The Iraqi government is considering relaunching its previously cancelled independent power project (IPP) programme.

Iraq originally launched a tender for a series of IPPs in 2010. The programme was scaled back from eight to four projects before bids were invited in February. The 2,750MW programme was then shelved in May with sources close to the projects citing disappointing offers and level of experience of the bidders (MEED 10:6:11).

Iraq’s Oil and Energy Parliamentary Committee began to consider different structures including an engineering, procurement and construction (EPC) hybrid to allow private investors to provide some of the capital expenditure (capex).

“[We are looking at] creating special-purpose companies as joint ventures between the Ministry of Electricity and the Trade Bank of Iraq with some investors to erect, commission and operate these four projects,” said Ala Disher Zamil, the head of the IPP programme at the Electricity Ministry, in June.

EPC bids were submitted in early July for the four ex-IPPs, in addition to another IPP at Najebia that was included in the original line-up before the programme was scaled back. At the time, pundits speculated on the ability of the ministry to pay for the EPC contracts due to limited budget allocations, although a source close to the ministry has denied that this was the case.

The EPC tender has now been cancelled and the ministry is looking at reviving the IPP programme for the five sites, including the Najebia project. According to a source close to the programme, details of the IPP programme have not yet been decided upon should the revived scheme go ahead.

Crucially, the issue of guaranteed gas feedstock has not yet been decided upon. It was this aspect, among others, that deterred many international developers when the scheme was first launched to the market.

Some industry sources said in June that the decision to abort the IPP programme at such a late stage would thwart any later attempts. “[This] will make it very difficult for them to attract any kind of private investment in electricity in future, though I believe they think they can do it all by engineering, procurement and construction – at least until the oil price falls again,” said one source on hearing the news.

Should Iraq decide to relaunch the IPP programme, bids will be invited for the following plants:

  • Samawa, Muthana governorate: 4 x 125MW = 500MW
  • Diwaniya, Qadisiyah governorate: 4 x 125MW = 500MW
  • Shat al-Basrah, Basra governorate: 10 x 125MW = 1,250MW
  • Amara, Maysan governorate: 4 x 125MW = 500MW
  • Najebia, Basra governorate: 4 x 125MW = 500MW

The selected developers will be awarded 25-year build-own-operate (BOO) contracts to develop the gas-fired plants, using Frame 9E gas turbines supplied by the US’ GE. The turbines were secured as part of a mega deal signed with the ministry in December 2008.

Seven bids were submitted to build the 500MW Diwaniya IPP in Qadisiyah governorate in February (MEED 20:2:11). Qatar’s Almco was in line for the contract along with another project – the 500MW Amara IPP – in Maysan governorate.

At least five bids were submitted to build the Shat al-Basrah IPP in Basra governorate, which was to comprise 10 x 125MW units. Jordan’s Mass Global and Turkey’s KAR Group were said to have been shortlisted.

A preferred bidder and second preferred bidder were lined up for the 500MW Al-Samawa IPP in Muthana governorate.

Iraq has an urgent need for power as most of the country suffers from crippling power outages for most of the day. The country’s power demand is about double that of its installed generation capacity. Furthermore, demand is growing six times faster than capacity is being installed.