Baghdad has abandoned a $1bn privatisation of Iraq’s deep sea port at Umm Qasr on the Gulf coast.

The Transport Ministry has scrapped the appointment of the US’ Cornell Group as the consultant in charge of the redevelopment of the site, which is Iraq’s marine gateway.

US advisers and foreign ports operators had hoped that the privatisation programme - suspended since last year by transport minister Amer Abduljabbar - would follow Cornell’s appointment.

Abduljabbar suspended all major infrastructure projects when he took office in August last year, including the Umm Qasr privatisation.

However, in December, he accepted Cornell as consultant, but he failed to sign a contract with the company.

In April, the Cornell Group sought to change the contract, but the ministry continued to resist and talks finally broke down this summer.

“The minister has decided he does not want a foreign consultant. That appointment is on hold indefinitely, so the commercialisation or privatisation of the port is [on hold indefinitely] as well. The situation will not change under this minister,” says a US embassy source in Baghdad.

Iraq has received several unsolicited offers to redevelop and manage Umm Qasr from international groups since the US-led invasion of Iraq in 2003. However, Abduljabbar appears to have backed away from relinquishing control of a major national asset to foreign control.

Instead, the Transport Ministry is sticking to a policy of leasing individual berths at the port to foreign companies. So far, the ministry has tendered two berths on three-year leases, with one now operated by the French shipping group CMA CGM, and the second by Jordan’s GLFS. However, this compromise appears to have satisfied neither the Iraqis or the foreign operators.

“Three years is not long enough to put any real investment into the site and have time to get your money out again. There is no incentive that you would get from a longer-term lease to invest in new equipment at the port,” says the US source.

International assistants and the local port authorities have continued to work on clearing wrecks and silt from the channel leading to the port, but the ministry’s attention has drifted elsewhere. Abduljabbar is still considering two rival plans for a new deep sea port on the Al-Faw peninsula to rival and potentially surpass Umm Qasr.

The government is leaning towards the cheaper Italian-designed option of expanding the existing port at Al-Faw.

However, the Oil Ministry has thrown both schemes into disarray by raising a plan to build a new deep-water oil export facility off the Gulf coast, ignoring the ports.

Developers behind the two rival port schemes say they will find it impossible to get international funding for either project if the port is not the country’s main marine oil export facility (MEED 18:9:09).