Iran's state gas company said on Monday it had slashed supplies to neighbouring Iraq over arrears of more than $6 billion, after the Iraqi electricity ministry said the cuts placed Baghdad and other cities at risk of serious power shortages.
"The Iraqi Ministry of Electricity owes more than $5 billion in gas bills to the National Iranian Gas Company (NIGC), of which $3 billion remains blocked and inaccessible in ...TBI (Trade Bank of Iraq), and more than $2 billion is overdue debt," NIGC said in a statement.
Iran has been unable to access billions of dollars in assets in several countries due to U.S. sanctions.
"In addition, the Iraqi side owes more than $1 billion to the National Iranian Gas Company for contractual offenses under the agreement," said the NIGC statement, published by the Iranian oil ministry's news agency SHANA.
The feared electricity shortages could place further pressure on the government of Prime Minister Mustafa al-Kadhimi.
Iran’s Energy Minister Reza Ardakanian is scheduled to visit Baghdad on Tuesday to discuss the unpaid bills with his Iraqi counterpart, an Iraqi official said on Sunday.
Washington has repeatedly extended by 90 or 120 days a sanctions exemption to allow Baghdad to import Iranian energy, but in November it granted only a 45-day extension.