Iraq looking to finance $3bn upgrade of transmission and distribution network

Exclusive: The electricity ministry hopes to bring 22GW of power capacity by summer of 2020

Iraq's electricity ministry has courted international energy firms such as Siemens and GE to help rehabilitate its power infrastructure. AFP

Iraq is looking to finance a $3 billion (Dh11bn) upgrade of its power transmission and distribution network as it looks to bring on stream additional capacity to rebuild its infrastructure, according to its electricity minister.

"We do have a fast track plan for $3bn to upgrade the distribution and transmission of which $2bn is for the transmission and $1bn for the distribution. These are required immediately to make the national grid capable of delivering 20 hours of electricity across Iraq but this is all subject to the approval of the council of representatives for budget," Luay Al Khateeb told The National in Abu Dhabi on the sidelines of the World Energy Congress.

"I’m open to credit lines for financial support to finance these projects, even these require approval of [the] council of ministers when it comes to planning for the budgets and government loans,” he added.

Iraq has been courting international energy companies to rebuild its dilapidated power infrastructure damaged by decades of war. A World Bank assessment has pegged the cost of rebuilding Iraq at around $150bn, with the utilities sector ranking high on the government’s list of priorities. A crippled utilities network was the main factor behind protests across Iraqi provinces during the summer months, when temperatures can easily reach 50°C, occasionally requiring government mandated holidays to cope with the extreme weather.

Mr Al Khateeb said the ministry required $3bn of funding by 1 October to meet targets for power generation for June 2020.

With the coming on stream of new capacities, Iraq hopes to achieve 22 gigawatt (GW) capacity for power generation by next summer. The ministry has added 19GW of electricity to the grid this year, he said.

Iraq urgently needs the funding as demand for electricity rises 10 per cent year-on-year, with $30bn required to completely overhaul the utilities sector.

Iraq, which also depends on neighbouring Iran for gas imports to meet its electricity demands is unlikely to wean itself from its dependence any time soon, Mr Al Khateeb said.
"We're very much open to secure supply of fuel, electricity to supplement our requirements until we develop the gas capability to do the needful and in the meantime we're communicating and dealing with various neighbouring countries on alternatives on the basis of best offering when it comes," he said.
In spite of Iran's trading partners coming under squeeze from Washington's "maximum pressure" approach, Iraq has managed to secure a 90-day waiver in June to continue its imports.
Mr Al Khateeb said the imports were a "question of economics rather than politics".
"We're happy to import electricity or gas from whoever could offer us the best deal irrelevant of the identity of that country until we achieve a level of self sufficiency in developing our own capabilities," he said.

Iraq also plans to add renewables to grid, as Opec's second-largest producer, plans a long term move away from hydrocarbons to cleaner forms of power generation.

The country plans to add 755MW of solar power through large-scale farms for which the ministry has pre-qualified companies, Mr Al Khateeb said.

The ministry hopes to add 1000MW of renewable capacity year-on-year and targets 20 per cent power generation from cleaner sources by 2030.

"This will compliment gas to power participation and diversify our energy portfolio," he said.