The parlous state of Iraq’s electricity sector is testament to the abject failure of post-war planning in Iraq and the extreme security environment in which engineers and contractors have had to work. Blackouts and outages are features of everyday life. With demand consistently exceeding supplies by a wide margin, many areas of the country receive just four hours a day of electricity.

Baghdad has drawn up a $27bn investment plan … which aims to double generating capacity in a six-year time frame

Age, wars and a lack of investment and feedstock continue to take a toll on existing capacity. In the second quarter of 2010 alone, 1,625MW of capacity was lost because of technical issues, mechanical failures and inclement weather, says the US Special Inspector General for Iraq Reconstruction (Sigir). With no spinning or contingency reserve, the result is frequent blackouts and a huge trade for diesel generator suppliers.

Deteriorating capacity

Technically, Iraq has installed capacity of 13,200MW, but available capacity is estimated at less than half this level. During the second quarter of 2010, actual production averaged just 5,435MW, 6 per cent below the previous quarterly high of 5,770MW in July-September 2009. War damage, a lack of maintenance during the sanctions era, sabotage and network difficulties all contribute to this deteriorating situation.

Iraq power factfile, 2009
Installed generating capacity (MW) 5,500
Peak power demand (MW) 10,800
Growth in peak power demand (%) 6
Reserve power margin (%) na
Largest generator Electricity Ministry
Number of power customers na
Number of IPPs/IWPPs concluded 0
Additional capacity requirement by 2019 (MW) 20,000
Estimated cost of required capacity ($bn) 24
na=Not available/applicable; IPP=Independent power project; IWPP=Independent water and power project. Source: MEED Insight

In the summer of 2010, demand was estimated to have peaked at 10,800MW, leaving available capacity barely covering 55 per cent. Demand growth has been compounded post-war by Iraqis rapidly buying electronic goods previously unavailable to them, driving up electricity usage. For the state, the worry is that the situation seems to be getting worse rather than better. Sigir said in its second-quarter 2010 report that supply met 66 per cent of estimated demand, down from 71 per cent the previous quarter.

Even though nameplate power capacity increased by more than 900MW in the year to the end of June 2010, the rise was offset by unplanned outages due to fuel and water shortages. Feedstock availability remains a particularly serious issue. Lack of gas feedstock and the use of suboptimal product have meant that up to 1,200MW of existing capacity is idle.

The situation has forced Baghdad to import up to 770MW of power, mainly from Iran. This has made only a small dent in the supply shortfall and has done little to quell rising popular anger. In June, riots broke out in the south of the country, leading to the resignation of Electricity Minister Karim Waheed. Typical of many countries in the region, the population in Iraq has little patience when it comes to power and water supply. This is especially true during the hot summer months, when life without power is unbearable.

Baghdad has drawn up a $27bn investment plan for the sector, which aims to double generating capacity within a six-year time frame. Its centrepiece is the 10,000MW programme for which supply contracts were signed in late 2008. The US’ GE was contracted to supply 56 turbines, with total capacity of 7,000MW, while Germany’s Siemens was awarded a 16-turbine contract for 3,160MW of capacity. Despite having placed the supply contracts almost two years ago, the Electricity Ministry has so far only managed to appoint engineering, procurement and construction contractors to install turbines at three power plant sites. Lack of project management experience and funding problems have been blamed for the extensive delays.

To resolve the problem, the ministry has now turned to the private sector for help. Under its recently unveiled independent power project (IPP) programme, developers will build and operate power plants using turbines delivered under the 10,000MW plan.

In late July, the first IPPs, using GE Frame E turbines, were issued for bid. In total, 3,250MW of capacity will be added at sites located in Samawa (500MW), Diwaniya (500MW) Shatt al-Basra (1,250MW), Amara (500MW) and Basra (500MW).

Building power

Public procurement will continue to play a role in the capacity building programme. This was highlighted in late July, when France’s Alstom signed a memorandum of understanding to undertake a series of power projects across Iraq. The agreement covered three major schemes – the building of a 1,200MW oil-fired plant at Basra, the rehabilitation of a 180MW gas-fired station at Najaf, and the construction of 400kV and132kV substations in various locations across the country.

Iraq’s transmission and distribution network requires massive investment. To date, the ministry’s focus has been on the repair of critical lines rather than construction of new capacity. However, this will have to change. Even if it was in perfect order, the existing network would be capable of handling about 8,000MW. If the 10,000MW plan comes to fruition, the transmission system will need new 400kV and 132kV lines and substations. The Alstom deal makes a start with the network’s upgrade, but there will have to be many more major awards before ordinary Iraqis begin to see a tangible improvement in their power supplies.