Iraq's 'Phantom' Electricity Deal Not So Ghostly?

The latest scandal at Iraq’s ministry of electricity involves multi-billion dollar “phantom deals” with a German and Canadian company. The minister of energy has been asked to resign. But according to a report from NIQASH, the real story is not as simple as it first appears.

As a long, hot summer continues to overheat the citizens of Baghdad, one of the government ministries that could alleviate some of their pain is in the spotlight once again. With the latest scandal at the Ministry of Electricity, which will most likely result in the dismissal of the current minister, it seems that this government department deserves to sit atop the list of most corrupt government institutions in Iraq.

Despite an ever-changing roster of ministers since the new Iraqi government was formed in 2003, nothing has really changed in terms of electricity supply in Iraq. Most Iraqis still only get a few hours of electricity a day, most local power is currently supplied by the independent owners of generators and Iraqis continue to suffer without their refrigerators and air conditioning in the 50 centigrade-plus summer heat. In fact, during popular protests earlier in the year, a better electricity supply was one thing all the crowds demanded.

Those earlier protests saw the resignation of Karim Wahid the former minister of electricity. And now, after only six months in the job, the next minister also appears to be being forced out of this difficult job.

The latest scandal involves what are coming to be known as the “phantom deals”. How much of the deals really are phantoms and how much is real still appears to be up for debate.

Early in July the Electricity Minister Raad Shalal signed two deals, worth close to US$2 billion in total, for the building of power plants and infrastructure. According to some politicians though, the companies he signed the deals with did not actually exist. One of the companies was a German one, Maschinenbau Halberstadt (MBH) and the other was a Canadian firm, the Canadian Alliance for Power Generation Equipment Inc (CAPGENT).

MBH was awarded a contract worth US$623 million to build five power plants in the Ninawa province within a year’s time. Capgent’s contract was for just over US $1.2 billion and they were assigned to build ten power plants in Iraq in the provinces of Anbar and Salaheddin, also within 12 months.