Baghdad is preparing to take sovereignty of its finances
Iraq is making slow progress in its efforts to monitor the production, transportation and export of crude oil, as it prepares to assume full sovereignty of its finances.
At the end of 2010, Iraq had only installed and calibrated 39 per cent of its planned meters, according to a 9 May press release from the International Advisory and Monitoring Board (IAMB), the UN body that oversees the country’s oil revenue management and accounting systems.
“The IAMB notes with concern that the implementation of the plan continues to fall further behind schedule and encourages the Government of Iraq to make every effort to implement the metering plan on schedule and address the further steps recommended by PWC [US-based auditors PricewaterhouseCoopers]”, says the release.
PWC presented a report in April, on behalf of the IAMB, on the installation of oil meters and whether meters are being utilised as intended.
“While loaded quantities can be verified, quantities extracted and pumped to export terminals and for internal use cannot be verified due to the absence of an overall comprehensive system of controls over petroleum in Iraq,” the report says.
The Oil Ministry has contracted UK consultant Kelton Engineering to provide technical advice and support in implementing the metering plan.
The IAMB audits the Development Fund of Iraq (DFI), the principal repository for Iraq’s oil-export receipts, but its UN Security Council mandate expires on 1 July. Its role will be taken over by Iraq’s Committee of Financial Experts (COFE).
Iraq’s oil revenues rose more than $52bn in 2010, with exports averaging 1.90 million barrels a day (b/d), according to data from the Oil Ministry. Total exports for the year was 694.8 million barrels (MEED 26:1:11).
But the country’s international liabilities remain substantial. Since 1991, the UN Compensation Commission (UNCC) has resolved more than 2.6 million claims against Iraq, demanding a total of $352.5bn. Only $52.4bn has been awarded in damages. So far, Iraq has paid $31.3bn.
The DFI has served as a protective shelter for billions of dollars in Iraqi oil revenues against international creditors since it was created by the UN in 2003. The Government of Iraq is implementing a new mechanism that will include a single oil-revenue account at the Federal Reserve Bank in New York.
However, the new mechanism will not carry the immunity from creditor claims. The COFE, which is led by the President of Iraq’s Board of Supreme Audit, is expected to assume oversight responsibilities for the DFI accounts on 6 June, replacing the IAMB.
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