Iran’s state and private sector electricity producers are willing to help rehabilitate Iraq’s crumbling power infrastructure but the Baghdad government does not seem interested, the energy minister said.
“The two sides signed a memorandum of understanding in 2018 to reduce power wastage in the country’s network by 30% in less than two years. However, the MoU has not taken the form of a binding contract due to (Iraqi’s) procrastination,” Reza Ardakanian was quoted as saying by Barq News.
Although the proposed rehab cost is competitive and Iranian contractors have accepted to be paid in installments, the Iraqis have not signed the final agreement, Ardakanian said without providing details.
“Electricity wastage in Iraq is a whopping 50%. Cutting it by 30% will help alleviate the chronic power problems.”
Referring to power export to the neighbor, he said there are no limits as Iran has an extensive power grid and can import from Armenia and export it to Iraq. He however, added, “We pay cash to import and we expect the same when we export”.
Iraq's unpaid electricity debt to Iran is said to be over $1 billion. The Arab neighbor imports 1,300 megawatts a day and its two thermal power plants use Iranian gas for which they have a problem paying.
If Iran cuts gas exports, Baghdad and other cities will be at risk of serious shortages as the war-torn country will lose around 7,000 MW. Last December Iran reduced gas exports to Iraq to five million cubic meters from 50 mcm citing long unpaid bills.
Iraq’s daily consumption during summer reaches around 23,000 MW while it hardly generates 12,000 MW.
“It is indeed regrettable that a country (Iran) that played a key role in improving security of its neighbor and helped it financially is being overlooked when it comes to major economic contracts,” deputy head of the Iran Chamber of Commerce, Industries, Mines, and Agriculture Hamidreza Salehi said.
Iraq has been importing power and natural gas from Iran over the last decade and based on what senior officials say “no payment has been made in the last two years” ostensibly due to the US economic blockade.
Iranian companies (private and state) have proved their ability in undertaking big power projects, namely construction of dams, hydro-power stations plus combined-cycle power plants. “But it seems this ability is not enough to win development projects in countries like Iraq as foreign policy plays a more important role,” Salehi said.
Iranian companies’ capabilities in manufacturing parts and equipment for the thermal power industry have encouraged many countries to want to benefit from Iran’s experience. Over 460 local firms and representatives from 36 European and Asian electric companies and equipment makers are attending with new technologies.
Iran is self-reliant in power generation and is the top producer and exporter of electricity in the Middle East and plays a central role as power supplier in the strategic region.
“Almost 90% of power generation equipment, including turbines and generators, are made inside the country,” he noted, adding that Iran sells and buys power to and from countries with which it has land borders.
In 2019, Iraq signed deals worth billions of dollars with the US General Electric Co. and Germany’s Siemens to undertake maintenance programs across key power plants in the country and bolster its transmission network.
The deals with GE and Siemens are worth a total of $3 billion to $4 billion.
According to a Wall Street Journal report, US and Iraqi officials also intend to unveil progress toward finalizing natural gas and power-technology deals with Honeywell International Inc HON.N and Stellar Energy.
