Iraq’s government has paid $1.6 billion of its debt related to natural gas from Iran, the Iranian Oil Minister Javad Owji said.
"After months of negotiations and diplomacy we received $1.6 billion for gas exported to Iraq last year," Owji wrote on his personal Twitter account on Thursday.
Gas export from Iran increased 25% in the first three months of the fiscal year that started in March and gas export revenue shot up 90% during the period, he said.
Earlier this week, Iraqi energy officials announced that they would settle part of the gas debt to Iran “in two days” to prevent cuts in Iranian gas flow to Iraq.
Ahmed Musa, spokesman for the Iraqi Electricity Ministry told the Iraqi News Agency that the unpaid bills had piled up during the past governments and that the current administration is set to resolve the problem.
The current government in Baghdad is working to resolve the remaining problems and find solutions by borrowing to pay Tehran’s dues.
Earlier this month, the electricity ministry in Baghdad said Iran had cut five million cubic meters of the gas to the Arab neighbor per day resulting in extended power cuts.
Although Iran demanded that Iraq fulfil its financial obligations, Baghdad could not approve the 2022 budget as the bickering political parties failed to reach a consensus to form a new government and elect a president.
Iraq was unable to pay its 2020 arrears because of the complex mechanism its authorities are forced to follow to be eligible for waivers from the unilateral US sanctions imposed on Iran.
The payment of debt, however, was possible after Iraqi parliament passed an emergency bill last week allocating 25 trillion dinars ($17 billion) to support the agriculture and energy sectors and pay public sector workers.
The bill also included 4 trillion dinars ($2.7 billion) to repay debts to Iran for gas and electricity imports, which would theoretically help mitigate supply disruptions that have hit electricity supplies during the sweltering heat across Iraq.
In December the National Iranian Gas Company said Iraq owes more than $6 billion in unpaid energy bills. The debt includes $2 billion in arrears and $1 billion in contract violations.
Moreover, three billion dollars are blocked by the Trade Bank of Iraq due to the US economic blockade and tough banking restrictions.
Iran has exported 65 billion kilowatt-hours of electricity to Iraq since 2005 worth an estimated $6.2 billion. The country is one of the biggest regional markets for Iranian energy. Twenty million cubic meters of gas is exported daily to Iraq (worth $200 million a month).
