Country Spotlight: Iraq power struggle

Iraq continues to wrestle with the problem of rebuilding its power infrastructure and meeting increasing demand while at the same time coping with ongoing sabotage.

Nigel Blackaby, Features Editor

Taking on the job of Minister of Electricity in Iraq takes a very determined and, many would say, brave person. The size of the task facing the ministry in rebuilding the country’s dilapidated power infrastructure is in itself daunting, notwithstanding the daily incidence of sabotage. Resources are limited both in terms of finance and expertise and in common with all Iraqi politicians there exists the ever-present threat of assassination by insurgents. Despite this, Dr Muhson Shlash, a quietly spoken Iraqi born in Baghdad who has been living in Canada for 15 years, took on the role following the elections in Iraq held in January 2005.

Shlash is no stranger to the Iraqi power system having held a senior position in ministry prior to the rule of Saddam Hussein. On taking up his post this May he became the third Minister of Electricity in the space of two years following in the footsteps of Dr Karim Hasan, who was appointed following the fall of Saddam and Dr. Aihim Alsammarae, who was the choice of the interim government.

It is well known that Iraq’s power infrastructure is in a dilapidated condition and as a consequence, is unable to deliver anything close to a consistent electricity supply across the country. American officials have admitted that the condition of the infrastructure was far worse than it had initially imagined. The issue is high on the political agenda in Iraq as the country’s leaders are only too aware of the discontent caused by its failure to deliver basic services. The power sector in Iraq suffered gross under-funding throughout the Saddam regime on top of which it has had to cope with the impact of economic sanctions and the ravages of two wars. Since the toppling of Saddam the expectation had been that there would be a meaningful improvement in power supplies and a rebuilding process that would gradually put Iraq on a par with neighbouring Arab countries when it came to power infrastructure. Like many other aspects of post-Saddam Iraq, this has not gone to plan.

Work on transmission lines under the PCO’s Rapid Contracting Initiative
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Although the power generation capacity of Iraq has grown, progress has been slow. The Ministry of Electricity (MOE) has had some success in redistributing power resources to parts of the country beyond Baghdad that, prior to the US-led invasion, had to play second fiddle to the needs of the capital. Reports from bloggers suggest the typical Iraqi home or business can expect no more than 6-8 hours of electricity per day although the official MOE line is that countrywide, power is available 14 hours per day on average, with Baghdad at 12 hours per day. Dr. Shlash is reported to have advised householders to obtain their own generator and not to rely on the central generating system. Some 29 per cent of Iraqi households own or share a generator but this does not guarantee the ability to produce power, due to the frequent fuel shortages.

Iraq has an installed capacity of 9700 MW, with thermal power making up 5015 MW, gas fired plants 2208 MW and hydropower 2477 MW. Only around one half of this capacity is currently in operation yet this summer demand hit a new all-time high of 8845 MW up from 6800 MW last summer. The MOE is looking to increase capacity to 18 000 MW by 2010 and is looking to obtain finance for the $20 billion that would be needed to implement these projects.

One of the main reasons that progress has been slow is the level of security in the country and the deliberate sabotaging of power plants, transmission grids and substations. Much of the destruction has been at the hands of insurgent groups, determined to undermine the administration by slowing the progress of reconstruction and preventing them delivering any improvement in standards of living. In July insurgents staged coordinated attacks on power plants and transmission lines across the country, knocking out power from Anbar Province in northwest Iraq down to Najaf and Karbala in the south.

Dr Slash admits that it is virtually impossible to protect every tower in the most volatile areas, let alone the 17 000 km of line and 66 000 transmission towers across the country. “Insurgent activity is a serious concern for the Ministry because these external forces are overwhelmingly difficult to counter with the MOE’s existing security force, the Electricity Protection Security Service,” says the Minister. There have been reports of deliberate sabotage by those working in power plants, possibly as a result of infiltration. There have also been instances of infrastructure damage in order to prevent electricity being shared more equitably around the country. The security situation has meant that a large part of the budget allocated to the power sector has had to be spent on infrastructure protection rather than restoration and expansion.

The frequency of bomb attacks and kidnappings has meant that foreign contractors and sub-contractors have become increasingly reluctant to post staff to Iraq. This has meant a much greater reliance on the local Iraqi workforce and in some specialist areas there has been a skills shortage. “The MOE is over-staffed with employees who are behind their counterparts in developed countries in terms of technical knowledge and skills. There is still a long road ahead to attain the level of technical proficiency that would enable the ministry to meet existing and growing power demands.”

The growth in power demand further adds to the challenge. “With more than half a million new jobs created, new industries and new factories, Iraq has experienced a rapid increase in electricity demand,” according to a fact sheet published by the Iraq Ministry of Electricity.

Despite the large amount of money allocated to power infrastructure reconstruction, funding remains are major obstacle. “Billions of dollars are needed to refurbish existing thermal units as well as construct new baseload power stations,” says Dr Shlash. “The ministry’s 2005 budget, which includes $300 million for capital improvements and $66 million for operating expenses, is insufficient to cover the capital investments needed. The ministry estimates that $2 billion on capital investments is required for a period of five years to be able to meet demand. “The significant funding gap for both O & M and capital investment may hinder the preservation, let alone the advancement of the system,” says Shlash.

The Minister has questioned where the $5.6 billion allocated by the US to power projects has all gone. More than $1 billion was redirected to security needs but most of the remaining money has already been spent. “What happened to these billions?” Shlash asks.” Why didn’t it make a difference?”

There have been allegations that some of the money has fallen victim to bribery and corruption. An audit undertaken by accountants KPMG suggest the existence of $600 000 in ghost pay rolling in the Electricity Ministry and additional evidence of bribes. According to the Minister, record keeping of equipment and materials is complicated, entirely manual and lacking in transparency.

Two units at the Al Doura thermal power plants in Baghdad have been repaired
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In a report issued in October, the US Department of Trade openly criticised the Iraqi Ministry of Electricity for its failure to properly maintain the country’s electricity grid. The report accepted the impact of the ongoing insurgency but questioned the ministry’s overall record. “Electricity levels have been limited by poor operations and maintenance practices, which reduces the output of plants by up to 30 per cent,” said the report. Minister Shlash has in turn described as “amateurish” the initial approach of American occupation officials in choosing to install gas turbine plants quickly, requiring more maintenance than thermal plants and less suited for baseload operation. “Everyone was talking about quick solutions without sizing up the actual problem,” says Shlash.

Efforts are underway to increase the level of power imports into Iraq. Around 350 MW is imported from Iran, Turkey and Syria and the minister held a series of talks with neighbouring countries including Kuwait in November. By next summer imports from Iran are expected to rise to 1000 MW against 145 MW now. Imported electricity goes directly into power islands in border regions that are not connected to the national grid due to voltage differences. “Economically, power imports are feasible because the cost to import power is lower than the cost of diesel fuel used at the power plants in these areas,” says Shlash.

The MOE is in the process of implementing Project Phoenix, an initiative that encompasses the repair or refurbishment of seven plants and 26 gas turbines at a cost of $18 million. Project Phoenix will add 699 MW to the national grid and all seven sites are due to be completed by the end of the 2005. The Ninewa plant in northeastern Iraq is already up and running and the Khor Al Zubayre gas fired project near Basrah will add another 220 MW.

In many cases the MOE is working alongside reconstruction agencies operating in Iraq with the MOE authorizing projects. This includes working with the Electricity Sector of the Projects and Contracting office (PCO), responsible for managing America’s reconstruction funding, as well as the US Army Corp of Engineers and USAID. The PCO Electrical Sector is responsible for 434 projects and training programmes valued at approximately $3.2 billion. USAID claims to have been responsible for adding 1600 MW though its projects, which include transmission line reconstruction and substation rehabilitation and construction.

Since his appointment as minister of electricity, Dr Shlash has survived an assassination attempt in which two of his bodyguards were killed and faced sharp criticism of his ministry’s performance from the US. With fresh elections due in December it is unclear if he will remain in the role next year.

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