Iraq pays high price for lack of electricity
Iraq's economic development is being held back by a critical shortage of electricity - with businesses and homes across the country forced to endure blackouts of as long as 15 hours a day.
Total demand stands at 14,000 megawatts, but the country's struggling power plants can supply only up to 8,000 megawatts.
Businesses in virtually every sector are reeling from a dependence on costly generators as summer temperatures rise to almost 50°C.
The government is unable to offer more than nine to 12 hours of power a day.
"The private sector in Iraq has been really negatively affected, across all areas of business. Whether industry, agriculture or construction, all of them need power," said Haydar Atraqchi, a business development manager at Technology Partners, a sales and services firm in Dubai. "Their costs have risen, [as] the price of diesel has surged from US$60 per barrel in the winter to $160 in the summer to maintain the generators to keep their businesses going."
Since the US invasion of the country in 2003, Iraq's government has spent $30 billion (Dh110.19bn) to upgrade its dilapidated power sector, through the purchase of gas turbines and other generators to maximise energy efficiency.
"Many of these power stations are gradually coming online in the coming weeks and entering the national electricity grid through phases," said Musab Al Mudaris, the spokesman at the electricity ministry. Iraq is planning to cover the current deficit by the end of next year and aims to increase its power offering to 9,000 megawatts next month and surpass 14,000 megawatts by the middle of next year, reaching 20,000 megawatts by the end of next year.
The ministry is reviewing applications for the recently advertised works to build three gas-fired stations in Al Diwaniya, Samawa and Nassriya.
In May, Iraq reviewed bids worth $1bn from South Korea's Hyundai Engineering & Construction, Italy's Saipem, Greece's Metka, Turkey's Gama and others to build a plant consisting of four gas units and two thermal units, Reuters reported.
Switzerland's ABB won a contract last month, valued at $75 million to extend an existing transmission grid. The workis expected to be completed by the end of next year.
"The ministry is meeting with third-party companies, that are responsible for the construction and engineering, twice a month and looking at the schedule in paper and comparing it to progress on the ground," Mr Al Mudaris said.
Contrary to Iraq's slowness to develop its power sector, crude output has dramatically increased, surpassing Iran's, the third-largest oil producing Opec member.
Iraq produced 2.984 million barrels of oil a day last month, compared with Iran's 2.963 million, Opec said.
iPad users can read the digital edition of business section as it was printed via our e-reader app. Click here
Published: July 13, 2012 04:00 AM