Thursday, April 18, 2013

Another Hollow Promise By Iraq’s Electricity Ministry, End To Power Shortages By October 2013


Iraq’s Electricity Ministry recently said that it would solve Iraq’s power problems later this year. This was not the first time that it had much such a bold announcement. That was also the reason why the remarks were met with widespread skepticism within the country. Questioning the Ministry’s statement is justified, because it has failed to reach its benchmarks before, and lacks the institutional capacity and support to deal with the daunting task it faces.

In April 2013, the Electricity Ministry promised that Iraq’s electricity shortages would be ended by October. The Ministry was quoted as saying that private generator operators would have to sell their equipment, because they would no longer be needed in just a few months. The Ministry made similar statements back in January, when it said that the country would reach self-sufficiency in power by the end of the year. The next month, Deputy Premier Hussein Shahristani who is in charge of Iraq’s energy policy announced that three new power stations would be opened per month until the electricity problems were solved. These assertions were immediately criticized. A parliamentarian from the oil and energy committee for example, told the press that the Ministry was exaggerating, and that the government continuously claimed that it would solve the electricity crisis soon, but never did. The lawmaker had grounds to be skeptical. The Electricity Ministry was actually misrepresenting its goals. According to its 5-year plan, the government is not supposed to meet demand for power until 2015. Not only that, but Shahristani has openly come out against the Ministry in the past claiming that its predictions should not be listened to, and that its numbers were only theoretical. Iraq is in fact facing large structural and institutional problems that inhibit it from solving its power problems any time soon.

This picture of convoluted power cables in an Iraqi neighborhood is symbolic of the problems that the country faces in resolving its electricity issues (AIN)

There are a number of interconnected issues, which have stalled Baghdad’s plans for resolving its energy needs. First, the country’s power grid needs everything from power stations to generators to transmission lines and more. It is also poorly designed, which leads to up to one-third of the power to be lost before it reaches consumers, the highest rate in the Middle East. That means that simply installing generators or building new stations as the government continuously announces will not end the country’s dilemma. In fact, if the entire system is not repaired and renovated, the Ministry cannot achieve its goal. Second, the authorities have not budgeted enough money for the Ministry. Its 5-year plan calls for $31.8 billion, but in 2011, it only got $3.2 billion for its capital budget. The government has also failed to attract private money for its effort, which means that the federal funds are all that it has available. Third, the Electricity Ministry lacks the capacity to plan, manage, and maintain the infrastructure that it has and wants in the future. That means it can’t handle the large contracts that it is signing. Finally, demand for power has continuously increased since 2003 due to the release of pent up demand after over ten years of sanctions. On top of that, few Iraqis pay their bills, and many that do have subsidized prices. That means there is little real control over consumption. In fact, after the Ministry’s recent remarks, Azzaman reported a run on prices for consumer goods like refrigerators and air conditions. Altogether that means there is little likelihood that Baghdad can solve the country’s power outages this October, or anytime soon. Until it builds up its personnel, emphasizes developing the entire network, gets the necessary funding, and puts a clamp on usage all of its remarks are hollow promises.

Every year the Iraqi government claims that it is close to solving the country’s continuous black outs and electricity problems. Every year it comes up short. The April 2013 announcement that private generators would no longer be necessary by October is part of this long list of promises that will ultimately be broken. Baghdad simply lacks the capacity to adequately plan for such a monumental task, not to mention fund, implement, and then manage and maintain all of the work that needs to be done on the national grid. Until the government addresses its institutional problems it will never be able to resolve this pressing issue, which continues to rank as one of the most important to the public.

SOURCES

AIN, “MP describes promises to resolve electric power crisis in Iraq as “exaggerated,” 4/11/13

Aswat al-Iraq, “Iraq achieves electricity self-sufficiency end of 2013,” 1/20/13

Azzaman, “Iraq to hit “final nail in coffin of darkness” in October,” 4/8/13

Iraq Business News, “Electricity Ministry “Stops Dealings with Siemens,” 4/10/13

Saeed, Samer, “Stability in power supplies leads to surge in prices of cooling gadgets,” Azzaman, 4/15/13

Shafaq News, “Shahristani: Iraq will open three power stations every month,” 2/20/13

Special Inspector General for Iraq Reconstruction, “Quarterly report to the United States Congress,” 10/30/12

2 comments:

Aziz Nasiri said...

Thanks for an accurate analysis of the power problem in Iraq. Of course as we head deeper into the summer the ministry's words will be tested.
My 2 cents. In trying to solve the problem(s) the ministry focussed first on production. They waited till 2008 to actually place the orders with GE and Siemens for the turbines. As of 2010 these turbines were arriving in Iraq and just left stored in the open desert in Basra. I guess it was lack of budgets or negligence that stopped the ministry from contracting with companies to build the power plants. These contracts started to flow in mid 2011. Hence what we are seeing this year are those contracts nearing completion with the plants coming online. But transportation and distribution are equally important elements of the power problem. Again nothing much has been done about this until late 2012 and in the past few months. So you are right, we will need another couple of years before the whole infrastructure is overhauled.
Having said all this I can confirm that here in Baghdad we have noticed an improvement of supply. We passed the least demand period in March where the ministry boasted they went through 24 hours one day with continuous supply. We are only a few weeks away from the real summer time when all the announcements will be tested.
Finally it should be mentioned that power installations such as high tension towers have been subject to sabotage in the past. Also some governates where large plants are located have been known to deliberately opt out of the national grid. Hence affecting other areas in Iraq. This is not to mention the problem of supplying the new power plants with fuel. Every year the ministry of electricity blames lack of fuel on ministry of oil.
Our street generator owner has just bought a second generator. Obviously he is betting the government has worked it out wrong once more.

Joel Wing said...

Aziz,

Thank you for your insight. I was going to mention that the Electricity Ministry didn't start working on power lines, etc. until recently, but I couldn't find any articles on it last night when I was writing the piece.