Mismanagement hits Iraq's power sector

05 March 2012

The Ministry of Electricity is to partly blame for the dire power situation in the country

Iraq is in urgent need of new power generation facilities. Iraqi Kurdistan aside, the country suffers from predictable blackouts throughout the day forcing households to rely on community and household generators.

While little capacity has been brought online in recent years, Iraq has invested about $27bn in its power sector since 2004. This figure includes two mega deals for the purchase of turbines from the US’ GE and Germany’s Siemens in 2008. Nevertheless, the combined value of deals is only $5.1bn. Some of these units will now be used at a new plant that will be built at Baiji.

As Iraq’s Ministry of Electricity embarks on its ambitious plans to build up its power generating capacity, questions are being asked about the way in which it operates at MEED’s Arabian Power & Water Summit on 5 March.

Abdul Qader Ahmed of Mass Holding, a developer which has developed almost all of Iraqi Kurdistan’s power as independent power projects (IPPs) asked: “Why is [the ministry in Baghdad] paying 2.5 times the going rate for power capacity?”

According to Luay al-Khateeb, executive director of the Iraq Energy Institute: “This is due to mismanagement – which can be a lot more harmful than corruption.”

The Ministry of Electricity is also massively over-staffed. It employs 88,000 people, while operating very little in terms of assets.

Due to its ballooning public sector commitments, the Ministry of Electricity has attracted criticism for prioritising employment, rather than being an efficient planner, developer and regulator of the power sector. Iraq will need to overcome these issues if it is to progress and develop anywhere near as much power capacity as it says it will.

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