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
  • Caution governs Jordanian bank lending

    12 June 2026

     

    In a region where geopolitical turbulence has amplified by an order of magnitude, Jordan is managing to stand out as a beacon of relative stability, with the Hashemite kingdom’s banking sector acting as a case in point.

    Lending has grown in recent years, with credit up by an average 4.9% between 2020 and 2025, according to the Central Bank of Jordan (CBJ) – a faster rate than average nominal GDP growth of 2.3% over the same period.

    The IMF took care to note an increase in credit to the private sector in its latest Article IV assessment of Jordan, standing at 80.1% of GDP at end-2024, compared to just 66.6% 10 years earlier.

    Banks in the kingdom ended 2025 in a liquid state, but caution remains the watchword for local lenders. The loan-to-deposit relationship bears that out. For that year, deposits ended up 7.1% to JD50bn ($70.5bn), while credit facilities were up just 3.7% to JD36.1bn ($50.9bn).

    Analysts see this as a case of Jordanian banks being prudent, given the tricky operating environment and limited lending opportunities, rather than banks being excessively defensive. 

    According to Christos Theofilou, an analyst at Moody’s Investors Service, it is cautious lending in fraught macroeconomic conditions.

    “On the one hand, we’ve seen a structurally strong and stable deposit base that has been growing more compared to lending. That indicates a certain degree of limited risk appetite, but also the fact that, given the challenging operating conditions, there were limited business opportunities in the market,” says Theofilou.

    Liquidity banked

    Jordan’s banks look able to withstand further shocks, given solid capital positions and relatively strong earnings performances. Arab Bank, the largest lender, saw net profits grow 12% last year to $1.13bn, despite a highly charged geopolitical situation across Jordan and the neighbouring Palestinian territories.

    As Moody’s notes, Jordanian banks’ funding base remains stable, with banks mainly deposit-funded – with deposits at 67% of total assets as of December 2025 – mostly comprising well-diversified retail deposits. The ratings agency noted that banks retain the capacity to increase lending without relying on more volatile and costly external funding, as indicated by the 72% loan-to-deposit ratio.

    The earnings outlook in Jordan may be better than other banking sectors in the immediate region, but this does not translate into a picture of booming profits going forward.

    “Profits should remain resilient, but we’re not expecting any significant improvement,” says Theofilou. “We have the challenging operating conditions, and the lower interest rates that have come down over the past few years. On the other hand, banks have had lower provisioning in the past 12 to 18 months compared to the period prior to that.”

    Asset quality remains a strong point, despite some weakening over recent years. Moody’s sees non-performing loans (NPLs) falling below 5.5% this year from 5.8% in June 2025.

    However, the continuing Iran conflict and its deleterious regional impacts – including on the West Bank, where about 9% of Jordanian banks’ loans are located – suggest that bank exposures to troubled sectors will require focus.

    Concentration bites

    Another challenge is the banks’ high credit concentration among large corporates, with a noted high exposure to real estate.

    Commercial and residential real estate loans accounted for 17.4% of total credit facilities as of year-end 2024, while residential mortgages accounted for 40.9% of household credit. Regulatory oversight may limit the impacts – the CBJ caps loans for real estate at 20% of local currency customer deposits.

    The real estate exposures are meaningful, but Moody’s views overall concentration risk as more material rather than real estate risk per se.

    “So, on the one hand, Jordanian banks have real estate loans, both commercial and residential, slightly below a fifth of the total credit facilities,” says Theofilou. “Banks also face challenges in quickly disposing of properties, but within the context of a relatively lengthy foreclosure process. On the flipside, we see Jordanian banks having fairly high collateralisation, so they do hold a lot of collateral against the real estate exposures.”

    The CBJ has earned plaudits for its regulatory oversight, with the IMF lauding its strengthening of the Financial Stability Committee, while refocusing its role on macroprudential policies and systemic risks. 

    Jordanian banks’ brisk uptake of digital technologies has also been a positive.

    Last year, digital payment systems in Jordan recorded over 184 million digital transactions, exceeding $38bn in value. The CBJ has introduced an AI regulatory framework for the sector and the authorities are now working to burnish the country’s credentials as a fintech hub, based on a 90% plus internet penetration. 

    In the year ahead, Jordanian banks will be looking to find exposures to new lending opportunities, given the past risk aversion that has prevented them from building stronger growth avenues.

    Projects beckon

    Big new infrastructure projects could yet come to the fore as bankable opportunities for local players. For example, the National Water Carrier Project, costed at $5.8bn and aiming to increase water supply by 40%, is looking to achieve financial close this summer. It is the type of project that could prove significant in helping diversify local lenders’ exposure away from real estate towards infrastructure.

    “If we see a lot of these infrastructure projects requiring financing coming to the market, then we could see a bit of a pickup in lending growth as well,” says Theofilou.

    New lending opportunities will come from large corporates and infrastructure-related lending. Those will play the key role in any significant pickup in credit growth, says the Moody’s analyst, in contrast to the small- and medium-enterprise (SME) sector, which poses a different challenge for banks.

    “The SME segment does represent a potential growth opportunity and it’s supported by policy focus, however its expansion is constrained by the operating environment. The sector is exposed to high overall credit risks, and when conditions are challenging, banks tend to be more cautious in lending to the SME markets,” says Theofilou.

    So long as the regional conflict persists, banks will be inclined more towards caution than exuberance in their lending approaches. And yet that strong and stable inclination may be what serves them best in a notably turbulent year in the Middle East’s recent history.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17204176/main.gif
    James Gavin
  • Oman tenders environmental survey consultancy contract

    12 June 2026

    Nama Power & Water Procurement Company (Nama PWP) has issued a tender seeking consultancy firms to provide environmental and seawater quality surveys under an ad hoc services contract.

    The selected consultants will be appointed for a four-year period and engaged on an as-needed basis to undertake environmental survey work.

    According to the tender notice, the scope of work includes environmental surveys, vertical profiling of seawater quality, seawater sampling and testing, environmental and social baseline studies, and bird and bat surveys.

    Bids are due by 1 July.

    Environmental and seawater studies are typically undertaken during the early development stages of power generation, desalination and other water infrastructure projects.

    Oman’s project pipeline includes a series of large-scale independent power projects (IPPs) scheduled for delivery between 2027 and 2031, according to the seven-year plan released by Nama PWP in March.

    Earlier in June, Nama PWP issued a supervisory consultancy tender for the 280MW Marsa solar IPP project in North Al-Batinah Governorate.

    The project is scheduled to enter commercial operation in the first quarter of 2028.

    The company is seeking project management and supervisory consultancy services during the construction, commissioning and testing phases of the project.

    The bid submission deadline is 26 July.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17209109/main.jpg
    Mark Dowdall
  • Emirates to offer passengers insurance amid travel warnings

    12 June 2026

    Dubai-based airline Emirates is to offer its own insurance product to passengers flying to or through Dubai, as it seeks to reassure travellers deterred by government advisories against travel to the region.

    The airline’s president, Tim Clark, confirmed the move in an interview with the London-based Financial Times. He said Emirates was working with insurance companies to introduce a “reasonably priced” product that would guarantee passengers could get home regardless of whether they returned on Emirates or another carrier.

    The move is designed to address concerns that travellers could become stranded if the conflict were to restart. More than three months after fighting began, several countries continue to maintain no-fly recommendations covering Gulf routes, leaving passengers unable to obtain conventional insurance for trips to or through the region.

    “I think one of the big concerns is that if they get caught overseas and they can’t get back,” Clark said. The group was working with insurance companies “to do the right thing”, he added.

    Emirates has played a leading role in supporting Dubai’s tourism sector since Iran began targeting the UAE with missiles and drones on 28 February.

    In early June, the Department of Economy and Tourism told stakeholders attending its bi-annual City Briefing that the emirate worked closely with airports and aviation partners, including Emirates and FlyDubai, to ensure continued connectivity for travellers.

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

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17206867/main.jpg
  • Conflict to push global growth to post-pandemic low

    12 June 2026

    The ongoing conflict in the Middle East is expected to drag global economic growth to its lowest level since the Covid-19 pandemic, with Gulf states bearing the heaviest burden of any region, the World Bank Group has warned in its latest Global Economic Prospects report.

    Global growth is forecast to slow to 2.5% in 2026, down from 2.9% in 2025, with forecasts downgraded for two-thirds of economies. Economies in the Gulf directly affected by the conflict are expected to see growth collapse from 3.9% in 2025 to nearly zero this year, marking the steepest regional decline.

    The closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude prices projected to average $94 a barrel in 2026, 36% above 2025 levels, assuming the worst disruptions ease by July. Fertiliser price increases are compounding the pressure, feeding through to food prices and pushing global inflation to an expected 4.0% this year, up from 3.3% in 2025.

    The World Bank says downside risks remain substantial. Should energy supply disruptions prove more severe than currently assumed and be accompanied by significant financial stress, global growth could fall as low as 1.3% in 2026, with inflation climbing to 4.4%.

    The World Bank is making up to $50bn-$60bn immediately available through existing instruments, including $25bn in pre-arranged financing, to support affected countries through social safety nets, fiscal capacity and working capital for businesses. More than 30 countries are actively working with the bank to enhance readiness under the response plan. If the conflict and its economic fallout persist, support could be scaled to $80bn-$100bn over 15 months.

    Despite the severity of the near-term shock, the bank projects a significant Gulf rebound, with growth recovering to around 5% in 2027-28 as trade normalises and reconstruction spending begins.

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

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17204153/main.jpg
    Colin Foreman
  • Emaar announces $55bn Dubai project

    12 June 2026

    Register for MEED’s 14-day trial access 

    Mohammed Alabbar, the founder of Emaar Properties, has released a statement saying that the Dubai-based real estate developer is about to announce a $55bn project in Dubai.

    On his social media channels including Instagram and X, he said: “Emaar is preparing to unveil its most ambitious project yet: a development worth AED200bn (around $55bn), commanding an extraordinary vista that brings together, in a single frame, three of the city’s timeless icons – Burj Khalifa, Burj Al-Arab and Palm Jumeirah – complete with the finest essentials of modern living, in the city of Dubai.”

    Emaar has delivered some of the world’s most ambitious real estate projects, including the world’s tallest tower, the 828-metre-tall Burj Khalifa, and the surrounding Downtown Dubai development.

    Commenting on the new project, Alabbar added: “This is no ordinary new development. It is a landmark that takes its place in the legacy of the United Arab Emirates, writing a new chapter in the story of a nation that knows no limits to its ambition.”

    In a statement on the Dubai Financial Market on 11 June, Emaar Properties said it “stands on the threshold of a historic announcement” and revealed more details about the project. It said it will have a total development value of AED200bn, with a gross floor area exceeding 4.5 million square metres.

    It added that it will include a mix of landmark residential towers, signature villas and mansions, Grade-A commercial offices, world-class retail destinations, luxury hospitality, and civic and cultural amenities. Altogether, the development will accommodate a projected population of nearly 150,000 residents. The statement also said the development will be connected to proposed metro lines.

    The exact location of the development was not revealed. Emaar has announced major projects in the past without giving precise locations. In June 2023, it announced the $20bn Oasis project. At the time, the details on the site’s location indicated it was situated in a prime location in Dubai, surrounded by high-end developments and within proximity to four international golf courses. It was later confirmed that the site sits between Damac Properties’ Lagoons development and Dubai Investment Park.   

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17203921/main5547.gif
    Colin Foreman