Iraq allocates billions for electricity ministry

13 June 2023

Iraq’s parliament approved the country’s largest budget in its history on 12 June. The ID198.9tn ($153bn) budget for 2023 was previously described by the country’s electricity ministry as a quantum leap for the sector.

A draft of the budget seen by MEED indicates that the proposed allocation for the electricity ministry is ID17.72tn ($13.5bn). This value is understood to exclude gas imports and payments to independent power producers (IPPs).

MEED understands the country’s Iranian gas imports and outstanding debt between 2019 and 2021 reached ID10.2tn, while Iranian electricity imports reached ID1.1tn. IPP payments in the period totalled about ID2tn.

Iraq needs projects that will generate 10,000MW of electricity to tackle worsening power shortages, according to recent local media reports quoting a senior government official.

Mudhar Saleh, financial and economic adviser to Iraq’s prime minister, said that the country generates about 20,000MW of electricity from existing power plants, which is 10,000MW short of actual domestic demand.

This is despite the country having spent more than $100bn on electricity projects over the past 20 years.

Electricity spending

Iraq has historically relied on electricity imports from Iran, averaging 1,200MW, to plug the gap.

Work is also under way to connect the country to the GCC electricity grid, the first phase of which will be completed in late 2024 and will allow 500MW of electricity to be transmitted to Iraq.

Iraq’s cabinet approved a $520m solar plant project, which PowerChina will develop in Iraq’s southern Muthanna province, MEED reported in May.

This development comes nearly two years after the Iraqi government signed an initial agreement with PowerChina to build solar power plants across the country with an expected capacity of 2,000MW.

Agreements for solar power generation plants with a total combined capacity of over 5,000MW were signed in 2021 and 2022 in Iraq.

These include 2,000MW with UAE-based Masdar, 1,000MW with France’s Total Energies and 525MW with a team led by Norway’s Scatec.

However, Scatec has withdrawn from the consortium that agreed to develop two solar IPPs in Iraq with a total combined capacity of 525MW. The company was to develop the Karbala and Iskandariya solar IPPs with Egypt’s Orascom and local firm Iraqi al-Bilal. 

According to data from regional projects tracker MEED Projects, thermal power plant projects with an estimated capacity of 15,000MW are at various stages of execution in Iraq, with a further 12,000MW of capacity being planned.

It is understood that construction work has yet to start of any of the planned solar photovoltaic projects, although solar IPP projects with a total capacity of over 9,000MW are at various stages of negotiation, government approval or procurement.

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Jennifer Aguinaldo
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