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By John Lee.

The Iraqi Council of Ministers has authorised the Ministry of Electricity to extend an invitation (the "sole offer") to the Emirati company AMEA Power to present its proposal to build a 500-MW solar power plant, with the option to add batteries.

This move allows the Ministry of Electricity to proceed with the necessary procedures in accordance with the Investment Law, aiming to increase Iraq's renewable energy capacity and reduce its reliance on fossil fuels.

The development of solar power projects is a key part of Iraq's strategy to address its chronic electricity shortages and meet the growing demand for power, while also mitigating the environmental impact of its energy sector.

(Source: Ministry of Oil)

By John Lee.

Prime Minister Mohammed Shia Al-Sudani met with Ahmed El Sewedy, CEO of Egyptian multinational electrical company El Sewedy Electric on Monday.

The meeting focused on government efforts in economic reform, boosting industrial and agricultural activities, and enhancing the investment environment to attract major global companies across various sectors.

PM Al-Sudani highlighted investment opportunities in the gas and electricity sectors, the development of new industrial cities requiring comprehensive services, and opportunities in agriculture, including the establishment of modern irrigation equipment manufacturing plants. He emphasized Iraq's initiative in advancing the agricultural sector.

Ahmed El Sewedy expressed his company's readiness to invest and operate in Iraq, stating that El Sewedy Electric will develop cooperation mechanisms and agreements in multiple areas, to be announced soon.

(Source: PMO)

By John Lee.

Iraqi Prime Minister Mohammed Shia Al-Sudani chaired the regular meeting of the High Committee for the Development Road Project on Thursday.

The meeting included the Ministers of Transport, Planning, Oil, Electricity, and Communications, along with the Prime Minister's advisors. The discussion focused on the project's implementation procedures and progress on previous directives.

The meeting reviewed the service corridor study, which includes the paths for fiber optic cables, oil and gas pipelines, and electricity and renewable energy transmission. PM Al-Sudani instructed the Ministry of Oil to prepare a consultancy study to strategically integrate the ministry's projects for transporting and exporting oil and gas via the Development Road.

He emphasized that relevant ministries should submit ideas for review and that no decisions should be made outside the High Committee.

Other topics included integrating the project into the Planning Ministry's budget and updates on transit and customs. It was decided that the General Company for Land Transport would guarantee the transportation of goods along the Development Road for the time being.

(Source: PMO)

By John Lee.

The International Monetary Fund (IMF) has issued a detailed report on the Iraqi economy.

The following key points were highlighted:

1. Improved Domestic Stability: Since the new government took office in October 2022, Iraq has experienced improved domestic stability. This facilitated the passage of its first three-year budget, which led to a large fiscal expansion starting in 2023.
2. Economic Recovery: The fiscal expansion supported a strong recovery in Iraq's non-oil economy after a contraction in 2022. Despite regional conflicts, Iraq remained largely unaffected.
3. Inflation Decline: Domestic inflation decreased to 4 percent by the end of 2023. This decline was attributed to lower international food prices, currency revaluation as of February 2023, and normalization in trade finance.
4. Imbalances Worsened: Despite the positive aspects, imbalances worsened due to the large fiscal expansion and lower oil prices.
5. Expected Growth in 2024: The ongoing fiscal expansion is anticipated to further boost growth in 2024. However, this expansion comes at the expense of a further deterioration of fiscal and external accounts, increasing Iraq's vulnerability to oil price fluctuations.
6. Medium-Term Sovereign Debt Stress: Without policy adjustment, there's a high risk of medium-term sovereign debt stress, indicating potential fiscal challenges ahead.
7. External Stability Risks: Iraq faces external stability risks, particularly concerning its vulnerability to fluctuations in oil prices. The ongoing conflict in Gaza and Israel also presents a potential downside risk.

In summary, while Iraq has experienced improvements in domestic stability and economic recovery, challenges remain regarding fiscal imbalances, external stability risks, and the potential impact of regional conflicts on its economy.

Click here to download the full 68-page report

Press release from IMF:

On May 13, 2024, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation[1] with Iraq and considered and endorsed the staff appraisal.

Domestic stability has improved since the new government took office in October 2022, facilitating the passage of Iraq's first three-year budget, which entailed a large fiscal expansion starting in 2023. This supported the strong recovery in Iraq's non-oil economy after a contraction in 2022, while Iraq was largely unaffected by the ongoing conflict in the region. Domestic inflation declined to 4 percent by end-2023, reflecting lower international food prices, the currency revaluation as of February 2023, and the normalization in trade finance. However, imbalances have worsened due to the large fiscal expansion and lower oil prices.

The ongoing fiscal expansion is expected to boost growth in 2024, at the expense of a further deterioration of fiscal and external accounts and Iraq's vulnerability to oil price fluctuations. Without policy adjustment, the risk of medium-term sovereign debt stress is high and external stability risks could emerge. Key downside risks include much lower oil prices or a spread of the conflict in Gaza and Israel.

Executive Board Assessment[2]

Executive Directors agreed with the thrust of the staff appraisal. They welcomed the strong economic rebound, declining inflation, and the improved domestic conditions which have resulted in the implementation of the first-ever three-year budget. Noting that risks are tilted to the downside, given regional conflicts and large dependence on volatile oil prices, and that the large fiscal expansion could result in fiscal and external imbalances, Directors underscored the need for sound macroeconomic policies and structural reforms to secure fiscal and debt sustainability, advance economic diversification, and achieve sustainable, inclusive, and private sector-led growth.

Directors emphasized that a gradual, yet sizeable fiscal adjustment is needed to stabilize debt in the medium term and rebuild fiscal buffers. They encouraged the authorities to focus on controlling the public wage bill, phasing out mandatory hiring policies, and mobilizing non-oil revenues, while better targeting social assistance. Directors agreed that prompt implementation of customs and revenue administration reforms, a full implementation of the Treasury Single Account, and a strict control and limit of the use of extrabudgetary funds and government guarantees are key to support fiscal consolidation. Limiting monetary financing and reforming the pension system are also important.

Directors commended the central bank's efforts to tighten monetary policy and enhance its liquidity management framework. Improving coordination between fiscal and monetary operations would help absorb excess liquidity and enhance monetary policy transmission. Directors concurred that accelerating the restructuring of the large state-owned banks is also essential. They encouraged further modernizing the private banking sector, including by facilitating the establishment of correspondent banking relationships, reducing regulatory uncertainties, and promoting efficiency and competitiveness of private banks.

Directors emphasized the need for structural reforms to unlock private sector development. They encouraged leveling the playing field between public and private jobs, boosting female labor force participation, and reforming education and labor laws. Directors agreed that improving governance and combatting corruption are also key and encouraged further strengthening the AML-CFT framework, enhancing public procurement and business regulations, and addressing electricity sector inefficiencies. Directors welcomed the renewed efforts toward WTO accession. They also encouraged the authorities to improve the coverage and timeliness of statistics.

Directors concurred that close engagement with the Fund, including through continued technical assistance, would be useful, and welcomed the authorities' request for a Policy Coordination Instrument.

It is expected that the next Article IV consultation with Iraq will be held on the standard 12-month cycle.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.

To browse our comprehensive library of reports on Iraq, click here.

By John Lee.

Iraq's Ministry of Oil has signed a Heads of Agreement (HoA) with the Chinese company Geo-Jade and the Iraqi company Crescent Basra (Hilal al-Basra) to invest in the integrated development project at the Tuba field, in the Zubair district of Basra.

According to a statement from the Ministry, the project would have a capacity for crude oil production of 200,000 barrels per day (bpd), along with 50 million cubic feet per day of gas.

Additionally, it includes the establishment of a refinery with a capacity of 200,000 barrels per day and the establishment of a petrochemical plant with an annual production capacity of 800 tons of polyethylene and polypropylene, as well as a fertilizer plant and the establishment of two power stations.

The Director-General of Basra Oil Company (BOC), who signed the Heads of Agreement with the consortium, said that the project will provide 1,200 megawatts of electricity through the two stations, a conventional 800-MW plant, and a 400-MW solar installation.

In a separate announcement this week, Geo-Jade was awarded the rights to develop the Jabal Sanam and Zurbatiya fields.

(Source: Ministry of Oil)

By John Lee.

A former employee of STX Marine Service has reportedly been indicted for allegedly leaking information about the company's Iraqi power plant management project to a subcontractor in Iraq.

The incident appears to relate to the company's $500-million project to restore and operate diesel-fueled electric power plants in Iraq.

More here.

(Source: Korea Times)

By John Lee.

Dana Gas announced on Friday that production at the Khor Mor facility in the Kurdistan Region of Iraq has been restored to normal levels following the recent attack.

The facility's daily production output capacity now exceeds 500 million standard cubic feet (MMscf) of gas, 1,100 metric tons (MT) of LPG and 15,000 bbl of condensate.

According to a statement from the company:

"The resumption of operations follows decisive actions by the Government of Iraq and the Kurdistan Regional Government as well as further firm commitments to significantly enhance security and strengthen defences at the Khor Mor site. We extend our gratitude to the authorities for their support and efforts.

"Dana Gas and its partners are dedicated to maintaining the highest safety for the wellbeing and security of all our personnel and facilities. We are proud to serve the people of the Kurdistan Region and Iraq and support the country's electricity generation by providing local power stations with affordable and lower-carbon fuel and fulfilling the LPG needs of the Kurdistan region of Iraq."

The field is operated by Pearl Petroleum, and joint venture between Dana Gas, Crescent Petroleum, OMV, MOL and RWEST.

(Source: Dana Gas)

By John Lee.

Iraq's Ministerial Council for Energy has recommended awarding the tender number "MOD-2024" for the operation and maintenance of diesel stations in North Diwaniyah, East Diwaniyah, East Karbala, and North Amara to Dasoff Petroleum Service LLC.

The contract price is set at $13.5 per MWh on a "Take and Pay" basis for a period of 5 years, as decided by the Ministry of Electricity's central review and approval committee.

Dasoff, which has an associate company in India, describes itself as a consortium of:

• Mohammed Obaid Mohammed
• DAS Offshore Engineering PVT. LDT.
• Bhagwan Dhamaji Gawai

(Source: PMO)

By John Lee.

A drone attack on Friday evening has killed four workers at Khor Mor gas field in Sulaymaniyah province.

Press reports say the dead were Yemeni nationals. Electricity supplies have also been disrupted.

A KRG statement said that initial information suggested the attacks come from "a nearby region within Iraq"; KRG Prime Minister Masrour Barzani urged the federal government to investigate and hold the perpetrators accountable.

The field is operated by Pearl Petroleum, and joint venture between Dana Gas, Crescent Petroleum, OMV, MOL and RWEST.

(Sources: AFP. KRG, Rudaw)

By John Lee.

The Iraqi Ministry of Planning held a meeting with the Japan International Cooperation Agency (JICA) to discuss the possibility of continued loans to fund new development projects in Iraq.

These projects cover sectors such as health, electricity, sanitation, and the Basra refinery.

Dr. Maher Hamad Johan, the ministry's Undersecretary for Technical Affairs, noted that the government's decision to halt new project loans applies to inactive and delayed loans, not just Japanese loans.

He mentioned ongoing efforts to find a legal framework for the Basra refinery's sixth phase, emphasizing the importance of prioritizing projects based on government recommendations and developmental gaps. (JICA provided a loan for the fifth phase of the Basrah Refinery Upgrading Project in August 2023).

The meeting was attended by the acting Japanese ambassador and a delegation, as well as several ministry officials.

(Source: Ministry of Planning)