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Iraq is preparing to issue a tender for a $388.5 million power plant, according to a report from Bloomberg.

Ali Al-Dabbagh, a spokesman for the government, said on Tuesday that the Council of Ministers approved the plan to issue a tender for the plant in the Nineveh province, north of Baghdad.

The plant should be built within 21 months and generate 750 megawatts.

Iraq plans to almost triple power generation capacity to 17,000 megawatts by 2013, up from around 6,000 MW now, mostly through building new plants, an Electricity Ministry spokesman said in January.

Former Electricity Minister Karim Wahid quit in June amid violent street protests triggered by severe seasonal summer power shortages.

By T. Keyzom Ngodup, co-founder and Executive Director at Ideas sYnergy, an Iraq based private sector development consulting company.

I was pleasantly ‘perplexed’ to learn that Prime Minister Nuri al-Maliki, approved (on February 7, 2011) an agricultural project for developing biofuel from rotting dates. The ‘dates-to-biofuel’ project implemented by an unnamed company based in UAE, is seen as a way to encourage growth in Iraq’s crumbling farm sector, which has suffered from decades of sanctions, isolation and war, further confounded by severe droughts and dust storms, attributed mainly to climate change. Ironically, the farming sector is Iraq’s leading employer but contributes less than 3% to state revenues and gets little investments from the Government. According to United Nations Environment Programme (UNEP), Iraq is among the hardest-hit countries (reference to climate change).

There is nothing new in this analysis; in fact it has been repeatedly appearing as an introduction to Iraq. Instead, I want to focus on how we can convert the challenges of climate change and agriculture into opportunities to develop Iraq’s clean energy market, and the important role of MSMEs – micro-, small- an medium-sized enterprises – in facilitating local and indigenous insights to develop world-class solutions that support access to clean, modern energy services. ‘Clean energy’ refers to products and services that produce energy from renewable resources and emit fewer greenhouse gas emissions than does energy from conventional fuel sources. The lack of a reliable supply of power from the electricity grid and the availability of free and inexpensive fuels, such as wood and kerosene, are key influences on this market. Imagine a samoan (traditional Iraqi bread) shop at every street corner or one of the 1.2 million poor woman leaning over her mud-oven: they represent a huge segment of the clean energy market for MSMEs.

There are two areas of the clean energy market that are high-potential and represent high-growth for MSMEs: clean energy electricity systems and clean energy cooking and light products. Iraq needs MSMEs enabling access to solar lanterns, solar home systems, energy-efficient cookstoves, and electricity generated from decentralized sources, including small hydro power plants and biomass gasifier systems. Working either as ‘developers’ of new products (may not be necessary to re-invent the wheel if ‘right’ product is already present in the global market) or as ‘enablers’, Iraqi MSMEs can, for example, help install solar panels and provide Iraq’s rural population with access to clean electricity.

The Government of Iraq, donors and stakeholders have an important role to play here, to support MSMEs in meeting local energy demand, and contribute to a cleaner Iraq. They can operate focused lending schemes for promoting investment in clean production and energy efficient technologies and production processes, through lines of credit from donors/international development financiers such as OPIC and IFC. In addition, Iraqi MSMEs suffer from a dearth of knowledge on emerging best practices and technologies in this space: the government and donors can support a nation-wide ‘clean energy and MSME conference’, with a focus on partnership models that MSMEs can undertake to develop local capabilities and their impact.

At Ideas sYnergy, we believe that the first necessary step is to understand the energy-related consumption and expenditure habits of Iraq’s poor, un-banked, and ‘under-energy served’ population segments, as well as GoI’s (future?) policies and initiatives in how they interact and facilitate the clean energy industry in the country. Reading through, you may understand why I am ‘perplexed’ with Iraq’s prime-minister: did the (premature?) approval of dates-to-biofuel programme implemented by non-Iraqis set-up Iraqis at an unfair disadvantage? That, and in general the economic decisions taken by people in politics, is a question Iraqis should ponder.

T. Keyzom Ngodup is co-founder and Executive Director at Ideas sYnergy, an Iraq based development consulting company committed to economic and social development through market-based solutions that help build and scale innovative businesses for sustainable and inclusive private sector development.

The last three years have been “exceptional” for the Kurdistan Region in terms of discoveries of both oil and gas, Dr Ashti Hawrami, the Minister of Natural Resources, told an audience of diplomats and international oil companies in Erbil today.

Dr Hawrami said that as a result of drilling activities from 2008 to 2010, the Kurdistan Regional Government’s Ministry of Natural Resources was constantly updating and reviewing the Region’s resource base estimates.

“We see our Region sitting on at least 45 billion barrels of oil and as much as 100-200 trillion cubic feet of gas and we expect that soon some of our reserve estimates will be included in that of Iraq’s overall reserves,” he said.

Speaking at the launch of The Oil & Gas Year Kurdistan Region of Iraq 2011, a book that focuses on the Region’s energy sector, Dr Hawrami also said production levels were steadily increasing and that exports of crude oil from the Region had already reached around 100,000 barrels per day.

“That figure will continue to rise throughout the year and we are very much on track to reach exports of 1 million barrels a day by 2015,” Dr Hawrami said. He added that he was pleased with the technical cooperation shown by the state-owned Northern Oil Company, which is responsible for the management of Iraq’s Kirkuk-Ceyhan pipeline.

Dr Hawrami said gas discovered in the Kurdistan Region would first help to solve Iraq’s chronic electricity shortages and then provide an important source of revenue for the federal government through exports to Turkey, to Europe and beyond.

“New gas discoveries to date total 20 trillion cubic feet,” he announced. “This is in addition to the previously discovered Khor Mor and Chamchamal fields which according to Iraqi estimates contain 4-5 trillion cubic feet and which remain a priority dedicated to serve the domestic market for current and future power generation.”

Dr Hawrami outlined the MNR’s support for plans to boost power-generation in the Region with the construction of three gas-fired power plants in the provinces of Dohuk, Erbil and Suleimaniah.

Dr Hawrami said the KRG was planning to develop 5000MW of electricity, in addition to the current domestic plan of 2000 MW. “This is for supply to both the KRG governorates and to our neighbouring provinces of Ninevah, Kirkuk and Salahadin,” he said.

Dr Hawrami said he was optimistic that the outstanding issues between Erbil and Baghdad would soon be solved. He said that he expected the federal parliament to pass a hydrocarbons law and a companion revenue-sharing law in the coming months.

“Iraq needs these laws. The region needs these laws,” he said. “They have already been delayed too long. We need to take the ideology out of oil policy and focus on getting results. After all, we are all working to the same end, which is to make our oil and gas work for all the people of Iraq, without exception.”

Picture: Prime Minister Barham Salih (standing) and Minister Ashti Hawrami (second from right).

(Source: KRG)

A representative of the protesters in Sulaimaniya said the anti-government campaigners have given the Kurdistan Regional Government 48 hours to respond officially to their demands or they will stage a general strike in Sulaimaniya city.

The parliament sent a 12-member delegation to hear the demands of the marchers on Monday, almost 12 days after the outbreak of violence.

Speaking to AKnews on Monday afternoon, Faruq Rafiq said it would be a peaceful strike: “The demonstrators will sit in and block all the streets of Sulaimaniya,” he said, explaining this is their way to “force the government to respond.”

At the national level, on Sunday Prime Minister Nouri al-Maliki (pictured) gave his ministers a 100 day ultimatum to step up reforms or face the sack.

Thousands of Iraqis took to the streets on Friday to protest against shortages of electricity, food rations and jobs, and called for some provincial officials to step down.

Politicians, who have already tried to appease citizens by diverting money from fighter jets to food, giving out free power and cutting their own pay, were quick to act after Friday's "Day of Rage" when at least 10 people died and scores were wounded.

On Sunday, the governor of southern Babil province Salman al-Zarqani resigned, while parliament speaker Osama al-Nujaifi called for a new provincial vote within three to four months.

Provincial elections were held in 2009 and are not due before 2013.

A White House spokesman said, "we were deeply troubled by reports that Iraqi Security Forces detained and beat Iraqi journalists and civil society leaders during Friday's demonstrations".

(Sources: AKnews, Reuters)

Turkey’s Tekfen Insaat, a construction company active in 12 countries, aims to build a power plant in Iraq together with a French company as Iraq’s risk profile improves, chief executive Umit Ozdemir said, according to the Kipp Report.

The company is looking into projects in the southern part of Iraq, ha told a conference in Istanbul.

Eight years after the U.S.-led invasion that ousted Saddam Hussein, the national grid supplies only a few hours of power per day, driving up costs for businesses and compounding summer heat, when temperatures reach above 50 degrees Celsius.

Iraq has big plans to install turbines and capture gas at oilfields to ramp up electricity production, and needs to spend $77 billion to improve the power sector by 2030, according to a government master plan.

Al Jazeera reports that at least 12 protesters were shot dead by security forces during Friday's 'day of rage', during which at least 17 demonstrations were held throughout Iraq.

Iraqi security forces detained hundreds of people, including prominent journalists, artists and intellectuals, according to a report from the Washington Post.

Four journalists described being rounded up well after they had left a protest at Baghdad's Tahrir Square, following which they were handcuffed, blindfolded, beaten and threatened with execution by soldiers from an army intelligence unit.

Protests continued on Saturday, with around 2,000 protesters rallying in central Sulaimaniya to protest against poor basic services.

Meanwhile, Grand Ayatollah Ali al-Sistani called on Iraq's government and parliament to take serious steps in improving electricity services, providing jobs and fighting corruption in the country, where progress remains slow eight years after the U.S. invasion.

(Sources: Reuters, Washington Post, Bloomberg, Al Jazeera)

Iraq's Electricity Ministry has announced that 11 international companies presented investment projects under the first licensing round to develop the electricity sector in the country.

The Iraqi government set February 10th as the deadline for receiving offers under this first licensing round.

Musab al-Mudarres, the spokesman of the Electricity ministry told AKnews that the award will be given to two companies, one of which will develop Basra power station, the gas-fired station in the Shatt al-Arab which consists of 10 generating units, each of which generates 125 megawatts, giving a total capacity of 1,250 megawatts.

"The second station in Amara, where four generating units will be installed, each generating 125 megawatts, giving a total capacity of 500 megawatts."

A decision will be made in about four weeks.

(Source: AKnews)

The Iranian Deputy Energy Minister Mohammad Behzad (pictured) has said the  Iranian-built Al Sadr power-plant in Iraq is an important project which is now ready to come on stream.

IRINN quoted the minister as saying that the first unit of this 324 MW plant has been completed and is waiting for its fuel supply, and the second unit will ready in 45 days.

He said Iran's electricity export to Iraq will expand, adding that the Islamic republic is plans to build eleven more power-plant units and new transmission lines to the tune of 2 GW in that country.

“Currently we’re exporting 750-800 MW,” he said, adding, “With the construction of the 400 KW Karkheh-Al-Amarah power line, the amount of electricity exported to Iraq will climb to over one GW,” Behzad was quoted by IRINN as saying.

The Karkheh-Al-Amarah power line project is being carried out by Iran's Tavanir Company.

He added that the Iranian ministry of energy has plans to export electricity to Lebanon via Iraq and Syria.

(Source: Tehran Times)

AKnews reports that the Vice Chairman of the Babil Investment Commission has complained that Iraq’s investment law has been “paralyzed” by the state’s failure to implement it effectively in ministries and government departments.

Abbas al-Tai told the agency that Iraq is one of the best places in the world for investors as it lacks many basic commodities such as housing, sewerage systems and electricity, but the government’s delay in adopting the investment law has left foreign investors reluctant to implement projects in the country.

"Iraq depends mainly on its oil revenues and a large part of public expenditure goes on salaries that take the largest share of the state budget," he said.

"Investment is the best solution to address the deteriorating economic situation in Iraq and radically resolve the problem of unemployment” Tai continued, emphasizing that it would depend on “the state's encouragement and support to set up investment projects.”

Tai attributed the delays in effectively adopting the investment law to lengthy bureaucratic procedures and the long time periods required to attain administrative approval.

“The investment law is good,” he said, “but its implementation and activation are the problems we face in our work”.

Giving the example of a residential construction project approved by the Babil Investment Commission but rejected by the federal Ministry of Municipalities, Tai complained: “The Kawthar housing project was obstructed by all government departments in the province,” and that the Ministry of Municipalities “gave itself the right to decide about investment projects although the Investment Authority is the only party in the country authorized in this matter according to law.”

“The Ministry of Municipalities has hindered our projects completely.”

The solution to this problem according to Tai is the establishment and activation of an investment body that includes representatives of government departments and ministries that has the power to facilitate the implementation of investment projects.

In conclusion, Tai called on the federal government to "…take swift action to resolve this problem and instruct the relevant government institutions to adopt the investment law to avoid future consequences on investment in Iraq."

(Source: AKnews)

On February 14, the National Iraqi News Agency reported that the import tariff increases originally scheduled to go into effect on March 6 are being suspended until further notice. (The story is at http://www.ninanews.com/english/News_Details.asp?ar95_VQ=FFHEEK.) This is not surprising. With protestors already in the streets in some places, now can hardly be the best time to introduce new taxes on consumers.

In my last post, I argued that a case might conceivably be made for some of the new tariffs if they offset distortions elsewhere in the economy. Even if this were true, however, ordinary Iraqis would be unlikely to see things this way. All they would see is higher prices for food and appliances. And they would suspect, probably correctly, that officials were profiting from the situation by taking bribes from importers.

The government’s argument that the new tariffs are necessary to protect Iraqi industry would also be likely to fall on deaf ears. Consider the proposed tariff on window-type air conditioners (harmonized code number 84.15.10.20), for example. In the Arabic version of the schedule, this is given as 20%; the English version has 50%. (These schedules are available at: https://www.iraq-businessnews.com/2011/02/14/new-iraqi-import-tariffs-the-full-list/.)

An obvious beneficiary would be a company like Al Hilal Industries (ISX ticker IHLI), whose main product is evaporative coolers. Unlike most air conditioners, which use compressed refrigerants, an evaporative cooler is water based. The only moving part is a fan, which draws the outside air through wet pads to lower its temperature. (See the illustration, by Nevit Dilmen, downloaded from Wikimedia Commons.)

On one of Baghdad’s 110 degree summer days, I think I’d prefer a real air conditioner. But faced with higher prices for imports, some consumers would be forced to buy one of IHLI’s products instead. Eventually, perhaps, the tariff might make it possible for the company to develop a viable air conditioner business. But in the meantime, their customers—presumably already unhappy about electricity shortages—would find that even when the power was on they were still pretty hot.

If the government’s plan is to wait until the public is ready to accept situations like this before introducing the new tariffs, they may be on hold for quite a while.