Iraqi Govt Suspends Investment In Electricity Sector As Summer Heat Hits

Protest over power shortages in Babil (Rudaw)

At the start of July protests returned to several southern Iraqi provinces over electricity shortages. The government has no answer because it has no money to spend on power projects due to the economic crisis. Even if it did structural problems with the power grid mean it is still years away from meeting demand.

The Electricity Ministry has halted most of its investment this year because of the country’s budget problems. It had contracts to work on projects that would add 7,000 megawatts. Other deals to capture natural gas to fuel power plants are in question as well. The government doesn’t have money to cover any of its major bills like public salaries, pensions or pay the oil companies. The first thing it did was suspend most of its capital spending that goes towards development.

Even if these projects were completed the power sector has such structural problems that supply is perpetually behind demand. Iraq has the capacity to meet needs even during the summer but because of poor maintenance and the use of bad fuels it only produces half of what it can. On top of that, 50-60% of what is supplied is lost due to poor transmission and distribution systems. Even if the 7,000 megawatt projects were completed they would only deliver around 1,750 megawatts with the rest lost due to the inefficiencies in the system. The result is that the difference between the highest demand and maximum supply has grown by 33% over the last five years. It also means that the Electricity Ministry has to invest billions more than it should because the power grid is so broken.

SOURCES

Oxford Institute for Energy Studies, “Compounding crises: Iraq’s oil and energy economy,” July 2020