meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraq electricity sector makes slow progress

9 May 2024

Latest news from Iraq's power and water sectors:

> Iraq plans new Baiji power plant
> Decision imminent on Iraq waste-to-energy project
> Iraq discusses nuclear projects with global watchdog
> Siemens Energy and SLB sign Iraq flare gas-to-power deal
> PowerChina in talks for Basra desalination plant
> US seeks firms for Baghdad power plant package
> Iraq plans green hydrogen project at refinery
> Iraq approves long-term grid expansion

 

In late March, Iraq’s Electricity Ministry struck a five-year gas supply deal with National Iranian Gas Company for up to 50 million cubic metres a day (cm/d), contingent on the needs of Iraqi power stations, in exchange for oil and gasoline.

The deal offers a lifeline to Iraq’s deteriorating electricity sector and replaces an existing agreement whereby contractual volumes were theoretically set at 70 million cm/d for summer and 45 million cm/d for winter.

The two countries signed the deal following nearly three months of longer-than-usual power outages in Iraq, and after Baghdad settled part of the multibillion-dollar debt it owes Iran. The power cuts occurred due to a drastic reduction in Irani gas supply, which dipped to 10 million cm/d and wiped out 4GW from Iraq’s grid.

The deal is a compromise for both countries. It allows Iraq some breathing space to implement projects to reduce its dependence on Iran’s gas exports – a long-running and elusive objective among Iraq’s policymakers and its allies in the GCC states and the US.

The crisis should prompt Iraq to push ahead with projects to boost domestic gas production and build solar power plants, according to the Electricity Ministry.

Supply and demand mismatch

There has been a persistent mismatch between supply and demand in Iraq’s electricity sector, with peak demand during the summer months outstripping available capacity by a sizeable margin.

In recent years, the deficit has returned during the winter when heating requirements rise.

With a few exceptions, however, the procurement process or negotiations for additional generation capacity have been proceeding slowly, leaving a gap that is typically addressed by diesel generators.

Iraq aspires to build 12,000MW of solar capacity by the end of the decade, which is nearly half its known available capacity today.

The Electricity Ministry has signed deals with several companies to develop sizeable solar photovoltaic (PV) capacity over the past two to three years in line with this objective. Yet, despite regular pronouncements that the construction phase for these projects is about to start, none have reached final investment decisions (FIDs) or the construction phase so far.

The Electricity Ministry remains the dominant client for these projects, although the National Investment Commission (NIC) has been an active participant, particularly in bilateral or public-private partnership projects.

For example, the UAE’s Masdar signed a deal to develop 2GW of solar capacity in Iraq with the NIC. The commission is also procuring a contract to develop the country’s first waste-to-energy (WTE) project in coordination with the Municipality of Baghdad, the Electricity Ministry and the Environment Ministry.

Located in the Al Nahrawan area of Baghdad Governorate, the planned WTE project will have the capacity to treat 3,000 tonnes of waste a day and generate nearly 80 megawatt-hours (MWh) of electricity.

Other companies that have committed to develop solar PV projects in Iraq include Power China, which has pledged to develop solar PV projects with a combined total capacity of 2GW, and France’s Total Energies, which has committed to build a 1,000MW solar farm in Artawi.

The solar project in Artawi is a small part of a $27bn package that TotalEnergies is developing in partnership with QatarEnergy. The package involves the development of a common seawater supply project and oil and gas fields in Iraq.

Awarded projects

As earlier cited, there are some exceptions to the endemic start-stop mode for Iraq’s power generation and distribution projects.

For example, Germany’s Siemens Energy and the US-based GE have ongoing projects that include retrofitting or upgrading existing gas turbine power stations or building new substations as part of agreements to help rebuild Iraq and support its goal of reducing carbon emissions.

Earlier this month, the Electricity Ministry signed a preliminary agreement with Germany’s Siemens Energy and US firm SLB, formerly Schlumberger, to explore the development of a power generation plant using flare gas.

According to Siemens Energy Middle East managing director Dietmar Siersdorfer, the planned flare gas-to-power project in southern Iraq will help reduce carbon dioxide emissions and capture value from gas that would otherwise be wasted.

The planned flare gas-to-power plant could have a generation capacity of up to 2,000MW.

In January this year, China-based Oriental International is understood to have signed a contract to convert a single-cycle unit at the Baghdad South power plant complex into a combined-cycle power plant.

In April, the Electricity Ministry awarded another Chinese company, China Machinery Engineering Corporation (CMEC), a second year of operation and maintenance contracts for the Salah Al Din gas-fired power plant.

CMEC was awarded the estimated $1bn contract to build the power plant in northern Iraq in 2011. After a series of delays and challenges, including the Isis uprising, the two 630MW capacity units began operating last year.

In December last year, Siemens Energy also signed a contract to deliver five high-voltage substations on a turnkey basis in Iraq. The 400-kilovolt substations, each with a capacity of 1,500MW, will be installed in Baghdad, Diyala, Najaf, Karbala and Basra.

Similarly, the US’s preoccupation with helping wean Iraq off Iran’s gas and electricity imports has spurred projects to interconnect Iraq’s grid with its neighbour Saudi Arabia through the GCC grid and Jordan.

In October last year, the governor of Saudi Arabia’s Eastern Province, Prince Saud Bin Naif Bin Abdulaziz, inaugurated the GCC grid's Iraq connection, which had been under development for several years. The 295-kilometre power transmission network will have a total transmission capacity of 1,800MW, with an initial phase expected to supply 500MW of electricity to Iraq.

Future projects

In February this year, Electricity Ministry spokesperson Ahmed Mousa said the government had approved funds for the long-term plans to expand the country’s power transmission and distribution network with Siemens Energy’s help.

Mousa said the ministry “received funds for long-term plans to develop the electricity sector in 2023 … the three-year budget approved in 2023 also includes funds this year and in 2025”. 

In early May, it was reported that the Electricity Ministry held discussions with Qatar’s UCC Holding to develop a 2,100MW gas-fired power plant in Baiji. The plant will replace a power station that was damaged during the war.

It is unclear if the project is part of a previous agreement between UCC Holding and NIC to develop two power plants with a capacity of 2,400MW in Iraq.

A new 2,000MW gas-fired power plant is also being proposed in Basra, which is expected to receive gas from the nearby West Qurna 1 and West Qurna 2 oil fields.

As it is, several projects are waiting for final approvals, such as the gas-fired 2,800MW Khairat independent power producer, which has yet to reach FID over two years after the contract was awarded.  

Going nuclear 

Project delays and indecision in Iraq do not appear to narrow down the options for future power generation expansion.  

In March, it was reported that senior Iraq and International Atomic Energy Agency (IAEA) officials had discussed Iraq’s plans for a possible nuclear energy programme, including small modular reactors.

According to the nuclear watchdog, discussions included maintaining strict adherence to non-proliferation norms.

IAEA director general Rafael Mariano Grossi said his agency has committed to supporting the foundations of what should be an entirely peaceful programme in Iraq.

Iraq, for its part, is considering nuclear energy to enable greater energy security and for water desalination projects as part of the country’s plans for a more sustainable future.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11745270/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Rabigh 2 IPP expansion secures $2.58bn financing

    5 October 2026

    Saudi Arabia’s Rabigh 2 combined-cycle gas-turbine (CCGT) independent power project (IPP) expansion has reached financial close.

    In a disclosure to the Saudi Exchange, Acwa said it had secured SR9.69bn ($2.58bn) in long-term financing for the project, which has a generation capacity of 2,313.5MW.

    In April, MEED reported that Acwa and Saudi Energy (formerly Saudi Electricity Company) had signed a 31-year power purchase agreement (PPA) with Saudi Arabia’s principal buyer, Saudi Power Procurement Company (SPPC), for the project.

    The project involves developing a CCGT plant in the Mecca region. It is being developed by Al-Morjan Two Electricity Company, with Acwa and Saudi Energy each owning a 40% stake in the project.

    The contract is valued at SR11.5bn ($3.07bn), the companies said in separate stock exchange filings at the time. The carbon-capture-ready power plant will be implemented under a build, own and operate contract.

    The financing has a tenor of about 34 years and was provided by a consortium of local, regional and international lenders.

    The lenders are:

    • Abu Dhabi Commercial Bank
    • Alinma Bank
    • Boubyan Bank
    • China Minsheng Banking Corporation, Hong Kong Branch
    • Commercial Bank of Dubai
    • HSBC Bank Middle East
    • Industrial and Commercial Bank of China
    • Industrial Bank, Beijing Branch
    • National Bank of Greece, Cyprus
    • Riyad Bank
    • Saudi Awwal Bank
    • Saudi National Bank
    • Standard Chartered Bank, Taiwan
    • Sumitomo Mitsui Trust Bank, London Branch

    The project scope also includes financing and expanding a 380kV electrical substation.

    According to regional project tracker MEED Projects, construction works have commenced on the project, and a joint venture of Egypt’s Elsewedy Electric and China’s Sinohydro has been working as the main contractor.

    Rabigh 1 extension

    In January, Saudi Energy announced a separate energy conversion agreement with SPPC for the purchase of electricity from the Rabigh 1 power plant expansion.

    The contract is valued at SR5.33bn ($1.42bn).

    It covers the development, financing, construction, ownership and operation of the gas-fired power plant, which will have a generation capacity of 1,179MW.

    A joint venture of Elsewedy Electric and Germany’s Siemens Energy is undertaking the engineering, procurement and construction work for the project, which is expected to be completed by the end of 2026.

    US/India-based Synergy Consulting is the financial advisory consultant to Saudi Energy on this project.

    Acwa also recently started initial commercial operations at the Taiba 1 and Qassim 1 CCGT power plants, as reported by MEED.

    The plants have a combined generation capacity of about 3.8GW and are two of four projects procured under the first round of Saudi Arabia’s gas-fired IPP programme by SPPC.

    A team of Saudi Energy and Acwa won the contract to develop and operate the projects in 2023.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20270643/main.jpg
    Mark Dowdall
  • Dubai announces $490m e-commerce hub expansion plan

    5 October 2026

    Dubai CommerCity has launched a second expansion phase valued at more than AED1.8bn ($490m), adding over 91,000 square metres (sq m) of office, retail and logistics space across the free zone’s business, social and logistics clusters.

    Dubai CommerCity is a joint venture of Dubai Airport Free Zone Authority (Dafza) and Dubai government-owned Wasl Asset Management Group.

    The expansion is scheduled for delivery between the first quarter of 2027 and the fourth quarter of 2028.

    The developer said the move builds on sustained demand at Dubai CommerCity, where occupancy has reached nearly 96% across its office, logistics and retail assets.

    Phase two will comprise a series of developments across Dubai CommerCity’s three districts: the Business Cluster, Logistics Cluster and Social Cluster.

    The Business Cluster comprises 13 office buildings with a total leasable area of 108,000 sq m. The Logistics Cluster consists of 84 logistics units with a leasable area of 68,000 sq m, while the Social Cluster features art galleries, restaurants and cafes. The development will also include 4,000 parking spaces.

    Dafza and Wasl Asset Management Group announced plans to develop the AED2.7bn ($735m) e-commerce free zone In 2017. 

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20270228/main.jpg
    Yasir Iqbal
  • Iraq and Turkiye discuss oil and gas deal

    5 October 2026

    Iraq and Turkiye have opened talks in Ankara on a framework agreement for oil, gas and energy cooperation, according to a statement from the Iraqi Oil Ministry.

    Iraq’s Oil Minister Bassem Mohammed Khudair Al-Abadi led the Iraqi side, while the Turkish Energy and Natural Resources Minister Alparslan Bayraktar led the Turkish side.

    Officials discussed a proposed roadmap to deepen work on oil and gas infrastructure, petrochemicals, and trade in oil, gas and power.

    Discussions about a future long-term deal to govern the Iraq-Turkiye Pipeline (ITP) were central to the talks.

    The ITP exports oil from northern Iraq to the port of Ceyhan in Turkiye.

    In July, Turkiye and Iraq signed a temporary agreement to allow crude flows through the ITP for a period of 12 months.

    Before the temporary agreement was signed, the previous deal governing oil exports through the pipeline was due to expire on 27 ​July.

    Speaking last month, Ali Al-Shatri, director general of Iraq’s state organisation for marketing oil (Somo), said the temporary deal was “a prelude” to a much bigger agreement.

    As well as governing pipeline exports, the new agreement is expected to cover electricity, chemicals and gas deals as well as the construction of a new oil refinery in Ceyhan.

    Under current plans, the new refinery will process Iraqi crude in order to produce refined products that can be exported to Europe.

    Bayraktar said: “Following the crude oil transportation agreement signed between our national company … we are clarifying our roadmap for a new, longer-term and more comprehensive agreement.

    “In this regard, we plan to activate our joint working groups to rapidly finalise oil and natural gas infrastructure, exploration and production, oil trading, refining-petrochemical and electricity projects.

    “In close cooperation with the new Iraqi Government, we will strongly continue to implement these concrete projects for the stability and prosperity of our shared geography.”

    Bayraktar said it was important to consider extending the Kirkuk-Ceyhan pipeline to reach Basra in southern Iraq.

    He also said it was important to consider expanding the capacity of the ITP to create a strong alternative to the Strait of Hormuz.

    The Strait of Hormuz is a key oil export route that has been disrupted by a regional war since the US and Israel attacked Iran on 28 February.

    Bayraktar also said that he wanted state-owned Turkish Petroleum Corporation (TPAO) to expand its footprint in Iraq.

    He said: “We aim for our national company TPAO to play an active role not only in the Kirkuk fields but also in different fields in Iraq, to ​​reach the target of supplying one million barrels of crude oil as stated by Iraqi Prime Minister Ali ez-Zeydi; and to transform Ceyhan into a global energy hub by increasing trade volume.”

    Bayraktar said that Turkiye wanted energy to be a key part of the plan for a north-south trade corridor from the Grand Faw Port to the Turkish border.

    Under current plans, the corridor will combine a new railway and highway system.

    Bayraktar said that Turkiye also wants the route to include oil and gas pipelines as well as electricity transmission lines.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20268590/main.jpg
    Wil Crisp
  • RTCC/Ictas wins $214m King Salman airport private aviation terminal

    5 October 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s King Salman International Airport Development Company (KSIADC) has awarded an estimated SR800m ($214m) construction contract to build the private aviation terminal.

    The contract was awarded to a joint venture of Riyadh-based Al-Rashid Trading & Contracting (RTCC) and Turkiye’s IC Ictas.

    The scope includes constructing a central courtyard, grand boulevard, parking facilities, access-control checkpoints, logistics and ground-support facilities, internal road networks and landscaping.

    It also includes all civil, structural, architectural, and mechanical, electrical and plumbing (MEP) works, along with testing, commissioning and handover activities.

    KSIADC is making rapid progress on its overall project masterplan. In July, it reported major progress on landside and airside infrastructure works linked to its third runway and private aviation facilities, as part of the wider airport expansion programme.

    Project scale

    The project covers an area of about 57 square kilometres (sq km), allowing for six parallel runways, and will include the existing terminals at King Khalid International airport. It will also include 12 sq km of airport support facilities, residential and recreational facilities, retail outlets and other logistics real estate.

    The airport aims to accommodate up to 100 million passengers by 2030. The cargo target is to process 2 million tonnes a year by 2030.

    Saudi Arabia plans to invest significantly in its aviation sector. Riyadh’s Saudi Aviation Strategy, announced by Gaca, aims to triple Saudi Arabia’s annual passenger traffic to 330 million travellers by 2030.

    It also aims to increase air cargo traffic to 4.5 million tonnes and raise the country’s total air connections to more than 250 destinations.

    MEED’s October 2026 report on Saudi Arabia includes:

    > COMMENT: Saudi projects hold steady
    > GOVERNMENT: Riyadh looks to reset its regional defence outlook
    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > UPSTREAM: Aramco upstream spending gathers pace
    > DOWNSTREAM: Sabic steps up Saudi petchems investment
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict
    > DATABANK: Saudi data indicates project spending shift

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20268414/main.jpeg
    Yasir Iqbal
  • Contractors submit bids for Libya refinery

    5 October 2026

     

    Bids have been submitted for the main contract for Libya’s planned South Refinery project and are currently under technical evaluation, according to industry sources.

    The project, located in Ubari in southern Libya, has gained momentum over the past year, and the main contract is anticipated to be worth more than $600m.

    The main contract is expected to use the engineering, procurement and construction (EPC) model.

    The EPC work is expected to take 50 months, and the facility will be designed to process 30,000 barrels a day (b/d) of crude oil.

    In March, US-based engineering company KBR was awarded a contract by Zallaf Exploration, Production & Refining of Oil & Gas Company to provide project management and technical services for the project.

    Under the terms of the contract, KBR will provide contract management, project management and supporting technical services throughout the project’s EPC phases.

    The refinery is expected to produce:

    • Propane and butane for domestic and industrial uses
    • Gasoline
    • Kerosene
    • Diesel
    • Fuel oil

    In March, KBR said that the project was aligned with its “long-standing commitment to advancing vital oil and gas infrastructure in Libya”.

    Libya currently operates five main refineries with a combined nameplate capacity of 380,000 b/d, but actual throughput is closer to 180,000 b/d due to poor maintenance and damage from military clashes.

    In addition to the South Refinery project, Libya also plans to upgrade the Zawiya refinery and carry out projects at the Serir, Brega, Tobruk and Ras Lanuf refineries.

    READ THE OCTOBER 2026 MEED BUSINESS REVIEW – click here to view PDF

    Industry and logistics drive development at Neom; Saudi Arabia’s investment priorities realign amid conflict; MEED’s 2026 power developer ranking.

    Distributed to senior decision-makers in the region and around the world, the October 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/20267178/main.jpg
    Wil Crisp