Iraq plans three-year infrastructure spending strategy

05 December 2011

Billions of dollars expected to be invested in Iraqi infrastructure schemes across the board

As a country emerging from years of conflict and many more years of neglect of its basic services, Iraq needs to invest heavily in new infrastructure projects and maintaining its existing assets.

Transport is central to Iraq’s plans and $5.11bn is expected to be spent on roads, expressways and bridges between 2012-15. About $950m will be spent on the construction of around 200 kilometres of new expressway, while a further $1.1bn will be spent on maintaining 1,200km of existing expressway.

Spending on new roads between 2012-15 is expected to total $2.06bn and will result in 4,510km of new roads. About $400m will be spent maintaining 1,600km of existing roads. Iraq also plans 97 new bridges at a cost of $1.1bn, while $100m will be spent on maintaining 20 existing bridges.

Affordable housing is another important pillar for the Iraqi government. The population of Iraq is growing at a rate of 2.3 per cent a year and the country will need 2.5 million new housing units by 2016 if it is to meet demand due to population growth.

Between 2012-15, 7,000 housing units will be constructed for staff of the Construction and Housing Ministry. A further 50,000-60,000 homes will need to be constructed as low-cost housing at a cost of about $2bn. Iraq has budgeted for 10 new housing projects to be launched every year. Each new project will comprise about 600 housing units.

Iraq is considering multiple funding options for its future housing projects including partnerships with the private sector, deferred payments, public-private partnerships (PPP), oil investment contracts and housing association funds.

Iraq’s growing population, together with an expanding industrial base, is also putting pressure on the power sector. Blackouts are the norm for Iraqis for most of the day. A handful of power projects have been developed or are under construction on an engineering, procurement and construction (EPC) basis and several independent power projects (IPPs) have been developed in Kurdistan. Baghdad intended to tender its first round of IPPs in 2010, but the plans were subsequently shelved. The plans may now be revived, in part due to budgetary constraints.

Iraq’s most ambitious plans are in its rail sector. Iraq Republic Railways (IRR), under the Transport Ministry, is planning to develop an extensive high-speed rail network across the country along two main routes. The new high-speed lines will not be competitively tendered, but rather negotiated on a one-to-one basis with developers.

The selected developers will be responsible for financing, procuring and constructing the projects. The developers will be paid after the assets are operational, either as a single payment, or in instalments under a deferred payment structure. At $32bn in total project costs, the scheme is unlikely to be realised in the short to medium term.

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