Wednesday, August 24, 2011

Maliki Fires Iraq’s Electricity Minister, As Scapegoat For Summer Blackouts

Just as Iraq’s summer heat was intensifying, and blackouts were occurring, Prime Minister Nouri al-Maliki announced that he was dismissing the Electricity Minister Raad Shallal al-Ani. The cause was two fraudulent contracts to build power plants. The Minister’s political allies quickly accused the premier of playing politics, and claimed that he and Deputy Premier Hussein Shahristani, who is in charge of energy, were complicit in the deals. The Ministry was definitely responsible for the two contracts, but the speed with which Maliki dismissed Ani points to the premier making a scapegoat out of the him for the general problems with Iraq’s power supply.

At the beginning of August 2011, Prime Minister Nouri al-Maliki dismissed Electricity Minister Raad Shallal al-Ani. On August 2, the premier received a letter from former Planning Minister under Saddam Hussein Jawad Hashim. Hashim warned of two deals signed by the Electricity Ministry that he believed were fake. On August 6, Maliki ordered Ani to step down, and called for an investigation. By the middle of the month, Ani had resigned. The Minister had been under pressure since the beginning of the year because of gaps in the power supply. For example, just before Maliki fired him, Ani appeared before parliament where he was attacked for his lack of performance. It was an odd series of events, as Maliki wanted Ani out before an official investigation had proved his wrongdoing.

The questionable deals involved Canadian and German firms that were given contracts this summer. In July, the Electricity Ministry signed a $1.2 billion deal for 10 power plants of 100 megawatts each with the Canadian Alliance for Power Generation Equipment Inc. out of Vancouver. That same month, the Ministry came to an agreement with Germany’s Machinerbrau Halberstadt to build five power plants with a capacity of 100 megawatts each for $650 million. When the former Planning Minister Jawad Hashim, who resides in Canada, heard about the contracts he decided to investigate them. He enrolled the former governor of the Central Bank of Iraq, who lives in Germany, to look into Machinerbrau Halbertsadt, while Hashim would handle the Canadian company. He found that the Canadian firm was registered by a woman at her home address, who then named a man in Jordan as the director general. Hashim believed that it was a paper company existing just to steal money. The fact that it came to an agreement with the Electricity Ministry without competitive bidding, also raised red flags for him. The German company declared bankruptcy in January 2011. After Hashim wrote to Maliki about his findings, the owner of the Canadian company admitted that it was only a consultancy group, and not a firm capable of building power plants. In response, the inspector general at the Electricity Ministry claimed that the deals were not fake, but that the two companies ended up not being qualified for the contracts. It also said that it was on top of the problems before Maliki ordered the dismissal of Ani. While Hashim’s investigation was far from conclusive, the Electricity Ministry ended up admitting that there were problems with the two companies after Maliki received Hashim’s letter. That was only after it claimed there was no wrong doing at first

After Maliki demanded that Ani step down, the political mud slinging began. The oil and energy committee questioned Minister Ani and Deputy Premier Shahristani on August 17. Before, both had refused to appear. Afterward, some lawmakers complained that Shahristani did not answer any substantive questions about the power deals, nor about his personal role in them. (1) One parliamentarian said Shahristani should return for another session, while another said he should step down. Ani didn’t stand pat either, and went on the offensive, accusing both Maliki and Shahristani of approving the questionable deals, while both denied it. Parliament’s integrity committee made a similar statement about the prime minister and his deputy’s involvement. A State of Law legislator did not help the matter when he admitted that Shahristani originally said that the contracts were fine, but then changed his mind when he got new information about them. The Electricity Minister also threatened to expose corrupt contracts signed before he was in office. Ani’s Iraqi National Movement claimed that his dismissal was a political move by Maliki. The list repeated the claim that Maliki acquiesced to both deals initially, in an attempt to spread the blame. Finally, an independent lawmaker stated that the prime minister made a deal with Ani to allow him to resign without charging him in return for the Minister not revealing any corrupt officials. Iraq’s politicians are still dealing with the fallout form the country’s parliamentary elections, which were held seventeen months ago in March 2010. The parties are still arguing over finishing off the new government. In this environment, any dramatic move by the prime minister is held in deep suspicion by his rivals. The dismissal of Ani was one such action, so the accusations surrounding his firing could be expected. The claims by Ani and the Iraqi National Movement appear to hold some weight, as there is some evidence that Maliki and Shahristani both knew about the two questionable energy deals at minimum, and might have initially approved them as well, yet they placed all the blame on the Electricity Minister. That points to Ani being made a scapegoat by the prime minister so that others could escape blame for this fiasco.

Another factor that probably played a role in Ani’s dismissal was the government’s inability to improve the power grid over the last several years. Iraq’s electricity network was badly damaged in the 1991 Gulf War when the Coalition purposely targeted it to undermine Saddam. The country was prevented from repairing much of this war damage because of the international sanctions imposed on Saddam afterward. The infrastructure took another hit after the 2003 invasion, as insurgents often attacked it. The result is that the country lacks a steady supply of electricity. Today, there is an average of six hours per day from the national grid. A member of the oil and energy committee told the press that supply had actually dipped from 6,000 to 5,000 megawatts in the beginning of August, while demand stood around 14,000 megawatts. Overall, supply has been relatively flat since late 2009, while demand has continually increased since 2003. As usage went up during the summer, blackouts began spreading across some of the country’s major cities. This is despite the government having spent $27 billion on the Electricity Ministry in the last seven years. $20 bill of that though, went to operational costs such as salaries, benefits, and pensions.

At the beginning of the year, protests broke out across the country with power supply being a major demand, putting additional pressure upon Baghdad. In response, on February 17, Maliki promised to end the electricity crisis in 15 months. (2) Dozens of new deals were announced, but later on many of these ran into problems. For example, in May the government signed an initial $6.25 billion contract with South Korea’s STX Heavy Industries to add 2,500 megawatts of capacity to 25 power plants. By August, it was announced that banks would not provide financial guarantees, so the deal was dead in the water. In another instance, in March, Minister Ani relayed plans to build 50 new power plants with 100-megawatts capacity each by the summer of 2012. The Electricity Ministry signed contracts for 44 of them, which include the two that took Ani down, but all of them either fell through or got stuck in red tape, with no final agreements being signed on any of them. Finally, Baghdad said that it would deliver free fuel to generator operators that supply many Iraqis with extra power after the national grid fails, but many owners complained that they never received any. The government would obviously like to increase the power supply, but its grand promises simply can’t be met right now. The bureaucracy, red tape, lack of trained staff, and finances amongst other things all impede Baghdad’s ability to complete any large development projects at this time. That hasn’t stopped it from continually announcing them however.

Electricity has been an issue in Iraq for the last two decades. The difference today is that for the last two years, protests have broken out about it across some of Iraq’s largest cities. Maliki has also continuously promised to improve services now that security has improved, and each month makes grand statements about new deals being signed. Many of these never materialize. The effect is that it raises the public’s expectations, but then they are continuously disappointed. That’s probably the reason why Maliki sacked Ani. The deals with the Canadian and German companies definitely look suspect, but no official investigation has been conducted yet, and none may ever occur. That didn’t stop the prime minister from dismissing Minister Ani, to make a scapegoat out of him. Maliki forced out the previous Electricity Minister when there were demonstrations in 2010, so there is a precedent. That still leaves many Iraqis in the dark, and that will not change anytime soon no matter how many ministers the premier sacks.


1. Alsumaria News, “Oil and energy parliamentary accused Shahristani of evading the responsibility of fictitious contracts and constantly call hosted by,” 8/18/11

2. Alsumaria News, “Maliki: financial guarantees requested by the electricity companies and hampered negotiations with China have agreed in principle,” 8/12/11


Alsumaria, “Premier request to sack Minister of Electricity reached Parliament,” 8/13/11

Alsumaria News, “Maliki: financial guarantees requested by the electricity companies and hampered negotiations with China have agreed in principle,” 8/12/11
- “Maliki reveals the intention to form a “supreme council of electricity” includes his deputy and the minister,” 8/12/11
- “Oil and energy parliamentary accused Shahristani of evading the responsibility of fictitious contracts and constantly call hosted by,” 8/18/11

Arraf, Jane, “Iraq’s government shuts down amid 120-degree temps – and no A/C,” Christian Science Monitor, 8/1/11

Associated Press, “Iraqi PM fires electricity minister over alleged violations in power plant deals,” 8/7/11

Aswat al-Iraq, “Electricity contracts go through Shahristani - MP,” 8/7/11

Bloomberg, “STX Signs Deal for 25 Power Plants,” Iraq Business News, 5/19/11

Al-Hasani, Mustafa, “Iraq: Contracts signed by al-Maliki with ST Korean X $ 3 billion and $ 125 million is also a fake,” Shatt al-Arab, 8/8/11
- “Iraqiya: You may be surprised to overlook the corruption in the Ministry of Trade and lack of accountability of former officials in the Ministry of Electricity,” Shatt Al-Arab, 8/8/11

Ibrahim, Haidar, “Electricity minister quits following corruption allegations,” AK News, 8/15/11
- “Electricity Ministry embroiled in $1.7bn fraud scandal,” AK News, 8/6/11
- “Electricity Minister in $1.7bn fraud probe – integrity committee unconvinced,” AK News, 8/18/11
- “Electricity minister quits following corruption allegations,” AK News, 8/15/11
- “Parliament criticizes electricity minister for non-appearance,” AK News, 8/16/11

Jawad, Laith, “Iraqi deputies lash out at Electricity Ministry,” Azzaman, 8/5/11

Karim, Ammar, “Iraq power plans short-circuit,” Agence France Presse, 8/8/11

Najm, Hayder, “‘phantom deal’ scandal at iraq’s electricity ministry may not be as ghostly as it looks,” Niqash, 8/11/11

National Iraqi News Agency, “Ashour : IS reject political bargaining in the issue of electricity contracts,” 8/10/11
- “IS demands questioning all involved officials in corruption dossiers in Ministry of Electricity, not the minister only,” 8/9/11
- “Jumaili: Iraqiya objects to the way Electricity Minister dismissed before being questioned by Parliament,” 8/7/11
- “Shahbandar rebuffs Sa’idi’s statements about Shahristani,” 8/15/11

Raphaeli, Dr. Nimrod, “Corruption in Iraq: A Case Study of Massive Fraud in the Energy Sector,” Middle East Media Research Institute, 8/12/11

Al-Rayy, “Inspector General of the Ministry of Electricity exonerates al-Shahristani from the charge of fictitious contracts,” 8/10/11

Saadi, Ahmed, “Minister of Electricity threatens to expose the dubious agreements before leaving office,” Shatt al-Arab, 8/8/11

Sabri, Abdullah, “Al-Iraqiya: Maliki saw phony electricity contracts,” AK News, 8/9/11

Salaheddin, Sinan, “Iraq PM fires electricity minister,” Associated Press, 8/7/11

Al-Shemmari, Yazn, “Electricity Ministry denies $1.7bn fraud reports,” AK News, 8/7/11
- “Al-Iraqiya to interrogate Minister of Electricity over $1.7bn fraud claim,” AK News, 8/7/11
- “Ousted electricity minister still in charge,” AK News, 8/8/11

Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 7/30/11

Al-Wannan, Jaafar, “Iraq’s power output drops as temperatures soar,” AK News, 8/2/11

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