Tuesday, May 1, 2012

Iraq’s Parliament And Cabinet Argue Over Future Electricity Output

Iraq has had problems with its electricity network since most of it was destroyed in the 1991 Gulf War by the U.S.-led coalition. Since the 2003 invasion, billions have been invested into the industry, but demand has always outpaced supply. Not only that, but contracts have been riddled with delays, corruption, and mismanagement. In March and April 2012, a special committee in Iraq’s parliament got into a dispute with the Electricity Ministry and Deputy Premier Hussein Shahristani who is in charge of energy policy over how much power the country will be able to produce in the next few years. The cabinet officials have claimed that the nation is on the precipice of being self-sufficient in electricity, and the public only needs to wait just a little bit longer. The committee said that the government’s development plans will not come to fruition, and that shortages and blackouts will continue into the foreseeable future. Outside experts seem to agree with the latter that Iraq is no closer today in solving its chronic power problems that it was in the recent past.
Electricity Minister Aftan (left with hard hat) and Deputy Premier Shahristani (right with hard hat) on tour of new power plant construction, Apr. 2012 (AIN)
For the last few months, the Electricity Ministry and parliament have been going back and forth about how much power the government will be able to provide in the future. At the beginning of March 2012, the Electricity Ministry released a video claiming that it is producing 4,554 megawatts of power, and importing another 1,296 megawatts from Iran and Turkey. Later in the month, the Ministry said it would have enough domestic power to stop importing it by the summer of 2013. It went on to say that the national grid would be producing 9,000 megawatts by the summer of 2012, and that a new power plant would be coming on line every three months after that. Deputy Premier Hussein Shahristani and Electricity Minister Abdul Karim Aftan held a press conference in April where they elaborated on the government’s plans. The Ministry is working on several new power plants that should be finished within the next year. They would add 3,000 more megawatts to the national grid, and end all shortages by the end of 2013. In total, Aftan said that the Ministry would be producing 15,000 megawatts by the end of 2013, and 20,000 by the end of 2014. A special electricity committee put together in parliament directly challenged the Ministry and Shahristani. A member of the committee told the press that Iraq would have worse power shortages in the summer of 2012 than it did the previous year. He blamed corruption in contracting for power plants as the main cause, and went on to say that overall production would only be slightly up by 2014 rather than the huge increase the Ministry was talking about. In April, parts of the committee’s report were leaked to the media. It predicted that there would only be an average of 4 hours of power per day from the national grid in the summer of 2012. It estimated that Iraq needed 14,000 megawatts of output to meet demand, and that the only way to achieve that goal was to get the private sector more involved in developing the industry, and giving the provinces more authority over implementing projects. The Electricity Ministry runs all power plants and the national grid outside of Kurdistan. It also recommended sacking Deputy Premier Hussein Shahristani, and five other officials for their involvement in corrupt contracts made by the Electricity Ministry. That was a reference to two multi-million dollar deals with German and Canadian firms that proved to be fakes that led to the sacking of the former Electricity Minister in 2011. The rest of the report was not made public, because Prime Minister Nouri al-Maliki’s State of Law list tried to block it. The committee chairman revealed that it came under intense political pressure not to present its findings. This was one of the rare occasions when the parliament was attempting to fulfill its duties of overseeing the government. Every year, the Electricity Ministry announces grand plans for how it is going to end the power crisis in the country, and it is rarely challenged. The special committee not only said that the Ministry’s goals are unrealistic, but that fraud was undermining them, and that top officials had to be held accountable. This rarely happens, because the party bosses have an unwritten rule to protect each other’s ministries, because every ruling party has at least one. That is the prize each one gets for being included in the government. Attacking one ministry would open up the door to attacking them all, which would put pressure on them to actually perform, rather than just being the source of power and political patronage for the lists.

Despite receiving over $10 billion in investment last year, outside experts would agree with the committee’s predictions about the future of electricity in Iraq. In 2011, there was $11.196 billion invested in the power sector. Still, a Dunia Frontier report on foreign investment in Iraq said that none of the power plants contracted by the Electricity Ministry would come on line until 2013. It thought that the Ministry’s production goals were not realistic either, and quoted a separate assessment that predicted that Iraq would still have blackouts and shortages by 2015. The major problems is the size of many of the contracts that the government signs. In 2011 for instance, the Ministry came to an initial agreement with South Korea’s STX Group to build 25 mini-power plants in southern Iraq for $2.76 billion. STX could not get financing for the projects, and it eventually was cut to $1.044 billion for power stations in just three provinces. Dunia Frontier has noted that such large contracts still run into constant delays, because of red tape and the lack of trained staff in Iraq’s bureaucracies, resulting in some never being completed. Because Iraq’s economy is also based upon cash, any big project is open to theft and fraud. Mega-deals is about all the Electricity Ministry signs, because it wants to be seen as acting aggressively to alleviate the country’s problems. The fact that almost all of its plans fall through doesn’t stop it from continually inking more. On paper, the Ministry may think that it can end the power shortages in the next year and a half, but realistically it will probably not come close.
A typical sight in Iraq, a mix of private and public power lines going to residences in Mosul, Ninewa province (Niqash)
In the meantime, Iraq’s public will have to continue to struggle with spotty power supply. The amount of electricity available to citizens varies across the country. In the three Kurdish provinces, there is nearly 24 hours of electricity per day. That’s because the regional government has allowed private companies to build and operate several power plants there. In the rest of the country, Tamim, Diyala, and Maysan are at the top with an average of 14, 11, and 10 hours of power per day. The remaining provinces, Basra, Salahaddin, Dhi Qar, Ninewa, Muthanna, Qadisiyah, Najaf, Karbala, Babil, Wasit, Baghdad and Anbar, receive anywhere from 8-6 hours of electricity per day. The lack of power from the national grid forces many people to turn to privately owned generators in their neighborhood. That makes life not only expensive and difficult for the average Iraqi, but also increases the cost of doing business. Private firms have to pay for their own generators and fuel if they want to stay open, because the government’s supply is so inconsistent. The fact that few people pay for power also provides no break on usage, causing more problems for the government.

Iraq’s power supply has been in constant crisis for decades. The ending of international sanctions with the overthrow of Saddam Hussein opened up the industry to massive foreign aid and outside investment. Supply has gone up since then, but it has never been able to meet demand. Every year, the government claims that it is just a few months away from solving the problem, and every year there are still blackouts. The new year has been no different, with the Electricity Ministry announcing some huge deal being signed every couple months, and promising the public that their problems are about to be fixed. The special parliamentary committee tried to dampen these claims by leaking its report to the public, noting that the government is not capable of significantly boosting power output any time soon. More important, it called for accountability and for officials to be sacked for their lack of performance, and their role in corrupt contracts. Unfortunately, their call will be ignored by Baghdad, because the government is more concerned with maintaining an image of activity than making wise and sustainable decisions.  


AIN, “Shahristani: Electricity crisis to end in 2012,” 4/2/12

Brosk, Raman, “Parliament chairman objects to reading electricity report calling for dismissal of deputy PM Shahristani,” AK News, 4/21/12

Dunia Frontier Consultants, “2011 Year in Review, Foreign Commercial Activity In Iraq,” March 2012

Ibrahim, Haider, “Political pressure prevents presentation of electricity corruption report, says investigative committee,” AK News, 4/7/12
- “Report reveals loss of 41% of electricity,” AK News, 4/24/12

Khalat, Khidir, “Iraq’s electricity this summer will be worse because of corruption,” AK News, 3/30/12

Najm, Hayder, “generating wealth from electricity,” Niqash, 12/22/10

Reuters, “Iraq enters dealt o buy power from UAE,” 4/15/12

Saleh, Khayoun, “Iraq’s power output to reach 9000 megawatts in summer,” Azzaman, 4/4/12

Al-Shummari, Yazn, “Iraq to stop importing electricity next year,” AK News, 3/25/12

Sowell, Kirk, “Inside Iraqi Politics No. 32,” 2/9/12
- “Inside Iraqi Politics No. 34,” 3/14/12

Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 1/30/11
- “Quarterly Report and Semiannual Report to the United States Congress,” 7/30/11

Al-Wannan, Jaafar, “Iranian gas to fight Iraq’s electricity shortage,” AK News, 5/23/11

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