Iran has reduced gas supplies to Iraq due to unpaid bills, causing widespread electricity shortages in the centre and south of the country, a government spokesman said on Tuesday.
Iraqi Electricity Ministry spokesman Ahmed Moussa told The National that gas supplies from Iran had dropped to around 8.5 million cubic metres a day from 50 million.
That reduction has led the national power system to lose around 4,000 megawatts, leaving total production hovering around 13,000 megawatts, Mr Moussa added.
Iraq’s daily production topped around 21,000 megawatts in summer, he said, while demand in the country is about 35,000 megawatts.
What has exacerbated the situation during peak winter demand, he said, is maintenance required for some power stations before the hot summer months.
“The reduction in gas supplies started more than two months ago, but we didn’t feel it that much because the weather was mild,” he said.
“There has been a contact between the Ministry of Electricity and Iran’s Energy Ministry to settle the payment issue,” he said, adding that Iraq owes Iran billions of dollars in unpaid energy bills. He did not divulge the exact amount.
Despite billions of dollars spent since the 2003 US-led invasion that toppled Saddam Hussein, many Iraqi cities and town are still experiencing severe power cuts and rolling blackouts.
The country’s chronic power crisis has fuelled protests, mainly during the summer when temperatures hit 50°C and above.
Iraq has spent at least $60 billion on the electricity sector since 2003, the country’s Prime Minister Mustafa Al Kadhimi told reporters in late 2020. Aside from money lost to corruption, much has been misallocated.
Despite being Opec’s second-biggest producer, Iraq depends on Iran for approximately one third of its electricity needs.
Baghdad has been under pressure from Washington to wean itself off Iranian energy imports, which have been subject to US sanctions since 2018.
Since then, Washington has repeatedly extended a waiver to Baghdad for periods of between 45 to 120 days.
Iraq has taken some steps to develop its natural gas resources and electricity sector in recent years.
It has signed multi-billion-dollar agreements with multinational energy services companies such as the US's GE and Germany's Siemens to improve its power infrastructure — damaged by decades of war, sanctions and corruption — and to start clean energy projects.
It is in talks with Gulf states and Jordan to import electricity, but these discussions have yet to result in permanent deals.
Four reasons global stock markets are falling right now
There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:
1. Rising US interest rates
The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.
Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”
At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.
2. Stronger dollar
High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”
3. Global trade war
Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”
4. Eurozone uncertainty
Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.
Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”
The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”
Temple numbers
Expected completion: 2022
Height: 24 meters
Ground floor banquet hall: 370 square metres to accommodate about 750 people
Ground floor multipurpose hall: 92 square metres for up to 200 people
First floor main Prayer Hall: 465 square metres to hold 1,500 people at a time
First floor terrace areas: 2,30 square metres
Temple will be spread over 6,900 square metres
Structure includes two basements, ground and first floor
Vidaamuyarchi
Director: Magizh Thirumeni
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
Results
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