Power generation in Iraq

The electricity sector in Iraq has suffered from the non-availability of spare parts and poor maintenance for the most part of the last decade.

Though Iraq had one of the largest electricity generation capacities in the region accounting for around 10% of the installed capacity in the region prior to the first gulf war, international sanctions and obsolete technology have reduced the actual capacity to a third of the installed capacity of 10,000MW. The situation worsened further due to damage during the war and looting after the second gulf war.

Recognizing the importance of electricity for development, the CPA placed the restoration of electricity services on the top of their agenda. The Commission of Electricity (CoE) was quickly established and given sweeping operational authority as well as financial resources to get Iraq's electrical grid back on line.

The CoE is a relatively autonomous institution overseeing 11 companies covering, generation, distribution, construction, manufacturing and IT. The CoE immediately started bringing units back on line and repairing transmission lines and substations damaged during the conflict, or looted after the war.

The Ministry of Electricity is another body also working to get power plants back on track. Unfortunately though, like the majority of government bodies, it is running out of funds. Sources in the Ministry of Electricity also blame delays in financing for generation and distribution upgrades for the comparatively slow progress the grid has had.

Lack of funds, sabotage and corruption are main issues which have been plaguing the sector. Nonetheless, the CoE and Ministry of Electricity are making double-time efforts in getting the situation back to normal. Deals have been concluded with neighboring countries to import power.

Large scale maintenance projects are also being implemented. According to the CoE, eight of the seventeen 400-kV transmission lines destroyed during the war have been repaired as of October 2003, while of the 746 high-voltage towers that collapsed, 102 have been repaired.

Repair work on the 132-kV network has restored 79 of the 98 lines, while 96 of the 262 132-kV towers that were damaged have been rebuilt. The maintenance project, which was launched by the Ministry of Electricity on October 10 aims at enhancing power capacity by repairing and maintaining generation equipment. The maintenance projects includes repairing above ground cables, cutting high trees near wires and cleaning converters.

Efforts to build new facilities to enhance output have also taken off. Technoprom, a Russian company, began work on a new thermal power station at Yusufia which is expected to be the biggest single power station in the region when finished.

Contracts for the project were signed in 2000 under the Oil for Food Program and the CPA upheld the contracts and allowed work to begin on the project, which resumed in September. Negotiations were previously made with the Abu Dhabi Electricity Authority, which had offered to build four power generation plants in Iraq with a total capacity of 130MW. The outcome of the negotiations has not been announced.

Bechtel and USAID have also been major contributors to the building of new facilities. Both institutions have been working with the Ministry of Electricity to build several new power stations capable of producing 1,200MW a day by the start of next summer.

Bechtel also has three new generation projects underway bringing a further 440MW online at power stations in southern Baghdad, Kirkuk and Mussayyib. In its report for the implementation of the coming phase, Bechtel recommends the full rehabilitation of the stations that will deliver the greatest immediate increase in output.

This includes work to restore the giant 1,320MW Baiji plant, beginning with returning the plant's fifth unit to full operability. In addition, Bechtel recommends installing smaller generation units of up to 5MW for specific needs at Umm Qasr port and Baghdad International Airport and 50MW units to support domestic supply in Baghdad.

But lack of security has been a recurring problem in all the sectors and the electricity sector is no exception. The Korean Company OMO, which was working on electrical infrastructure in the north pulled out its 60 employee engineers after two of its engineers were shot in an ambush.

Due to the efforts of all parties taking part in rebuilding the Iraqi electricity system, power output exceeded pre-war levels for the first time during the month of October. Output reached a peak load of 4,518MW on October 6, compared with barely 3,200MW in September.

The achievement marks the first milestone in the plan to restore Iraq's ramshackle generation, transmission and distribution infrastructure. Since October 1, USAID claims that Baghdad in specific has received an average of 1,241MW a day.

USAID has now set the ambitious plan to increase power output to 6,000MW by May 2004 while the Ministry of Electricity also hopes to increase total production to 7000MW by June 2004 to provide for a five hours on and one hour off rationed schedule in the summer. This is in comparison to the current three hours on, three hours off being implemented throughout the country.

Despite these impressive achievements, plants are still working at much less than 50% of capacity. The country's eight large-scale thermal plants account for most of the installed capacity, which at full output could produce 5,415 MW of power. Gas turbines account for 2,181MW and hydro stations for a further 2,518MW of nameplate capacity.

The World Bank, after conducting an in depth analysis on the needs of the electricity sector set up a budget for funding needed in the coming three years. The budget estimates the net financial requirement for the electricity sector in 2004 at US$2,501.6mn of which $US997mn will be financed by the Oil for Food Program.

According to the World Bank, the preliminary 2004 recurrent budget provides USD119.2mn, for the sector, which is 40% more than the budget for 2003. The background data and assumptions of the budget prepared by CoE include several elements that might require further adjustment such as fuel price, cost of imported materials and the budget of the three northern Governorates.

Fuel costs, salaries and other services were estimated at prevailing prices. Any change in such prices will have an impact on the budget. The recurrent budget for 2004 would not be sufficient for financing normal maintenance required and these have been included in the investment budget.

The estimated costs for major overhauls and rehabilitation expenditures for 2004 are also included in the investment budget. For subsequent years the recurrent budget will need to be substantially increased to allow for proper maintenance of assets.