Oil ministry

Since 1979, Iraq’s Oil Ministry has been both the operator and regulator of the country’s entire oil and gas sector, with the exception of the Kurdistan region. The Oil Ministry operates through a network of 14 subsidiaries, which took over the work of the Iraq National Oil Company (INOC) when it was merged with the ministry in 1987.

Iraq has been struggling for the past four years to pass a series of laws to regulate the oil sector, including ones to restructure the industry and revive the INOC, which would take over responsibility for operations from the Oil Ministry, leaving the ministry with a purely strategic and regulatory role.

The Oil Ministry is currently led by Abdulkarim al-Luaibi, a technocrat who has risen through the ranks since the 1980s and was appointed in December 2010. Al-Luaibi replaced Hussain al-Shahristani, who had been oil minister since 2006. During that time, Al-Shahristani successfully ran Iraq’s first two oil licensing rounds and secured the return of international oil companies. After leaving the ministry, he was handed the role of deputy prime minister for energy affairs, with considerable authority over all oil and gas-related matters.

Upstream oil operations are carried out by four companies, with responsibility split by region. The largest of these is the Basra-based South Oil Company (SOC), which is responsible for the bulk of Iraq’s oil production in the south of the country.

The Missan Oil Company was split off from SOC in 2008 to take responsibility for fields along Iraq’s eastern border with Iran.

The North Oil Company is based in Baghdad and has responsibility for the Kirkuk, Ninevah, Erbil, Baghdad, Hilla and Kut governorates. The newest operating company, Midland Oil Company, was established in April 2010 to oversee the development of oil fields in central Iraq. Production from this region has so far been minimal.

There are also a series of refining companies, such as South Refineries Company and Midland Refineries Company. In addition, there are numerous service providers, such as Iraq Drilling Company, Oil Exploration Company, State Company for Oil Projects and State Oil Marketing Organisation.

Along with the development of a dozen of its oil fields by international oil companies, Iraq plans to build five new grassroots refineries, as well as to expand and rehabilitate its existing facilities. It has already awarded a $6bn contract to a South Korean consortium led by Hyundai Engineering & Construction for the Karbala refinery and hopes to award contracts in 2014 for another facility at Nasiriyah.

Construction & Housing Ministry

The Construction & Housing Ministry is responsible for roads, housing and public buildings, making it one of the most important organisations in Iraq’s infrastructure sector. The ministry is led by Mohammad al-Daraji, who was appointed in 2010.

More than 70 per cent of Iraq’s population now lives in cities and towns, and the country is suffering from an increasing housing shortage, estimated at more than 1.5 million units. It also struggles with crumbling infrastructure and poor services, the result of years of war and neglect due to sanctions and underinvestment. Iraq has a current total housing stock of just over 2.8 million units, well below the required minimum. Along with the shortages, according to the UN, only half the population has access to safe drinking water, and outside the capital only 9 per cent of Iraqis are provided with sewage collection and treatment services. Iraq’s cities embody the country’s most pressing development challenges, including the proliferation of slums, unemployment and a widening wealth gap.

Beyond its long-standing housing shortage, Iraq also has a relatively new problem: refugees from Syria and Iraqis returning to their home country settling in illegal areas. In Baghdad alone, there are an estimated 250 makeshift settlements housing 1 million people. In some cases, this is on land earmarked for development.

Iraq needs to build about 2.5 million new housing units by 2016 to meet the requirements of its growing population. Private sector participation in the sector remains limited due to constraints on land availability and inadequate services, along with poorly developed ?nancial markets. Government attempts to promote the Iraqi private sector have been limited to seeking foreign investment and have not been matched by the creation of legislation and policy to encourage it.

The largest of Iraq’s housing schemes have been passed over to the National Investment Council to deliver. The organisation is responsible for securing international and private participation in the country’s infrastructure and has begun to make progress on some major housing projects. It aims to build 1 million houses by 2015 and, although no one expects this target to be met, work is under way.

Transport Ministry

The responsibility for transport infrastructure in Iraq is split between two government entities: the Transport Ministry and the Construction & Housing Ministry. The Construction & Housing Ministry is in charge of the road system; port, railway and airport infrastructure is the responsibility of the Transport Ministry.

The Transport Ministry is led by Hadi Farhan al-Amiri. It has 13 divisions in charge of various aspects of the transport network, including the Iraq Civil Aviation Authority, the General Company for Ports of Iraq (GCPI), Iraqi Republic Railways and the Department of Planning and Follow-up.

To date, the ministry has been focused on the short-term emergency repair and rehabilitation of Iraq’s existing infrastructure.

Although the long-term strategy has yet to be determined, Baghdad has outlined general objectives. Its ambition is to offer an alternative transport corridor for logistics and trade from the East into Europe. Most ships currently sail around the Arabian Peninsula and through the Suez Canal. Iraq wants to offer a world-class port at Faw on the country’s southern tip, which will be connected to a regional rail network. Grand Faw is the biggest priority for the GCPI and involves the construction of a 17-metre deep port, allowing the world’s largest vessels to dock, and 7,000 metres of quayside. Cargo will then be moved via a rail link to the improved north-south railway, which will eventually extend into Jordan, Syria, Kuwait and Iran, as well as along the existing line to Turkey. The plan is still in the design stage.

Another area where private involvement is much sought after is aviation. Iraq is keen to capitalise on the international trend to privatise airport operations and wants private investment to play a role in its many planned airport schemes.

Electricity Ministry

The Electricity Ministry is working to a masterplan that aims to provide a substantial boost in generation capacity. However, it is struggling to meet the timetable and has repeatedly been forced to revise down targets, which sometimes bear little relationship to reality.

The ministry is led by Abdulkarim Aftan. Underneath him are four directorates: production; distribution; transmission; and projects, along with offices for contracts, planning and studies.

Tasked with delivering a huge increase in generating capacity, the ministry has considered various options to ensure a smoother contracting process. It has faced criticism over its handling of the tendering process, which compares unfavourably with that of the Kurdistan Regional Government (KRG). The northern provinces enjoy near 24-hour supply.

In 2008, the ministry bought 72 turbines from the US’ GE and Germany’s Siemens, but the first was only successfully installed in April 2013. These are supposed to run on natural gas, but Iraq currently lacks the infrastructure to capture and process enough gas, so they are fuelled by oil, which reduces output and degrades the equipment faster. The ministry either tenders most power plant contracts or invites selected engineering, procurement and construction firms to implement them. For the final remaining plants in the GE/Siemens megadeal, it is assumed that companies will be invited rather than engaged through open tender.

In November 2013, the electricity ministry said it was looking to resurrect its previously cancelled independent power programme, with plans to build several plants around the country.

Agriculture Ministry

The Agriculture Ministry oversees one of Iraq’s most critical economic sectors, which employs some 20 per cent of the workforce and contributes 8 per cent of the country’s GDP. However, inefficiencies have hampered performance, prompting the ministry to take an active role in promoting crop and livestock production.

Much of Iraq’s agricultural activity is undertaken at provincial governor level, reflecting the federal structure of Iraq. The regional development fund that finances the provinces includes agricultural activities, and that has limited the ministry’s room for manoeuvre.

The government established the Agricultural Initiative in 2008. It is chaired by the prime minister and operates as a sub-unit of the ministry. The unit has its own budget and mainly extends loans to farmers. The ministry also includes the State Company of Agriculture Supplies, which distributes agricultural products.

The ministry’s main policy thrust is aimed at supporting farmers with the provision of seed, fertiliser and water. It cooperates closely with donors, prominently the UN Food & Agriculture Organisation, and bilateral donors such as the Australian government, which is working with the ministry on a national programme to develop the cultivation of wheat.