Iraq Electricity Debt to Iran Reaches $1b

Iraqi authorities had agreed to repay the debt in $100 million installments.
Iraqi authorities had agreed to repay the debt in $100 million installments.

Iraq's debt to Iran for electricity imports has reached $1 billion, deputy energy minister said on Wednesday.

“Although plans had been made to help Iraq settle its massive debts by monthly installments, the war-ravaged country has fallen short of clearing its outstanding debts,” Houshang Falahatian was also quoted as saying by Mehr News Agency.

According to the official, serious negotiations are underway with Iraqi officials to settle the debt as soon as possible.

Referring to the previous agreement between the two sides, Falahatian added that Iraqi authorities had agreed to repay the debt by paying $100 million per month, yet after clearing three installments, they started to procrastinate.

Stressing that the piled up debts have nothing to do with financial and banking restrictions, he said, "The unsettled dues have accumulated over the past year."

Falahatian believes that the plunge of oil prices over the past two years has weighed heavily on Iraq's budget and financial resources.

The official added that as long as new negotiations are being held, electricity exports will not stop.

According to Mojib al-Hesani, the head of Basra Energy Committee, plans have been devised to provide Rumaila, Shatt al-Basra and al-Najibiyah power plants with gas imported from Iran.

"Basra needs 3,500 MW of electricity, of which 1,500 MW are generated in al-Najibiyah gas turbine power plant," he added, noting that as soon as the other two power plants are provided with the much-needed natural gas, electricity cuts will become a thing of the past.

  Gas Supplies

Tehran and Baghdad signed a draft deal in 2013 to transfer Iran’s gas to two Iraqi power plants. However, the two countries agreed to postpone exports to the second quarter of 2015, given the political insecurity in the region.

Based on the contract, gas export will start at 4 million cubic meters per day and gradually reach 25 mcm/d. There are plans to increase exports to 30-50 mcm/d in the future.

A 270-kilometer pipeline stretches from Charmaleh, a village located in the western province of Kermanshah in Iran, to Naft Shahr, a town bordering Iraq and then to power plants in Baghdad. A second route, with a capacity of 30 mcm/d, will pass through Basra.

Gas export to Basra is expected to begin in 2016. A 142-kilometer pipeline is to be extended from IGAT VI to Basra.

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