“Iran is about to lose ground in Iraq’s electricity market as Turkish firms are negotiating to sign a $20 billion agreement to develop Iraq’s ageing power infrastructure,” Hamidreza Salehi was quoted as saying by Barq news website.
Iran and Iraq signed a memorandum of understanding in 2018 to boost energy collaboration and renovate the Arab country’s power infrastructure. However, little has happened since and the MoU is apparently shelved, he noted.
“It is regrettable that a country (Iran) that played a key role in improving security of its neighbor and helped it economically is easily overlooked when it comes to major contracts.”
Salehi added that Iran has not even been able to elevate the MoU into “a real contract” after two years and this is while others (Turkish and Saudi firms) are in talks with the Iraqis for lucrative long-term contracts.
Iraq has been importing power and natural gas from Iran over the last decade and based on what senior officials say “no payment has been made in the last two years” ostensibly due to the US economic siege.
“During the visit of Iraqi Prime Minister Mustafa al-Kadhimi to Tehran in July no contract was signed and nor did authorities discuss the MoU. When he (al-Kadhimi) went to Turkey negotiations to develop the Iraqi power sector was on top of the agenda.”
The ICCIM official said old strategies and ineffective diplomacy failed and a new approach should be adopted to enable Tehran to have a say not only in Iraq but also in other regional states where the power sector to be developed.
Iranian companies (both private and state) have proved their mantle in executing big power projects namely constructing dams, hydro-power stations in addition to thermal and combined-cycle power plans. But it seems access to cutting-edge knowhow is not enough to win development projects in countries like Iraq as foreign relations play a more important role, he said.
“Appointing ambassadors to Iraq from among military ranks, namely Iraj Masjedi, a top-level commander of the Islamic Revolution Guards Corps, shows that military actions are at the center of attention, which is good, but the policy should not overshadow other areas including energy sectors.”
Mutual Interest
Simply put, positively impacting Iraq’s economy is as important as helping ensure security in the region because robust economic collaboration is key to long-term mutual interest.
Over 65% of energy in Iran is produced by private companies. It is obvious that these companies should and can play a key role in helping Iraq meet its growing electricity needs.
Iraq is the main importer of Iranian electricity for more than a decade. The Arab neighbor needs 23,000 plus megawatts of electricity, but decades of instability and fighting have destroyed its power infrastructure. It has a power deficit of 7,000 MW.
Daily power generation capacity in Iran is 60,000 MW and average annual export 10,000 MW to Iraq, Pakistan and Afghanistan.
Iraq's unpaid debt to Iran for electricity import is said to be about $1 billion. Following recent negotiations between the sides, it is hoped that the issue will be settled soon.
Iran also exports 15 million cubic meters of gas per day to Baghdad from Naftshahr in Kermanshah Province through a pipeline diverging from the Sixth Iran Gas Trunkline.