Ziad Ali Fadel: Addressing the Electricity Crisis in Iraq

The Iraqi Minister of Electricity: 3 axes to solve the electricity crisis… and Iranian gas continues

In an interview with Al-Araby Al-Jadeed, the Iraqi Minister of Electricity, Ziad Ali Fadel, touched on his ministry’s projects seeking to end the electricity crisis, pointing to the continued import of Iranian gas.

He also revealed the latest findings in negotiations to supply gas from Turkmenistan and Qatar. The following is the text of the interview:

– We start from the electricity production file, what is its current quantity? How big is the gap to cover aggregate demand, and what have you provided to address it?
We have prepared plans to solve the thorny issue of the electricity crisis in Iraq, with the suffering of citizens continuing for decades. We focused on three basic axes: production stations, transportation networks, and distribution networks, as one system, within a plan extending for three years. Because any delay in one of these sectors will be reflected in the rest.

On the production side, we proceeded in two directions: The first is to increase production, and we were able to increase it to 26 thousand megawatts as part of our effort to reduce the gap with the total demand volume of 40 thousand megawatts, and this gap currently amounts to about 14 thousand megawatts of additional energy required to be produced.

The increase was achieved thanks to the cooling systems project, which added 800 megawatts, as well as the implementation of a comprehensive maintenance program, which contributed to raising production rates first to 21 thousand megawatts and then 24 thousand megawatts, reaching the highest load with a capacity of 26 thousand megawatts. Our current plan to increase production is moving in two directions. The first is to raise the efficiency of the operating production units to bring them to the highest possible production capacity, and it is expected that 800 megawatts will be added next summer. The second direction is to proceed with combined cycle projects to provide 4,000 new megawatts that do not require fuel or additional operational costs, but rather generate energy. Through the heat produced by our operating units themselves, these projects are currently being implemented under contracts with a group of companies, including American and Chinese. In the past, our reliance on establishing stations that operate exclusively on gas and fuel cost us the value of fuel amounting to 4 billion dollars annually.

The Ministry is also proceeding with the establishment of new thermal stations using locally available fuel, and among its projects is the establishment of 3 stations in the governorates of Nineveh, Anbar, and Al-Qadisiyah, with a capacity of 700 megawatts each, as well as an agreement with investors to establish investment stations that currently sell energy to the state. This formula has had problems in the past. Because previous contracts required the state to pay ongoing costs even if those stations stopped production under any circumstances, and we proceeded to sign new contracts to remove any problems.
Together, these projects and plans could provide an additional 11,000 megawatts to the national system to reduce the gap of 14,000 megawatts, which requires two and a half to three years to provide the required energy.
– How will the approval of a three-year financial budget in Iraq be reflected in the ministry’s work to achieve the goals you talked about?
One of the biggest problems that the Ministry of Electricity and the rest of the ministries in Iraq were going through was the cessation of projects until the budget was approved, which was delayed for months exceeding half a year and sometimes between 8 and 9 months in past years, and this greatly affected the completion dates of projects that were supposed to be completed by dates from Two to three years, because it adds months to the amount of delay in approving the budget, and from here comes the importance of the tripartite budget because it will provide the necessary funding without disruption for a period of 3 years.

– What is the significance and importance that will be added by Iraq’s signing of contracts with the German companies Siemens and the American General Electric?
50% of our operating units are implemented by the American company General Electric, 30 by the German company Siemens, and 20% by Chinese companies and also various investment companies, so the contracts came with these two companies, and included a 5-year agreement to provide parts, equipment and maintenance supplies for the stations that the two companies established in Iraq during Over the past years, it has come into effect through the start of the station maintenance plan for the summer of 2024, as the manufacturing of materials that will go into rehabilitating our stations has begun. The value of contracts with Siemens reaches $1.6 billion and with General Electric $3.9 billion, and these contracts will save 30% of the current maintenance costs. .

– What have you done to solve the problem of faltering imported gas flows, and what about alternative energy projects?
Gas is one of the most important sources of fuel for operating stations, the least expensive and most exhausting for the stations themselves, and the most beneficial, as it gives higher operational energy and is less harmful to the environment. We have implemented a plan to reduce dependence on imported gas by completing and activating the interconnection lines with neighboring countries. We have contracts signed with the Gulf Interconnection Authority, which are in progress, and with the Saudi side, and we are now in the process of preparing the estimated costs, which will provide 900 megawatts, and the connection with Jordan has also been completed. We are also negotiating with the Turkish side, and the discussion is currently about the required tariff.
The second aspect of the plan included the completion of 3 contracts for solar energy generation, the first with the French company Total with a capacity of 1000 megawatts, with the Chinese company Power China with a capacity of 750 megawatts, and with the Al-Bilal Group with a capacity of 525 megawatts, and we expect to complete them in the year 2025.
Likewise, combined energy and solar energy projects, along with rehabilitating existing stations and raising their efficiency, will reduce operational costs by up to $7 billion annually.

– The agreement to replace Iranian gas with Iraqi black oil to end the problem of limited flows. Is it taking place smoothly, without stumbles or interruptions?
In fact, the need for gas is still ongoing due to the need for gas stations that generate around 7-8 thousand megawatts. This need came about because of the delay in the Ministry of Oil’s previous plan to establish Iraqi gas investment projects, and we sensed in the current ministry seriousness in establishing them, and there are those who wonder why they established Iraq has gas stations, which we implemented after the Ministry of Oil confirmed that its need for gas would be met within years, which was not the case, as well as to diversify energy sources to meet the local need.
As for the agreement with Iran, it was made due to the faltering financial payments from the Iraqi Trade Bank as a result of the American sanctions that caused the prolongation of the auditing processes, and the debts accumulated to reach 11 billion dollars. The agreement came to overcome this faltering and ensure the continuation of gas flows, and stipulated that Iraq would pay the dues in quantities of… Excess black oil.
This procedure is not new, as the Ministry of Oil has been paying the dues of foreign companies operating in the fields for years using the same mechanism, and the Iranian side is now continuing the flow of gas without faltering at a rate of 40 million cubic meters per day, while the total need is 55 million cubic meters.

– After this agreement, was the government satisfied with the gas coming from Iran, or did it go to other countries to diversify the sources?
Yes, the government went in two directions, the first towards Turkmenistan, and a memorandum of understanding was recently signed with it to supply Iraq with 25 million cubic meters per day of gas. Due to the geographical distance, the gas will be transported through Iranian pipelines because there is no direct pipeline network between Iraq and Turkmenistan, and we are now in the process of determining the costs according to the equations. The global price, and then there will be an exchange agreement with Iran through which it will supply gas from Turkmenistan, and will give Iraq the same quantities through shared pipelines with us in exchange for small, agreed-upon fees. These quantities have nothing to do with the 40 million cubic meters that reach us from there under the oil swap agreement. Iraqi lions with Iranian gas.
The second direction is towards the sister State of Qatar, and we have negotiated the export of liquid gas to Iraq by ship, passing through the Arabian Gulf due to the lack of joint pipelines, with the establishment of a platform to receive the gas and pump it into the Iraqi national system, and so far the quantities, costs, and date for starting the export have not been determined. There are preliminary discussions indicating that the start of this project may extend until the year 2026 due to the gas contracts that Qatar has committed to with other countries until it is Iraq’s turn to start sending gas.

– What about the associated gas investment licensing rounds that were launched this year, and how much will they save?
Investing in associated gas is one of the basic contents of the government program of Prime Minister Muhammad Shiaa Al-Sudani, and on the basis of that, the annex to the fifth licensing round was launched. We hope that it will contribute to covering the local need for energy generation and reducing the need for imports. We expect that it will provide from 8 to 10 billion dollars annually to the state budget after its completion. Under these rounds, we expect gas investment to generate electricity within 5 years.

– What is the impact of the decline in water flows in the Tigris and Euphrates on the capacity of hydroelectric stations?
The volume of energy that can be generated from these stations reaches 1,300 megawatts per day, and due to the decline in flows, it has decreased to only 200 megawatts. This also explains the Ministry’s failure to expand towards establishing new hydroelectric stations. Because water flows are not encouraging.

– Lack of regulation of electricity fee collection. What is the extent of its impact? What do you hope for from the smart transformation project?
In fact, the impact of this topic is great; Due to the large amount of waste, whether the occupancy is residential or commercial, a two-part plan was prepared, the first related to areas with high consumption to organize the collection process, and the second part stipulates the installation of electronic meters and smart meters in 10 elected areas, 4 of which are in Baghdad, and will begin during the current month, with 500 One thousand subscribers, and invoices are issued electronically through a special application, which reduces the amount of corruption, and we expect that it will add very large financial revenues.

2023-11-12 23:01:40
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