German industrial giant Siemens is in discussions with Iraq's government to advance work on phase two of its $15 billion roadmap for power rehabilitation, as it also helps the country stem technical and piracy-related losses.
"There are two projects which are not yet finalised and we are working on the financial close of these projects," Dietmar Siersdorfer, Middle East and UAE managing director at Siemens Energy told The National in an interview.
The company is in talks to reach financial close on power projects that will add 1.3 Gigawatts to Iraq's grid by the summer of 2021.
Siemens has already added 791 megawatts of power capacity to the Iraqi grid, which is sufficient to provide electricity to nearly 3 million people, according to the company.
Rebuilding Iraq's power infrastructure, damaged by decades of war, is high on the government’s list of priorities. A crippled utility network has been a key factor behind protests across provinces during summer months, when temperatures can easily reach 50°C.
“We are in the first phase, we are trying conclude projects to build up new generation....and we are looking now into the projects that they will put in place for phase two,” Mr Siersdorfer said.
Siemens will bring online the Maysan, Rumaila and Shatt Al Basra plants that are expected to add 2,200 megawatts of capacity to grid.
The company also signed a $1.3bn agreement to rebuild two power plants destroyed by ISIS as part of phase two of the roadmap last year.
The Munich-based company is helping the Iraqi electricity ministry manage systemic losses, which cost the power sector and government billions of dollars in lost revenue weakening an already fragile economy. Iraq, Opec’s second-largest producer has seen revenues decline from the impact of low oil prices resulting from the Covid-19 pandemic. Its economy is forecast to contract 12.1 per cent this year, according to the International Monetary Fund.
Iraq lost an estimated $12bn to electricity theft in 2019, the country’s former electricity minister Luay Al Khateeb said earlier this year.
About half of nearly four million registered units "thrived" on power piracy leading to lost revenue for the government, according to Mr Al Khateeb.
Siemens is helping the Iraqi government manage such losses by helping implement an advanced digital collections system that will plug in gaps in payments.
“You need to establish different systems in order to do the collection of the electricity bills because [much] electricity is consumed but it's never paid,” Mr Siersdorfer said.
"The government is also working on pilot projects now to implement them, and we are supporting them on this technology so that they implement the collections system,” he added.
Siemens will test a billing system in Iraq that has worked successfully in Latin America and Africa to limit losses to utility providers. The system will also allow end users to access electricity in a pre-paid mode.
"You can pay with your cell phone for your electricity. You can buy now for €10 or $10-worth of electricity,” Mr Siersdorfer said.
Iraq's government is currently looking to partner with firms to help support the implementation of a viable and efficient distribution system.
“They're looking also for partners, private companies - public-private partnerships in order to enable collections,” said Mr Siersdorfer.
An effective collections system will also enable job creation, as a functioning distribution and transmission network requires adequate infrastructure as well as metering technology that needs to be locally manufactured.
Siemens is also helping Baghdad access financing for its electricity rehabilitation schemes. Having the right mechanism and framework will help the country shore up its finances.
“We are also looking into finding partners that go into private investments for some of the assets that have to be built,” Mr Siersdorfer said.
On Tuesday, Iraq's oil minister Ihsan Abdul Jabbar, said he anticipated delays in several energy infrastructure projects, but said the country's crude capacity would reach 7 million barrels per day by 2027.