The fire occurred at the Al Bakr power station in Basra province, cutting high voltage transmission lines across governorates.
By Saturday night, the Ministry of Electricity said the situation was mostly under control.
“Electricity supply to all hospitals, medical centres, water, and sewage stations have been restored,” the ministry said on Saturday night.
Iraq has struggled over the years to improve its ageing electricity grid, despite consistently increasing electricity production with new plants every year.
The result has been a high loss in distributed electricity due to grid inefficiency and the breakdown of equipment, in some cases causing major blackouts, despite rising electricity generation.
Last summer, Iraq lost around 3.5 gigawatts of power production when a major transmission line failed.
Iraq is also dependent on unstable gas supplies from Iran to generate power.
It lacks the infrastructure to capture and process its own gas, of which it has proven reserves of around 132 trillion cubic feet.
The supply from Tehran has often been cut, sometimes due to extremely high demand in Iran but often due to Iraq’s struggle to pay, a problem compounded by US sanctions.
At the start of July, Iran cut off gas supply for around five gigawatts of production amid payment problems, a situation later resolved when the US approved Iraq’s payment.
Iraq produces around 23 gigawatts of electricity but summer demand is often said to exceed 30 gigawatts, mostly driven by soaring use of air conditioning.