The pressing need is to direct spending towards essential infrastructure projects. The government has sought to deploy its funds in the key population centres such as Sadr City, the massive slum area adjoining Baghdad.

It is under pressure to boost service provision in Sadr City since Shia cleric Moqtada Sadr’s movement had largely met the local population’s needs through its own resources.

Having quelled the Sadr militia, the government of Prime Minister Nouri al-Maliki is ready to allocate new funding for redeveloping the city. About $100m has been set aside to reconstruct and develop Sadr City, while another $50m will be spent redeveloping Shula, a poor Shia neighbourhood of Baghdad. The funds will be spent on two new sports stadiums, schools, health clinics, markets and public parks.

Plans also include the establishment of three residential compounds in the city, in the areas of Al-Habibya, Ur and Khalf al-Sadda, with about 30,000 residential units planned. US assistance is also being leveraged, with the US Army Corps of Engineers overhauling the Sadr City water treatment plant.

In Basra province, the government has allocated ID366bn ($308m) for provincial development projects, with more than ID15bn earmarked for roads and bridges.

The provincial authorities are starting to activate projects in Basra, following the reassertion of state authority in the city. The bids committee in the provincial council has referred 49 projects from the roads and bridges department to local companies and contractors.

Other former insurgent bases will also find additional funding coming their way. The government has allocated $100m to rebuild towns and villages damaged by violence in Diyala province.

The government is planning to develop three investment projects in Najaf, including a tourist city for religious pilgrims, as well as building 8,000 housing units and another tourist city project in the city of Kufa.

Power and water will enjoy a growing share of the spending allocations as the government attempts to ramp up electricity provision. Long-term plans call for the addition of 20,000MW of generating capacity through either greenfield or rehabilitated power plants. More than $1.5bn of the Iraqi budget was made available to the Electricity Ministry in 2007, but the ministry estimates at least $25bn will be needed for capital improvements in the sector.

New power projects include a planned 315MW power plant at Sadr City, a 750MW single-cycle gas turbine plant at Youssfiiyah and the rehabilitation of two units at Hartha power station near Basra, to double output at the plant to 800MW.

Upgrading roads

The US has allocated $2.1bn from the Iraq Relief & Reconstruction Fund for water and sewer infrastructure repairs, operations, maintenance programmes and capacity development. Donor funding has also been made available to the Baghdad Mayoralty, covering the $65m cost of the Emergency Baghdad Water Supply & Sanitation Project, which will assist in restoring basic water supply and sanitation services for Baghdad through the rehabilitation of existing priority networks and facilities.

Transport is another strong focus. The government plans to simultaneously upgrade and extend road, rail, air and river transport networks. The Transport Ministry has earmarked $960m for reconstruction of the Iraqi Republic Railway (IRR) between Baghdad and Rabiyah, and Baghdad and Basra. The IRR has already established a daily service from Baghdad to Basra. The Transport Ministry is planning two new railway lines linking the Iraqi, Syrian and Iranian borders, as part of a plan to add 2,600 kilometres of railway across the country. One of the new links will run from the holy city of Najaf to the Iranian border.

Road improvements will be covered by the proposed Emergency Road Rehabilitation Project, which will rehabilitate damaged segments of the country’s motorway and rural road network. As part of its ongoing efforts to rebuild Iraq’s infrastructure, the US Army Corps of Engineers is planning to construct a 96km road from Tampa to Khabari on the Kuwaiti border.

Port improvements will centre on Umm Qasr. Container capacity at the port is to be increased to 300,000 20-foot-equivalent units (TEUs) initially, rising to 1 million TEUs in the future.