development and disrupted almost every aspect of daily life.

The Ministry of Electricity said it had plans to revamp production to some 18,000 MW this summer from its current 14,000.

Last week, Abdel-Mahdi travelled to Berlin to attend the signing of a framework agreement with German industrial conglomerate Siemens to upgrade the electricity grid of the power-strapped country.

Under the deal, Siemens will build one power plant, upgrade 40 gas turbines and install electricity substations and transformers across Iraq. This should increase electricity production in the country by around 50 per cent.

The deal, yet to be finalised, includes the addition of new and highly-efficient power generation capacity, the rehabilitation and upgrading of existing plants, and the expansion of transmission and distribution networks.

But it will put the Munich-based company at the top of a list of rivals vying to take on the bulk of orders for infrastructure projects, especially the US company General Electric (GE).

GE had revealed earlier that it had already secured a number of orders for Iraq’s power needs, including a 750 MW order deliverable by the end of the year.

But GE’s award now seems to be in doubt after Siemens succeeded in securing the $15 billion contract despite the US Trump administration’s intervention on behalf of the US rival.

Further complications in the competition included the heavy pressure on Baghdad by Washington to stop Iranian gas supplies to Iraq in line with the US energy sanctions on the Islamic Republic.

If GE had won a large contract to sell power plants to Iraq that would burn gas from Iran, it could have caused a political furor in both the United States and Germany.

Iraq would likely have had to stop the Iranian gas supplies that Abdel-Mahdi’s government has considered to be non-negotiable, declaring that it wants to stay out of the dispute between Iran and the US.

In addition to its gas supplies to Iraq’s power plants, Iran also exports 1,200 MW of electricity to its neighbour, making the Islamic Republic the sole foreign energy supplier to Iraq. Iran also hopes to become an energy hub and reach regional markets through Iraq.

There are further geopolitical dimensions to Iraq’s electricity crisis, since many of the country’s neighbours are also offering to sell electricity to Baghdad, some at a discount, as part of efforts to curb the influence of Iran in Iraq.

But while the foreign struggles over Iraq’s power grid escalate, many experts and international organisations have been questioning the management of Iraq’s energy sector by successive governments since Saddam’s fall.

Iraq spent some $40 billion between 2003 and 2018 to rehabilitate its power sector, but inefficiency, waste and widespread corruption in the country have not led to the results that had been hoped for. The country’s Ministry of Electricity estimates that $35 billion will be necessary to rebuild the power system fully.

A report by the International Energy Agency (IEA) issued last month found that Iraq’s main problem lies in the weakness of the infrastructure distributing the electricity.

The report said that Iraq, one of the world’s biggest energy producers, could address its electricity shortfall and growing power needs through immediate action to relieve pressure on the system.

The report, “Iraq’s Energy Sector: A Roadmap to a Brighter Future,” noted that Iraq’s electricity network losses were “among the highest in the world.”

It said reducing these losses by half would help dramatically to improve the efficiency of supply and effectively increase capacity by a third.

Demand for electricity in Iraq is set to double between now and 2030, and the shortfall will likely widen as the country’s population grows by more than one million people each year, the report added.

Without changes to the current system of electricity supply and improvements to the network, domestic generation, imports and neighbourhood generation will need to double by 2030, the report concluded.

Though the problem of the power shortages in Iraq is multifaceted, government dysfunction and corruption remain the biggest challenges to solving it.

As the country struggles to cope with electricity shortages with little expectation that they will end soon, many Iraqis believe that some of the funds allocated for the power sector have been mismanaged or embezzled.

Successive electricity ministers have been sacked over corruption charges or forced to quit their jobs. Aiham Alsammarae, a US-Iraqi dual citizen and the first post-Saddam minister of electricity in Iraq, was jailed on corruption charges in 2005 before he fled to Chicago through the then US-policed Baghdad Airport.

Alsammarae’s escape has served as an example to his successors in the ministry, which has remained one of the most corrupt even by Iraq’s standards.

The Wall Street Journal reported on 19 November that a consultancy report prepared for GE on corruption allegations in Iraq’s power sector had showed “pervasive bribery.”

The study, prepared for GE by corporate intelligence firm Hakluyt & Co and based on interviews with business people and officials working in the power sector, painted a portrait of widespread corruption and bribery in the sector.

Last week, Iraqi MP Alia Nussayif urged the country’s parliament to probe reports that current minister of electricity Luay Al-Khateeb had authorised a contract with a foreign consultancy firm that he set up before joining the government.

The Training and Energy Research Directorate of the ministry signed the contract with the London-based Iraq Energy Institute (IEI) covering energy research and technology collaboration, data and capacity building.

Under the agreement, IEI will focus “on improving the accuracy of the IEA energy balance analysis for the Republic of Iraq,” being the critical study mentioned above.

Nussayif accused Al-Khateeb of “signing a contract with himself” by alluding to his on-going relationship with the IEI, which according to its Website is a non-profit organisation providing “broad categories of services.”

It relies for funding on “gifts and private donations from private businesses and individuals” as well as “grants from multilateral organisations and governmental and non-governmental organisations,” its Website says.

With the start of the fasting month of Ramadan this week and rise of energy consumption, Iraqis hope their government will keep its promise to increase power supplies to help them cope with rising summer temperature.

*A version of this article appears in print in the 9 May, 2019 edition of Al-Ahram Weekly under the headline: Powerless Iraq

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