Iraq’s electricity: from crisis to ISIS

IS fighters have launched attacks on the power plant in Bayji
IS fighters have launched attacks on the power plant in Bayji
Credit: Jim Gordan, USACE

Just as it was beginning to recover its optimism after years of war, Iraq’s energy sector has been derailed by the advance of IS across the country. The nation’s ambitious plans have been dealt a major blow, writes Harry Istepanian

Three months before the fall of Iraq’s second largest city, Mosul, to the Islamic State (IS), formerly the Islamic State of Iraq and Syria (ISIS), I was invited to present a paper on the future of Iraq’s electricity sector at an energy conference in Dubai. Iraq’s Minister of Electricity Abdul Kareem Aftan and many senior officials were among the invitees.

In his opening statement, the minister conveyed the optimistic message that Iraqis will finally benefit from 24 hours of electricity supply by the end of 2014. He also revealed an ambitious plan to launch investment projects for international firms to boost Iraq’s electricity generation capacity to meet future demand.

ISIS electricity map. Credit: HH Istepanian
ISIS electricity map. Credit: HH Istepanian

Some additional 8000 MW were planned to come online this year, with the expectation that generation capacity would reach 20,000 MW by the end of 2015. But the recent development in Mosul was a major blow to the ministry’s plan, with the fear that the country is heading toward another sectarian war at the bleeding heart of the ongoing conflict among Sunni and Shi’ite factions.

No doubt the fall of Mosul and other Sunni provinces will further erode the already weak central government authority and put the country once again on the brink of internal conflict, with an enormous impact on the economy. The oil export has already been affected through the north pipeline due to the military operations, and worsened after KRG’s Peshmerga forces stepped in and occupied Kirkuk, the city with large oil reserves, in an attempt to stop the insurgents who swiftly took control of the neighbouring cities of Tikrit and Mosul.

The conflict between the central government and KRG over Kirkuk is not new, but seizing control of production facilities at Bai Hassan and Kirkuk oilfields, which produce more than 400,000 barrels per day, has deteriorated relations between the two sides, leading to speculation about the declaration of an independent Kurdish state.

Generation vs demand 1990 - 2013. Source: Iraq Ministry of Electricity
Generation vs demand 1990 – 2013. Source: Iraq Ministry of Electricity

Economic deadlock

During the last four decades, Iraq has gone through three wars, periods of civil unrest and economic sanctions which had devastating consequences on the future and life of its people, including lack of security, high unemployment and shattered infrastructure. According to the Foreign Policy Group, Iraq has ranked in the top 20 failed states for several consecutive years, trailing behind the Central African Republic and Zimbabwe.

The electricity shortage has been one of its economic deadlocks for years. Persistent power cuts are still common almost everywhere in Iraq and constitute a major restraint on the country’s economic and social development. Iraqis have been getting frustrated with government’s unfulfilled promises, and with having no more than eight hours a day of electricity despite billions of dollars spent over the past ten years. The cost to the economy from unserved electrical needs is estimated at about $40 billion per year.

Iraq’s socioeconomic development has remained below expectations despite the fact that its GDP has almost doubled ten times since 2003. Around eight million citizens (25 per cent of the population) are still living below the poverty line, on less than $2.2 per day. Iraq’s economy continues to rely predominantly on exported oil, which generates more than 95 per cent of earnings. Over the last eight years the government of Prime Minister Nouri al-Maliki has failed to evenly channel this huge oil income into economic and social development across the provinces, which are still suffering from the legacy of civil war and hobbled by political alienation and the marginalization of Sunni minorities.

Despite the fact that more than $40 billion from the country’s oil revenue has been poured into the sector over the past ten years, many big projects that could have lit up the whole of Iraq have been delayed. Natural gas, which is one of the main sources of fuel for power generation, has remained unexploited due to lack of investment in the oil and gas sector. A recent study published in the Electricity Journal concludes that Iraq’s demand for electricity is higher than the Ministry of Electricity’s original estimate. The study expects that Iraq will require more than 60,000 MW of electricity by the end of 2030, driven mainly by the increase in the population and GDP growth. It is envisaged that the gap between demand and supply is widening as a direct result of imprudent policies over the last three decades, which impeded the development of the sector and ultimately caused massive institutional and governance failure due to inefficient management.

“Maku Kahraba'” (no electricity) is a common idiom used by Iraqis to describe power cuts which became a regular feature of their lives, especially at peak times on Baghdad’s extreme summer days with outdoor temperatures reaching above 110à‚°F.

For years Iraqis have been relying on expensive, noisy and polluting diesel generators to meet the shortfall. It is estimated that there are more than 5000 diesel generators in the streets of Baghdad alone. Some are provided by local councils to the Baghdad ashwa’iyyat, or informal districts built illegally due to the influx of internally displaced refugees after the sectarian war in 2006-2008, which often do not receive public services from the municipalities. Fees for running private generators are hefty because of the high price of fuel on the black market. Weekly service fees range between $0.13/kWh and $0.33/kWh, on par with prices for electricity provided by the government at less than $0.1/kWh. It is unlikely that the government will be able to long sustain the subsidies to fill the gap between the cost of electricity and the tariff, due to dire financial burdens caused by the war on ISIS which is exacerbating an already stretched government budget.

GDP 2002 - 2014. Source: The World Bank
GDP 2002 – 2014. Source: The World Bank

Power under Caliphate rule

The fall of Mosul to IS has created turmoil for an electricity sector already marred with uncertainties regarding its future plans. The ministry has already announced that the grid has lost more than 4000 MW of its generation capacity due to military operations.

Current generation capacity is hovering just above 7000 MW, compared to 12,500 MW before the fresh cycle of violence began in June. Before that time Iraqis had begun to have electricity for five to eight hours daily in the best times, depending on the areas they live in. Many of them say that even before the fall of Mosul, electricity delivery was bad in the summer – much the same as in previous years, without any improvement in rolling electricity cuts.

Foreign contractors have already pulled their staff out of ongoing projects such as Mansuriya (730 MW), Sadr-2 (320 MW), Gayarah (750 MW), Baijàƒ­ (960 MW), àƒkkaz (250 MW), and Salàƒ¡h ad-Dàƒ­n (630 MW). Several transmission lines once again became targets for the insurgents, including Baiji 1 & 2, Haditha, Qàƒ¡im and Kirkuk-Diyala, in addition to a 400 MW import line from Kirmanshah, Iran. Thermal, hydro and gas-fired power stations in dangerous and unstable provinces, including Nàƒ­nawàƒ¡ (Nineveh), Diyalah, Al-Anbar and Salàƒ¡h ad-Dàƒ­n, were forced to shut down due to the heavy fighting.

The paradox of controlling energy installations and water resources is that they have become attractive targets for IS because of the potential for dramatic – if not catastrophic – effects with devastating consequences on the population and economy. In an energy conference held last January in London before the fall of Mosul and other Sunni provinces at the hands of IS, the Iraqi Deputy Prime Minister for Energy, Hussain al-Shahristani, stated: “Attacking the energy sector has been among ISIS’s top priorities to deprive the country of its main revenue sourceࢀ¦ The attacks were mainly focusing on oil export pipelines, power generation and transmission lines.”

The fighting in July over Hemreen dam (50 MW) in Diyalah province, and in January over control of the Fallujah dam along the Euphrates River, are part of IS’s new strategy of controlling the country’s strategic installations in order to inflict man-made disasters, if necessary, on the central and southern provinces, which are populated predominantly by Shi’ites. Although the Iraqi forces managed to retake control of the Fallujah dam two months later, during the months of seizure IS managed to block the Euphrates, causing massive flooding in the areas surrounding Fallujah while cutting off water to the southern and central provinces.

The capture of Rawah on the Euphrates River and the nearby town of àƒnah appeared to be part of marching toward a key dam in the city of Haditha, the second largest dam in Iraq, which produces some 1000 MW. Destruction of the dam would adversely impact the country’s electrical grid and cause major flooding as it holds back the gigantic reservoir, Lake Qadisiyah. Until now, the dam remains in the hands of government forces but the areas on the outskirts of Haditha are under the control of IS.

The threat to seize the dam is not quite remote, but the major concern for Iraqi officials is now turned to Mosul as the insurgents have gained a prime location to launch an assault on Mosul dam (1050 MW), the largest in the country, which literally will hold up the Tigris River’s flow to the south. Control of both the Mosul and Haditha dams will effectively impede 92 per cent of Iraq’s hydropower generation, in addition to water sources for more than 25 million people in the central and south provinces. However, it is unlikely that IS would risk sabotaging the Mosul dam for the time being as long as it is seizing the city of Mosul.

During the US-led invasion, the US Army Corps of Engineers found the Mosul dam inherently unstable. Since then, the dam has been undergoing continuous pumping of grout deep into its base to prevent the structure from collapsing. Any disruption could breach the dam and have dire consequences within hours by flooding the city of Mosul, surrounding Nineveh plateau and drowning parts of Baghdad under 15 feet of water.

Demand forecast 2011 - 2030. Source: Istepanian
Demand forecast 2011 – 2030. Source: Istepanian

Out of the Syrian Desert

The Syrian Desert, the traditional home of Arab Bedouin tribes, served as a major supply line for the Iraqi insurgents during the 2003 war. Ten years later it became IS’s primary stronghold, with headquarters in the city of ar Raqqa on the Euphrates River. In February 2013, IS took control of Tabqa (Thawrah) dam (824 MW), the largest hydroelectric dam in Syria, built in the 1970s with help from the Soviet Union. The dam is now providing electricity to areas that are in the hands of IS, including the contested city of Aleppo. Prior to taking over Tabqa dam, IS controlled two smaller facilities upriver, the Baath dam (81 MW), located 14 miles upstream from the city of ar Raqqa, and the Tishrin dam (630 MW), 50 miles south from the Syro-Turkish border. The battle for control of the dams has become an effective weapon in the Syrian civil war, offering the possibility to deny electricity to non-allegiant towns and cities.

Turkey is also involved in a different kind of war: that of controlling hydroelectric resources. The Southeastern Anatolia Development Project (GAP in Turkish) involves the construction of 22 dams and 19 hydroelectric power plants, with an installed capacity over 7500 MW on the Euphrates and Tigris rivers. The two rivers have historically been at the centre of a conflict between Turkey on the one hand, and both Syria and Iraq on the other. Turkey is one of only three countries in the world (besides China and Burundi) that opposed the Convention on the Law of the Non-Navigational Uses of International Watercourses adopted by the UN General Assembly in 1997. Before civil wars began in the two countries, GAP drew much criticism for restricting water flow to both Syria and Iraq. The water level of the Syrian Lake Assad, which is controlled by IS, has dropped by about 20 feet, leaving millions of Syrians without drinking water and reducing the generation capacity at Tishrin dam to lowest levels. ar Raqqa is facing a severe shortage of both water and electricity supplies, forcing both sides of the fight to race against time to control other sources of electricity, including control of a thermal power plant at al-Safira, which has been out of service due to the clashes and sabotage of the gas pipeline feeding the station.

The same electricity war scenario could be repeated in Iraq if the militants seize control of Baiji, the site of Iraq’s largest oil refinery and power plant (1320 MW). IS’s control of one third of Iraq is probably the most serious crisis threatening not only the territorial integrity of the country but also its electric power industry.

Harry Istepanian is a US-based freelance power consultant.

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