Iraq seeks power revamp to head off sanctions, protests

In this file photo taken on September 2, 2018, Iraqi protesters gather trash cans and scrap with barbed wire as they erect a make-shift barricade during clashes with security forces following a demonstration against corruption and lack of basic services outside the local government headquarters in the southern city of Basra. (AFP)
Updated 28 November 2018
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Iraq seeks power revamp to head off sanctions, protests

  • Iraq’s broken electricity sector is planning a long-awaited overhaul to meet US pressure to halt Iranian power imports

BAGHDAD: Iraq’s broken electricity sector is planning a long-awaited overhaul to both meet US pressure to halt Iranian power imports and head off summertime protests over chronic cuts.
With a freshman at the helm, the electricity ministry is exploring options including revamping stations and lines to cut waste, importing power, and improving bill collection to boost revenues.
Baghdad hopes it will generate enough megawatts to feed demand by summer, when cuts can leave millions powerless for up to 20 hours per day.
But it also has an earlier deadline to meet.
When Washington reimposed sanctions on Tehran in November over the latter’s nuclear program, it granted Iraq a 45-day waiver to produce a roadmap to stop using Iranian electricity and gas.
Iraq pipes in up to 28 million cubic meters of Iranian gas daily to feed its stations, and also directly imports up to 1,300 megawatts of Iranian-produced electricity.
Now, Baghdad’s power ministry has outlined a plan to wean off Iranian electricity within 18 months and resolve some decade-old problems, said spokesman Musab Al-Mudarris.
“In the coming two weeks, we will submit to the Americans a five-year plan including yearly assessments,” he told AFP.
If the US approves, it may extend the waiver for “a year or two.”
“But there are no quick fixes,” Mudarris insisted.
Iraq sits on 153 billion barrels of proven crude reserves, but it needs higher quality fuel and gas for power turbines.
Mudarris admitted that while Iraq could do without Iran’s electricity, it needed Iranian gas until it could extract its own or capture flares from oil drilling.


Using its own fuel plus Iranian gas, Iraq can produce a total of around 16,000 megawatts of electricity.
That is far below demand, which hovers around 24,000 MW but can jump to 30,000 in summer, when temperatures reach a sizzling 50 degrees Celsius (122 Fahrenheit).
Much of the shortfall is technical: when Iraq transmits power, 30 to 50 percent gets lost to poor infrastructure, according to the Iraq Energy Institute (IEI).
Some of that is age, but pipelines and stations were also attacked by the Daesh group before Iraq beat it back last year.
Rehabilitation is a key element of the ministry’s plan.
Mudarris pointed to recent memorandums of understanding with Siemens, worth $10 billion, and General Electric, at $15 billion, to fix infrastructure.
Together, they could add up to 24,000 MW within five years: “That would bring us to 40,000 MW,” Mudarris said.
Electricity Minister Luay Al-Khateeb has also asked Siemens and GE for “fast-track” plans to boost power generation by summer.
Baghdad is finding ways to fund these efforts, including a $600 million finance deal between GE, the Trade Bank of Iraq, and Standard Chartered announced in late November.
Another ministerial initiative involves swapping Iranian power for imports from other neighbors, Mudarris said, including 300 MW each from Turkey, Jordan, and Kuwait, plus Saudi solar power.
In a possible omen, new Iraqi President Barham Saleh visited Amman, Kuwait, and Riyadh in his first regional trip since assuming power.
Finally, Baghdad wants to recover money lost by the ministry’s poor collection service.
“We are losing about 60 percent of our revenues to people who don’t pay. If we can cut those losses, we can stop relying on Iran,” said Mudarris.


Last year, Iraq began privatising by hiring collection services to ensure households paid power bills.
Samir Hussein, a 20-year employee of the ministry’s distribution department, said privatised collection has already reduced outages in Baghdad.
“Those who pay cut their usage by half, which allows me to redirect megawatts to other neighborhoods, preventing cuts there,” he told AFP.
But obstacles remain, including overdue bills to Iran for previous imports.
A draft 2019 budget shows Iraq allocating some $800 million for “Iranian gas arrears” and around $350 million for Iranian electricity backpay, according to an IEI analysis.
Another issue is Iraq’s bloated electricity ministry, said energy expert Harry Estepanian.
Neighbouring Kuwait generates around the same amount of electricity as Iraq, but its ministry employs 12,000 compared with Iraq’s roughly 140,000, he said.
The body is also accused of widespread corruption, which technocrat and first-time minister Khateeb pledged to investigate this week.
“Whatever he is planning is doomed to fail if he does not reform,” Estepanian told AFP.
And Iraq’s five-year plan must account for skyrocketing consumption as cities are rebuilt post-Daesh.
“Right now Mosul, Anbar, Salahaddin probably don’t have high demand. Once reconstruction starts, demand will start to go up by around seven to 10 percent,” Estepanian said.
“The gap between supply and demand is widening. It’s not like it was in 2003 or 2013, and it won’t be the same in 2023.”


UN agency to donors: Back Palestine efforts anew, keep funding at 2018 levels

The UN Relief and Works Agency provides food assistance to 1 million people in Gaza every three months, which is half of the area’s population. (AFP)
Updated 4 min 7 sec ago
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UN agency to donors: Back Palestine efforts anew, keep funding at 2018 levels

  • ‘Exceptional’ contributions enabled the UN Relief and Works Agency to fund its entire 2018 budget of $1.2 billion
  • ‘Countries that supported us last year I would say were extremely proud to contribute to the solution’

UNITED NATIONS: The head of the UN agency that helps 5.3 million Palestinian refugees on Monday urged donors who filled a $446 million hole in its budget last year after the Trump administration drastically cut the US contribution to be equally generous this year.
“Last year we had an extraordinary crisis and an out of the ordinary response,” Pierre Krahenbuhl said in an interview with The Associated Press. “Our humble request to all the donors is: Please keep your funding levels at the same level as 2018.”
He said he has been thanking donors for their “exceptional” contributions that enabled the UN Relief and Works Agency to fund its entire 2018 budget of $1.2 billion.
Krahenbuhl said the agency, known as UNRWA, also adopted a $1.2 billion budget for 2019, and this year it is getting nothing from the United States. Last year, the Trump administration gave $60 million, a dramatic reduction from the $360 million it provided in 2017, when the United States was the agency’s largest donor.
US President Donald Trump said in January 2018 that the Palestinians must return to peace talks to receive US aid money — a comment that raised alarm from leaders of 21 international humanitarian groups, who protested that the administration’s link between aid and political objectives was “dangerous.”
Krahenbuhl said the campaign that UNRWA launched immediately after the US slashed its contribution succeeded as a result of “very important donations,” starting with the European Union, which became the agency’s biggest donor. He said 40 countries and institutions increased funding to UNRWA, including Germany, United Kingdom, Sweden, Japan, Canada and Australia. Qatar, Saudi Arabia, United Arab Emirates and Kuwait each gave $50 million, he said.
“Countries that supported us last year I would say were extremely proud to contribute to the solution,” Krahenbuhl said.
Last year, he said, the number of multi-year funding agreements with donors rose to 19.
So UNRWA right now is in “a somewhat better position” than it was last year, with a shortfall of just over $200 million, Krahenbuhl said.
So far this year, the agency has received $245 million and is expecting $100 million more, he said, which means it should be financially OK until about May.
“But from then on we’ll start to ... reach some crisis points,” Krahenbuhl said.
He said UNRWA is thinking about holding some events in the next two or three months “to collectively mobilize the donor community.” In June, he said, there will be a pledging conference at which the UN and donors will take stock of the agency’s financial situation.
Krahenbuhl said he is committed to making up for the $60 million that UNRWA is losing from the United States this year through internal cost saving measures to reduce the agency’s expenditures.
“That’s going to hurt, but that’s where we feel our financial responsibility, so that we preserve the trust that was generated by the level of donors,” he said, noting that UNRWA last year saved $92 million.
Krahenbuhl said donors recognize the agency does important work. He pointed to the 280,000 boys and girls in UNRWA schools in Gaza and the food assistance the agency provides to 1 million people there every three months. “That’s half of Gaza’s population,” he said.
The UNRWA chief also said that continuing the agency’s services to Palestinian refugees in Syria, Lebanon, Jordan, Gaza and elsewhere in the Mideast “is in everybody’s interest” and important for stability in the region.
“If you take Gaza right now ... it’s continuously at the razor’s edge,” Krahenbuhl said, stressing that any shift in humanitarian assistance or conditions that people live in “can trigger the need for justification, or the excuse ... to go back to war.”
Noting his own experience in the 2014 war between Israel and Hamas, which controls Gaza, Krahenbuhl said, “this is absolutely devastating and needs to be avoided.”