Iranian private companies have proved their mantle in executing big power projects, such as construction of dams and hydropower stations, as well as thermal and combined-cycle power plans, at competitive prices, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture's Exports Commission, said.
However, Hamidreza Salehi added that access to cutting-edge knowhow is not sufficient to win development projects in Iraq, Afghanistan and Pakistan, as foreign relations play a more important role.
“Iran is about to lose ground in Iraq’s electricity market as Turkish, Egyptian and Saudi Arabian firms are negotiating to sign a $30 billion agreement to develop Iraq’s aging power infrastructure, while the first thermal power station in Iraq after the Iran-Iraq war was built by Iranian companies,” Salehi was quoted as saying by ILNA.
Investment opportunities in Iraq’s power sector notwithstanding, no meaningful measures have been taken to expand Iran’s footprint in the untapped market as the government’s main priority is political issues and they are not concerned about economic development projects that can be handled by the private sector, he added.
The ICCIMA official said old strategies and ineffective diplomacy have failed and a new approach should be adopted to enable Tehran to have a say not only in Iraq, but also in other regional states planning to develop the power sector.
“Iran and Iraq signed a memorandum of understanding in 2018 to boost energy collaboration and renovate the Arab country’s power infrastructure. However, little has happened since then and the MoU is apparently shelved,” he said.
“It is regrettable that a country (Iran) that played a key role in improving security of its neighbor and helped it economically is easily overlooked when it comes to major contracts.”
Salehi added that Iran has not even been able to elevate the MoU to “a real contract” after four years and this is while others (Turkish, Egyptian and Saudi firms) are in talks with the Iraqis for lucrative long-term contracts.
Iraq has been importing power and natural gas from Iran over the past decade and based on what senior officials say. “no payment has been made in the last two years” ostensibly due to the US economic siege.
“During the visit of Iraqi Prime Minister Mustafa al-Kadhimi to Tehran in 2019, neither a contract was signed and nor did the authorities discuss the MoU. When he [al-Kadhimi] went to Turkey, negotiations to develop the Iraqi power sector topped the agenda.”
Mutual Interests
Positively impacting Iraq’s economy is as important as helping ensure security in the region, because robust economic collaboration is key to long-term mutual interest.
Over 65% of energy in Iran are produced by private companies that can also play a key role in helping Iraq meet its growing electricity needs.
Iraq is the main importer of Iranian electricity for more than a decade. The Arab neighbor needs 23,000 plus megawatts of electricity, but decades of instability and fighting have destroyed its power infrastructure. It has a power deficit of 7,000 MW.
Daily power generation capacity in Iran is 60,000 MW and its average annual export is 10,000 MW to Iraq, Pakistan and Afghanistan.
Iraq's unpaid debt to Iran for electricity import is said to be about $1 billion that will hopefully be settled when the nuclear deal Iran had signed with six world powers, including the US, is revived and anti-Iran sanctions are lifted.
Iran also exports 15 million cubic meters of gas per day to Baghdad from Naftshahr in Kermanshah Province through a pipeline diverging from the 6th Iran Gas Trunkline.
