Electricity exports to Iraq continue as usual and the pattern is symptomatic of cordial and expanding economic, trade and political relations between the two neighbors.
According to the Energy Ministry news website Paven, Iran can supply its western neighbor with as much as 1,500 MW of electricity per year via five transmission lines.
The export contract was signed in 2005 for the sale of 150 MW p.a. and is extended ever since.
Iran has exported close to 65 billion kilowatt hours of electricity to Iraq since 2004 worth $6.2 billion, of which $5.2 billion has been paid.
Iraq is the biggest importer of electricity from Iran. It needs more than 23,000 MW to meet growing domestic demand. Years of war, civil strife, terror attacks and the US invasion in 2003 almost destroyed its power infrastructure creating a whopping 7,000 MW deficit.
Besides importing electricity from Iran, Iraqi power plants also depend on Iranian natural gas to generate power. A shortage last summer fueled unrest in some southern provinces.
Based on a deal signed by Iran's Energy Minister Reza Ardakanian and the Iraqi Minister of Electricity Luay al-Khatib in February, Iran agreed to boost cooperation in power production and export as well as sharing power industry know-how and technology.
According to the agreement, Tehran will help rebuild the war-stricken country's power infrastructure and human resources.
Plans include construction of a power plant, modernization of old plants and reducing power grid losses in Iraq by Iran’s state and private companies.
Besides importing electricity from Iran, Iraqi power plants also depend on Iranian natural gas to generate power. Shortages last summer fueled unrest in some southern provinces
Power loss in Iraq’s electricity network is 50% and is expected to fall to 20% by 2020. Moreover, Iraq will be able to meet domestic need for power by 2021 with help from Iranian firms.
Ardakanian has said Iran will continue to sell electricity to Iraq “unless peak domestic demand puts the national grid under extra pressure.”
Debt Rescheduled
Regarding Iraq’s $1 billion unpaid debt to Iran, the minister has said that “there is no hurdle” in transfer of money related to power exports.
Although the new US economic sanctions have imposed added pressure on exporters and importers in terms of banking transactions, he said the Energy Ministry would continue selling electricity to Iraq.
The overdue debts have been “rescheduled” and repayments have started, he has been quoted as saying.
On Monday, President Hassan Rouhani met his Iraqi counterpart Barham Salih in Baghdad and discussed ways to further expand cooperation in key fields, especially energy and technology.
“We are keen to offer technical and engineering services and share experience with Iraq. We will encourage the private sector to boost investment there,” the president said during his visit to Baghdad since taking office in 2013.
"Iran is willing and able to participate in reconstruction projects in Iraq."
The rare meeting was billed as “crucial” by most regional observers as US President Donald Trump and his senior aides seek to pressure Iraqi leaders not to buy energy from Iran.
