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.
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Bahrain’s construction and infrastructure sector remains subdued, with project awards still depressed despite a modest uptick this year.
Data from regional projects tracker MEED Projects shows that $737m-worth of construction and infrastructure contracts had been awarded in the kingdom by 29 October 2026. While this exceeds the $686m recorded across the whole of 2025, it confirms that the market remains in a prolonged downturn.
Between 2016 and 2020, Bahrain recorded more than $2bn in annual awards, peaking at nearly $3.9bn in 2016 when major packages for the Bahrain International airport expansion were signed. Awards then fell to $912m in 2021 before rebounding to almost $2bn in 2022. The recovery was short-lived, with awards declining to $1.66bn in 2023, $1.57bn in 2024 and $686m in 2025.
Major awards
Activity this year has been supported by several housing and transport packages.
The largest award was an estimated $400m contract secured by a joint venture of local developer Naseej and China Machinery Engineering Corporation for the Madinat Khalifa project. Procured under the Mega Government Land Development Programme, the scheme involves the design, financing, construction, marketing and sale of more than 2,500 housing units on two government-owned land parcels, alongside roads and electricity, water, sewage and drainage networks.
Road infrastructure also produced a major commitment. The Ministry of Works amended its award for package four of the Busaiteen Link project, appointing a joint venture of Nass Company and Nasser Hazza Al-Subaei Contracting Company under a BD65m ($172m) contract. The three-year deal replaces a BD69.7m ($185m) award made in January to a consortium of Haji Hassan Group, Saudi Arabia’s Alomaier Trading & Construction Company and Greece’s Terna.
The package includes a signature bridge connecting Muharraq with the North Manama Causeway and Bahrain Bay, as well as road works between junctions four and five.
Residential projects provided further volume. Mohammed Abdulmohsin Al-Kharafi & Sons secured a $112.4m contract to build 512 social apartment units on Madinat Salman’s Island 12. Binaa Al-Bahrain also appointed Kooheji Contractors to build Bayview in Manama, a development comprising four residential buildings and 489 apartments.
Early-stage commitments included a BD5m ($13.5m) consultancy contract awarded to US-based Populous for the planned Sports City at Sakhir. The scope covers the masterplan, internal infrastructure, phase 1A design and tender documents. Lebanon’s Dar Al-Handasah won a QR28m ($7.7m) contract to conduct feasibility studies for the proposed 40-kilometre Qatar-Bahrain Causeway, also known as the Friendship Bridge.
Transport links
Transport is the most promising near-term outlet for the market, with a pipeline valued at about $15bn, according to MEED Projects data.
Cross-border rail has re-emerged as a strategic focus. Bahrain has introduced legislation to establish a framework for constructing, operating, maintaining and regulating railway networks, including licensing, safety, cross-border services, and passenger and freight tariffs.
The move comes as Gulf states prepare to advance the GCC railway network, which is expected to begin operating by the end of 2030. Bahrain’s proposed rail link to Saudi Arabia is expected to run via the planned King Hamad Causeway, a second fixed connection between the two countries alongside the King Fahd Causeway.
Road expansion is also progressing. In September, the Bahrain Tender Board received bids from Nass Contracting, Haji Hassan Group, Almoayyed Contracting Group, Mohammed Abdulmohsen Al-Kharafi & Sons, Eastern Asphalt & Concrete Production, Cebarco Bahrain and Kingdom Asphalt for the upgrade of two kilometres of the Sheikh Jaber Al-Ahmed Al-Sabah Highway. The works involve a four-lane dual carriageway with service roads.
Industrial and maritime infrastructure is advancing, too. The Ministry of Works received five bids for engineering and quantity surveying services linked to reclamation works at Salman Industrial City and Bahrain Logistics Zone.
Dar SSH International Engineering Consultants submitted the lowest offer at BD778,580 ($2.1m), followed by Aecom at $2.2m, Ansari Engineering Services at $2.3m, Millet Engineering Bureau at $2.4m and Ayesa at $2.8m. The project involves reclaiming about 1.13 million square metres of land using 9.67 million cubic metres of fill near Khalifa Bin Salman Port.
The government is also preparing the Bahrain Northern Link Road as a public-private partnership. The 29.5km highway will connect the North Manama Causeway with Suhaila Island and the King Hamad Causeway, creating a parallel east-west route to Sheikh Isa Bin Salman Highway and improving links between Khalifa Bin Salman Port and Saudi Arabia.
Building pipeline
Outside transport, Bahrain’s construction pipeline exceeds $6bn. The most prominent project is the Bahrain International Sports City development in Sakhir. In September, 21 local and Saudi Arabian contractors were prequalified for the first-phase construction contract, which is expected to include Bahrain’s largest sports stadium and a multipurpose indoor sports arena.
The planned National Assembly Building in Manama is another significant civic project. Bids submitted earlier this year included three options from Cebarco Bahrain, ranging from $163.8m to $200.3m, alongside offers of $239.4m from Nass Contracting and $316.4m from Kooheji Contractors.
The four-storey complex will be built on a reclaimed island and will include a main hall for joint sessions, separate debating chambers, administrative offices, an auditorium, library, museum, meeting rooms, public spaces, underground parking and supporting facilities.
These projects provide a route out of Bahrain’s multi-year downturn. The market’s recovery, however, will depend on whether the government converts feasibility studies, advisory mandates and prequalification exercises into construction awards.
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Bahrain creaks under the strain of war5 November 2026

With a small economy and exports almost wholly reliant on passage through the Strait of Hormuz, Bahrain has been painfully exposed to the turmoil caused by the Iran war. The country’s social makeup – with a Shia majority ruled by a Sunni-dominated regime – is also showing signs of strain.
The economy is expected to contract by 11.3% this year, according to the IMF’s latest Regional Economic Outlook report. That is not quite as bad as some of its neighbours, such as Kuwait and Qatar, but it is well above the 4.8% fall expected for the GCC as a whole.
Just as importantly, Bahrain also starts from a much weaker base than its Gulf peers, with a smaller economy, limited hydrocarbon resources and high levels of government debt.
“Countries with the largest reserve declines since the start of the conflict generally entered the shock with comfortable reserve positions, with Bahrain as a notable exception,” the IMF noted in its 22 October report.
Physical disruption
Iran’s closure of the Strait of Hormuz this year has cut Bahrain off from its most important trade route for both exports and imports. In addition, major industrial and military targets have been hit by Iran on multiple occasions, including the US naval base and the Aluminium Bahrain (Alba) plant.
The latter suffered a 32% year-on-year drop in sales volumes and a 61% fall in output in the first half of the year as a result of the Iranian attacks – although higher aluminium prices and lower costs meant that the company’s revenues held steady and profits actually increased year-on-year.
Other areas of the economy have been badly affected too, with the Bapco oil refinery, a desalination plant and an Amazon data centre all hit in Iranian strikes. The IMF also noted that Bahrain has seen one of the worst declines in hotel occupancy rates during the year. Inflation has also been rising, reaching an annual rate of 3% as of July.
As a result, the government’s already weak financial position is under even more pressure. The Central Bank of Bahrain’s reserves have slumped sharply since the start of the war, falling from BD1.8bn ($4.8bn) as the war broke out, to a low of BD568m three months later. They recovered some of the ground lost in the following months, but remain well below the pre-war level. Reserves stood at BD887m by September, supported by drawing on a BD2bn ($5.4bn) currency swap line provided by the UAE in early April.
Total public debt had reached BD20.3bn at the end of August, the most recent data available, up from BD18.2bn a year earlier. That is significantly larger than the country’s GDP, which stood at BD15.7bn in 2025 and is expected to end this year at just BD13.9bn.
To make matters worse, the markets have been pushing up Bahrain’s borrowing costs to levels not seen since 2018, when the government had to turn to Kuwait, Saudi Arabia and the UAE for a bailout to avoid a potential sovereign default.
External support
With no easy way to reduce its debts or plug its budget deficit, Bahrain is likely to seek more assistance from its wealthy neighbours – although any aid will likely come with demands for spending restraint and other reforms that will be uncomfortable for the government to accept.
The appetite of some neighbouring states may also be more limited than in the past, given their own economies have been weakened by the war, but King Hamad Bin Isa Al-Khalifa’s close ties with the UAE leadership in particular are likely to ensure some help is forthcoming.
Asharq Bloomberg reported in late October that Manama has been holding talks with neighbouring states for a fresh round of support, with the UAE expected to emerge with a leading role. However, the timing and scale of any bailout remain unclear.
Without external assistance, the country’s finances are likely to deteriorate further. Ratings agency Capital Intelligence said in an October report that it expected debt levels to rise further in 2027-28, with the budget deficit averaging 9.3% of GDP in those years.
“The burden of government debt on the budget is also very high, with interest payments projected to average 30.7% of revenues in 2026-28, up from 27.1% in 2025,” it noted.
King Hamad Bin Isa Al-Khalifa’s close ties with the UAE leadership in particular are likely to ensure some help is forthcoming
Political tensions
Politically, Manama has appeared increasingly cautious towards its own citizens, with planned elections for both municipal councils and the Council of Representatives delayed until next year. Announcing the postponement of the council elections in mid-October, deputy prime minister Sheikh Khalid Bin Abdulla Al-Khalifa referred vaguely to “the current circumstances and their resulting effects” as the reason for the delay.
The postponement removes a formal channel for the public to express grievances about the country’s current situation. At the same time, the authorities have moved against perceived support for Iran during the conflict. More than 600 people have been arrested this year on charges including espionage and supporting an enemy state, according to the Bahrain Institute for Rights and Democracy (Bird), a London-based advocacy group that is critical of the government. Dozens of people have also had their citizenship revoked.
“Since the outbreak of the Iran war, repression in Bahrain has intensified sharply,” said Bird advocacy director Sayed Ahmed Alwadaei.
Some analysts warn that the crackdown could prove counterproductive. The Bahrain researcher at conflict monitoring group Acled said that tensions between the government and its Shia opposition were gradually placing the country at high risk of instability.
The economic outlook could change quickly if a resolution to the Iran-US conflict is found. The IMF predicts that the economy could rebound to a growth rate of 13.9% next year, before settling back to a more sustainable 3.1% the year after – but that depends on Gulf trade routes reopening and energy production normalising. The country’s political tensions will be harder to resolve.
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Sharjah opens first phase of new Dubai road connection5 November 2026
Sharjah’s Roads & Transport Authority (SRTA) has partially opened the first phase of a major road development project designed to improve connectivity between Sharjah and Dubai.
The initial opening includes the partial launch of the Al-Taawun interchange, alongside several bridges and junctions providing one-way traffic flow from Sheikh Mohammed Bin Zayed Road toward Expo Centre Sharjah.
Tunnel construction in the Al-Taawun area is also progressing under the scheme. The 500-metre-long tunnel will run beneath the Al-Taawun roundabout, providing three lanes in each direction to link Al-Taawun Street to Al-Nahda Bridge and onward to Dubai.
The project will also include a signalised intersection designed to handle approximately 4,200 vehicles an hour in each direction. In addition, the tunnel will provide access to Expo Centre Sharjah and form part of a transport corridor linking to Al-Noor Road.
The Al-Taawun tunnel project is the centrepiece of a broader AED750m ($204m) road development programme in Sharjah, which comprises a network of tunnels, bridges and intersection upgrades.
The other projects that form part of the programme include:
- Al-Noor Road: Extends from Al-Orooba Street into Dubai via Al-Nahda Bridge, serving residential and commercial communities in Sharjah and adjacent districts in Dubai.
- Industrial Streets 1 and 2 bridges: Involves constructing two 130-metre-long bridges with two lanes in each direction. These will connect to Maleha Road, Sheikh Khalifa Bin Zayed Road and Al-Waset Road, adding capacity of roughly 2,800 vehicles an hour in each direction.
- Industrial Street 3: Encompasses two new bridges linking Sharjah’s industrial zones to the Ring Road. The 2.7-kilometre scheme will add dedicated turning lanes toward Maleha Road, Sheikh Khalifa Road and Al-Dhaid Road, along with a culvert linking Industrial Street 3 to the Ring Road. It will increase capacity by about 5,200 vehicles an hour across both directions, improving links between Sheikh Mohammed Bin Zayed Road, Al-Khan Street and Al-Ittihad Road.
- Sheikh Mohammed Bin Zayed Road Interchange: Entails upgrading the existing interchange to improve connections between the highway and the Al-Taawun, Al-Khan and Al-Buhaira districts.
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Engie completes refinancing of Oman power plants5 November 2026
French developer Engie has announced that it has reached financial close on the refinancing of the Sohar 2 and Barka 3 independent power projects (IPPs) in Oman.
The transaction follows 15-year extensions to the plants’ power purchase agreements (PPAs) in March, securing their long-term operations through to 2043.
As previously reported by MEED, the new agreements for the 750MW Sohar 2 and 750MW Barka 3 IPPs will take effect on 1 April 2028.
The refinancing aligns the projects’ debt profiles with the extended PPA terms and establishes a long-term financing framework to support future capital expenditure. This includes refurbishment works aimed at improving the reliability and long-term performance of both assets.
Al-Batinah Power Company and Al-Suwadi Power Company operate the Sohar 2 and Barka 3 power plants, respectively.
According to regional projects tracker MEED Projects, Nama PWP signed the original PPA for the Barka 3 project in 2010 with a consortium led by Gaz de France (GDF) Suez under a special purpose vehicle called Al-Suwadi Power Company.
The shareholders comprised GDF Suez (46%), Bahwan Engineering Company (22%), Shikoku Electric Power Corporation (11%), Sojitz Corporation (11%) and the Public Authority for Social Insurance (10%).
In 2015, GDF Suez was rebranded as Engie following a strategic shift towards low-carbon energy and utilities.
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Aramco seeks to expand East-West crude pipeline5 November 2026
Saudi Aramco is planning to expand its East-West oil pipeline network, aiming to strengthen the kingdom’s ability to transport crude oil while bypassing the Strait of Hormuz.
Aramco operates the 1,200-kilometre East-West pipeline from Abqaiq in the Eastern Province to Yanbu on the Red Sea coast. The pipeline currently has an oil transportation capacity of 7 million barrels a day (b/d).
The pipeline was targeted by Houthi missiles in September and by Iran in April. Aramco resumed crude oil exports through the pipeline at the start of October.
“With regard to the expansion to our East-West pipeline and the additional networks that we are building, this work has already started,” Amin Nasser, Aramco’s president and CEO, told analysts on a call following the company’s announcement of its Q3 2026 financial results on 3 November.
Nasser had previously said in an interview with Al Arabiya Business that Aramco had begun engineering work on the East-West pipeline expansion project during the early stages of the US-Iran conflict.
In October, Saudi Energy Minister Prince Abdulaziz Bin Salman said that the kingdom was looking to expand its crude oil export capacity by pipeline to as much as 10 million b/d. The plans would involve repurposing a domestic gas pipeline and investing in the existing East-West pipeline network.
Aramco uses three main routes to export crude oil: the Gulf, via the Strait of Hormuz; the Red Sea, via the Bab El-Mandeb strait; and the Mediterranean, via Sidi Kerir in Egypt. The company also uses overseas oil-storage facilities in South Korea, Japan, the Netherlands and Sidi Kerir, and is working with partners to expand storage capacity, particularly in Asia.
Aramco is also undertaking engineering work on additional export routes, Nasser said.
He added that the company would not disclose details of the proposed routes until it made final investment decisions.
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