Iran's Power Export to Iraq Awaiting New Contract

Iran has suspended power supply to Iraq since the beginning of 2017 after its electricity export contract with the Arab neighbor ran out at the end of last year, a top energy official said on Tuesday.

"The power export deal between Iran and Iraq has expired. This is the main reason for cutting power exports to Iraq," Arash Kordi, the managing director of Iran Power Generation, Distribution and Transmission Company (Tavanir), was quoted as saying by ISNA.

The official rejected rumors that exports were cut due to Baghdad's unpaid debts for its import of Iranian electricity, which reportedly has piled up to more than $1 billion.

An Iranian delegation traveled to Iraq last week to discuss terms for a new electricity export contract, Kordi said, speculating that power supplies would resume in a month.

Iraq imported 800-1,000 MW of electricity from Iran under the previous contract.

However, sections of the Iraqi media claimed that Tehran suspended electricity exports  without prior notice.

Iraq Trade Link cited the country's electricity ministry spokesman Mus'ab al-Mudaris as saying that Iran "stopped providing Iraq with power without prior notification," adding that Iraq's power grid lost about 1,200 MW through three transmission lines in Diyala, Missan and Basra provinces.

The Iraqi official said the cutoff was due to Baghdad's electricity payment backlog which has hit $1 billion.

Iran's Energy Ministry said last year that Iraqi authorities had agreed to repay the debt by paying $100 million per month. However, after three installments they started to procrastinate.

Al-Mudaris confirmed that the last $100-million payment was made in May "but since then no further payments have been made."

Kordi suggested that Tehran intends to hammer out a better deal with Iraq. "One of the important considerations (in the new electricity export contract) is transparency in payments by the Iraqi side," said the energy official.

According to reports, Iran cut power supplies to Iraq in April 2015 because of unpaid dues. But exports returned to normal several weeks later after Baghdad pleaded with Tehran to resume supplies as the country faced day-long power outages which had led to nationwide protests.

War-ravaged Iraq is grappling with a chronic shortage of electricity that has caused lengthy blackouts and mass protests against its government, particularly during the hot summer season when electricity demand for cooling homes soars.

The country also depends on Iranian gas to feed three power plants—Rumaila, Shatt al-Basra and al-Najibiyah—to partially offset the blackouts.

--- Pipeline Project

Oil Minister Bijan Namdar Zanganeh will reportedly visit Baghdad next week to meet his counterpart Jabbar al-Luaibi, Fars News Agency said.

The meeting is reportedly aimed at finalizing a new gas export contract and discussing an oil pipeline project to connect Iran to the autonomous Kurdistan Regional Government in Iraq.

Fars said the pipeline is part of plans to transfer Iran's crude oil and petroleum products to the Iraqi Kurdistan.

In a statement on Tuesday, the Oil Ministry discounted any preliminary agreement over the oil pipeline and said, "Any decision on the subject (oil pipeline) is contingent on negotiations with Iraqi officials next week."