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By Jessica Obeid for The Middle East Institute. Any opinions expressed here are those of the author(s) and do not necessarily reflect the views of Iraq Business News.

Iraq needs renewables, but they won't solve its power problems without broader reforms

Two decades on from the 2003 U.S. invasion of Iraq, efforts to improve the country's electricity infrastructure have lagged.

Despite massive hydrocarbon reserves, including the world's fifth-largest proved crude oil and 12th-largest proved natural gas reserves, Iraq struggles with chronic electricity shortages.

Citizens do not have access to reliable electricity service and have to rely on expensive neighborhood diesel generators to cover some of the gap.

Click here to read the full article.

From Rudaw. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Iraqi economic capital engulfed in trash, suffers from dilapidated electricity

Japan is keen to assist Iraq develop its "weak" private sector by cooperating with Iraqi and Kurdish companies, the Japanese ambassador to Iraq, Futoshi Matsumoto (pictured), said last week.

Click here to read the full article.

Remarks for the Ambassador's Keynote Speech at the Iraq Oil and Gas Show
Saturday, February 18, 10:45 a.m. (Babylon Rotana Hotel)

I have recently returned from Washington, D.C. where we had the privilege of hosting Foreign Minister Fuad Hussein and his 15-member delegation.  This visit was historic.  It was the first Higher Coordinating Committee that was focused on economic cooperation, energy sector development, and climate change.

In Washington, the Foreign Minister and Prime Minister Sudani's advisors laid out a plan to diversify Iraq's economy from being more than just an oil exporting country to a country with vibrant private industries, where the private sector is the main engine of economic growth.

In addition to the meetings with Secretary of State Blinken and other senior government officials, the Foreign Minister's delegation met with the U.S. Chamber of Commerce and about 40 U.S. companies inviting them to play a role in Iraq's economic development, including in growing Iraq's nascent private sector.  I came away from this trip confident in the strong and expanding relationship between Iraq and the United States, and excited for the opportunities to foster real growth in Iraq's economic future.

For Iraq to realize this bright future, Iraq must do at least three things:  invest in critical infrastructure, combat corruption, and create a business environment that is favorable to foreign direct investment.  By that I mean encouraging foreign companies to bring both their capital and their expertise to Iraq and where these investments generate jobs and companies train Iraqis to run their own businesses.

There is no place better to focus these opportunities than the energy sector, specifically the country's electricity grid and oil and gas field development, including gas capture.  These areas capture both Iraq's greatest source of revenue and its greatest constraint on economic growth.  We all know electricity demand will only grow and there is promising potential for investment and improvement.

I have spoken with the Minister of Oil, the Minister of Electricity, and the prime minister's new adviser on energy, all of whom have laid out a vision for modernizing the energy industry, and not just in the oil sector, but by capturing and using the vast amounts of gas in Iraq to help develop the electricity sector to meet the power demands of a growing economy.

The Biden Administration is encouraging U.S. energy companies-those already in Iraq and new ones, to explore opportunities in Iraq and where they could bring their world-class expertise and help generate jobs for Iraqis.  On Thursday, General Electric and the Ministry of Electricity signed an MOU to develop the energy sector in production, transmission, maintenance, staff training, and reducing carbon emissions.  And there is certainly more room for other companies.

Strengthening Iraq's energy sector will require significant investment.  Gas capture plants will have to be built along with new power plants to use the additional gas.  The electricity grid will have to be upgraded and modernized to make sure that the 50 percent of power that is currently lost in transportation due to theft and poor equipment can instead be harnessed to power Iraqi homes and businesses.

That is why energy infrastructure is an obvious place to start with investment.  Iraq has a valuable pre-existing resource that has the potential to advantage not just Iraqi citizens, but the economy - especially since the lack of electricity is one of the largest constraints facing manufacturing and industry today.

In the gas field, Iraq has both a challenge and an opportunity.  After Russia, Iraq is the highest emitter of flared gas in the world.  This causes severe environmental problems.  Capturing the gas that is currently flared would dramatically improve Iraq's climate, allowing Iraqis to breathe cleaner air, drink cleaner water, and suffer less from debilitating diseases such as cancer.

But capturing gas is also an economic opportunity.  Most assessments conclude that if the amount of gas flared in Iraq today was processed in new electricity generating power plants, Iraq could double the total amount of its electricity production and meet the current shortages.   By using captured gas to power electric generators, Iraq could dramatically increase the amount of electricity available to its people - as much as 3,500 MW of additional electricity, or an increase of 25 percent to the entire country's electrical grid.

To fully take advantage of developing the energy sector, we must also address the important challenge of corruption.  The business environment must convince foreign companies that their investments are protected, and the regulatory climate is predictable, transparent, and honest.  Also companies, especially those that are going to do business with the government, must know they will get paid on time.  Unfortunately, this has been an issue in the past.

Finally, the bureaucracy itself must modernize, efficiently process contracts and projects, and streamline the process for companies, both foreign and domestic, to do business here.  When companies compare opportunities to do business, they will almost invariably choose those with less risk and greater ease of doing business.  In today's fast moving global economy, time matters to international investors.

So let me conclude by saying that modernizing Iraq's energy sector is key to Iraq's ability to become a secure, stable, sovereign country that can provide for its own people using its own vast natural resources.

In Washington last, the Biden Administration launched a new and expanded vision for Iraq focused on economic development.  We are committed to working with the Sudani government to create new opportunities that strengthen the economic interests of both our countries and the region.  American companies are ready to invest and participate in modernizing Iraq's energy sector to the benefit of Iraq's sovereignty and its environment and help build a more secure future for the Iraqi people.

We are continuing this conversation with Prime Minister Sudani and his team at the Munich Security Conference.  We look forward to working with the Government of Iraq, the private sector (including other western companies), and directly with the Iraqi people to make this happen.   Thank you.

(Source: US Embassy)

Waste gas used to generate power in Garmian, Kurdistan

A significant step taken by the ninth cabinet of the Kurdistan Region Government (KRG) was to reduce the impact of waste gas on the environment and produce electricity using this gas from oil wells.

The Garmian waste-gas-to-power-plant project is a 165-MW facility of its kind in Iraq and Kurdistan, which generates power from Hasira oil wells. The plant was completed in 2021 and since has created 118 job opportunities for the residents.

The project was constructed on 35 donums land and consists of 180 generators and 45 exchangers. Each generator can produce 0.9 MW of electricity and its daily production has been estimated at 100 MW. Efforts continue to increase the generating amount.

The ninth cabinet has been working on environment-friendly policies to minimize the harms of waste gas on the environment. Besides its economic benefits, the project provides better electricity service to the residents in Garmian.

(Source: KRG)

By John Lee.

The Prime Minister of Iraq, Mohamed Shia Al-Sudani, has presided over the signing of a memorandum of understanding (MoU) with the American company General Electric (GE).

The memorandum covers areas such as production, efficiency, transportation, maintenance, staff training, and reducing carbon emissions.

It also includes long-term maintenance works for a period of five years, increasing the work efficiency of the energy production units, and establishing new stations for the production of electric energy.

Additionally, there will be studies for the exploitation of associated gas, the establishment of monitoring centers, and the establishment of a training center for staff working in the Ministry of Electricity.

(Source: Media Office of the Prime Minister)

U.S. Ambassador to Iraq Alina Romanowski's Remarks

Virtual Roundtable Discussion with the U.S.-Iraq Business Council

January 31, 2023

I am pleased to meet with members of the U.S.-Iraq Business Council.  You represent some of the finest companies in the United States, and some of you know Iraq very well.

Let me begin by providing a brief overview of where things stand in the U.S.-Iraq bilateral relationship.  In short, we are committed to the relationship for the long term.  Iraq plays an important and strategic role in the region.  We are closely engaged with the new Iraqi government and the Iraqi people in our mutual desire to see a democratic, peaceful Iraq that is stable, secure, and sovereign.

An important part of our work is to facilitate trade and investment in Iraq and thus promote Iraq's growth.  While Iraq's investment climate has its challenges, there are some positive trends.  An estimated 60 percent of the population is younger than 25 years of age, and the Iraqi youth are Iraq's most valuable resource for building a prosperous, inclusive Iraq.  Now that a new government is in place under the leadership of Prime Minister Sudani, we are working with Iraq's leaders on a range of common goals, with economic and commercial issues taking a prominent place in our agenda.

In my meetings with Iraq's new leaders, I have emphasized that the Iraqi government must respond to the legitimate demands of the Iraqi people.  I have also assured Prime Minister Sudani of our readiness to collaborate with his government on a whole range of shared interests.  We have further demonstrated our willingness to work with the Sudani government with the recent visit of National Security Coordinator for the Middle East and North Africa Brett McGurk and Special Presidential Coordinator for Global Infrastructure and Energy Security Amos Hochstein, who met with Prime Minister Sudani and other Iraqi leaders in Baghdad and Erbil in January.  The prime minister made it clear that our goals and his significantly overlap.

We are currently working with the Iraqi government to finalize plans for a visit to Washington in early February by a delegation led by Deputy Prime Minister and Foreign Minister Fuad Hussein.  In planning the delegation's visit - and in our bilateral relations in general - we are increasing our focus on issues such as economic cooperation and climate change.

The Iraqi people look to their government to provide greater economic opportunity, and it is important for the Sudani government to make the promotion of diverse economic growth a priority.  Economic and regulatory reform is needed to rebalance the economy from its reliance on oil, to deal with chronic shortages in electricity, and to address climate change.  We firmly support Iraqi efforts in these areas and strongly encourage the Iraqi government to partner with U.S. companies - with their tremendous expertise, capacity, and experience - in meeting these energy and environmental challenges.  We know that strengthening the investment climate is crucial to attracting U.S. and other foreign investment in these areas, and we engage with our Iraqi partners on this issue as well.

The impasse in forming a government after the previous elections impeded the national governments' budget process.  The Sudani government is now preparing a 2023 budget that could open the doors for progress on infrastructure projects and other vital programs.  That budget holds the potential for progress as well as peril.

Higher oil prices in 2022 boosted government revenue - another development that can potentially aid Iraq's progress.  But, as might be expected, the government is under pressure to add new jobs to an already bloated public sector.  If it does not exercise caution, inflation might accelerate, putting the economy on shaky ground.  The government should act prudently in authorizing new projects, while vigorously addressing corruption and seeking to rein in salary expenditures.

We have seen positive signs from the Sudani government on the economic front.  For years, the United States has worked closely with the Central Bank of Iraq (CBI) to prevent criminal and corrupt actors from accessing the international banking system and to bring Iraqi banks into compliance with international standards.  In coordination with the CBI, we implemented regulatory changes that improve transparency into financial transactions.  These changes were planned for over two years and not related to the timeline for government formation.  An immediate consequence of these and other anti-corruption measures is that the United States and CBI have successfully limited the ability of bad actors to misuse the Iraqi banking system to launder funds.  And despite strong criticism of the government and conspiracy theories claiming sinister U.S. motives for the dollar exchange rate issue, the new government has strongly supported CBI's new measures and is trying to rein in actors who are hoarding dollars or taking other measures to artificially increase the spread on the informal market.

Under the new government, we have seen the strongest levels of U.S. wheat purchases we have seen in some time.  They also approved an energy contract that was negotiated under the previous government with a U.S. firm.

Further, just hours after local sources began circulating U.S. press stories about the unlicensed Starbucks cafes in Baghdad, the prime minister's spokesperson issued a strong statement condemning their operations, and the unlicensed cafes were closed within hours.

Some remain skeptical of Iraq's private sector.  I, however, see hopeful signs.  Iraq's entrepreneurship and innovation ecosystem is growing rapidly.  USAID now offers a diverse series of business development programs to support that ecosystem. Since 2020, more than 10,000 entrepreneurs have received business support services from USAID programs, including support for setting up, formalizing, and sustainably scaling up their businesses.

We saw impressive growth in Iraq's tech and e-commerce sectors during the surge of COVID.  In response, we are helping Iraqi businesses present themselves to the U.S. and other markets as viable investment opportunities.  Since 2021, USAID has mobilized about $41 million in investments to local firms with contributions from U.S.-based venture capital.

We are doing much more to support the development of Iraq's private sector. USAID has allocated approximately $2 million to partner with business development hubs - including Five One Labs, The Station, Science Camp, and Mosul Space - to build the resilience capacities of the private sector, focusing on increased opportunities for women and youth and providing business management skills and access to finance opportunities.  This work is ongoing throughout Iraq, including in the Iraqi Kurdistan Region.

Despite the economic and political challenges facing Iraq, the newly formed government, the expected passage of a new budget, increased oil revenue, and progress in Iraq's private sector are positive developments.  I'm confident that opportunities exist for U.S. businesses to export products and services to Iraq.  Specifically, the embassy has identified franchising, agriculture, education, renewable energy, healthcare, defense, and energy as sectors with potential for U.S. trade and investment in Iraq.

And with support from our consulate in Erbil, the American Chamber of Commerce-Kurdistan is growing and developing into an effective advocacy organization for reform, inclusive growth, and diversification of the economy.

In addition to the traditional services offered by the U.S. Commercial Service, our embassy has launched a new initiative to promote U.S.-Iraq business endeavors.  On November 15, we hosted the first in a series of Forums to Improve Iraq's Business Climate, which brought together representatives of U.S. businesses and Iraqi businesses.  At that virtual forum, we focused our discussion on Iraq's customs system and the impediments it presents to trade.  A representative of the United Nations Conference on Trade and Development, UNCTAD, spoke to the forum participants about his organization's project to automate Iraq's customs process.  Supporting this project, known by its acronym ASYCUDA, should be a goal of the business community as well as the U.S. Embassy and likeminded embassies in Baghdad.  The project has the potential to revolutionize the customs process, decrease opportunities for corruption, and facilitate trade while enhancing Iraqi government revenues.  ASYCUDA will surely face resistance as it is rolled out.  We plan to use this series of forums to develop support for improvements like automation of the customs process.

We are keen to address the challenges of the private sector's growth in Iraq, particularly unlocking financing opportunities for SMEs.  Last June, USAID convened financial experts, donors, government, and private business leaders to discuss securing capital for local businesses, establishing the first access-to-finance forum in Iraq.  This March, USAID will hold a follow-on event in Erbil to present solutions and innovative approaches to increase lending to the private sector and advance financial inclusion.

I do not want to present an overly rosy picture of the business environment in Iraq.  U.S. companies doing business here face significant challenges, as some of you know all too well.  We are engaged on several fronts to advocate for U.S. businesses.  But I do believe there are positive developments.  And I can assure you that my team at the embassy and I stand ready to support you.

(Source: US Embassy)

The Iraq Britain Business Council (IBBC) President Baroness Nicholson of Winterbourne supported by Managing Director Christophe Michels, and Board Member Haider Al Shamaa led a delegation of 20 IBBC members to Baghdad to meet the new Government of Federal Republic of Iraq

Welcomed by President of Iraq H.E. Abdullatif  Rasheed, and Prime Minister H.E. Mohammed Shiaa Al Sudani, the delegates met with H.E. Taif Sami, Minister of Finance, H.E. Mr Zyad Ali Fadhil, Minister of Electricity, H.E. Abdul Ameer Al Shimari Minister of Interior, and the Governor of the Central Bank.

Further meetings were held with Mr. Hameed Naeem Al Ghizzy, Secretary General of the Council of Ministers and the Prime Minister's Office, Dr Abdulkareem, Chairman of PMAC and Mr. Hazim Al Hafadhi, Deputy Minister of Transport.

In all meetings IBBC and its members were praised for its long and strong relationship with Iraq and were further assured of the Government's support for all of its continuing work. The IBBC Spring Conference 2023, to be held on the 16th June was welcomed, would be attended as speakers, special guests by ministers, officials, and leading financial experts.

New member Company, UK Education in Iraq brought a parallel delegation of Academics  led by  Professor Victoria Lindsay accompanied by IBBC, Health and Education Advisor Professor Mohammed Al Uzri. On Tuesday 24th January Baroness Nicholson and Christophe Michels  joined the academic delegation for an important meeting held with H.E. Naeem Al Aboudi, Minister of Higher Education and Scientific Research. At this meeting, an agreement was signed by the Minister enabling UK Education In Iraq to establish a British University in country.

Ambassador Mark Bryson-Richardson hosted a reception for the delegation at the British Embassy on Sunday 22nd, with special guests, H.E. Rakan Saeed, Governor of Kirkuk, H.E. Shakhwan Abdullah, Deputy Speaker of the Parliament and Dr. Laith Al Shaher, Director General of the Legal Department in the Ministry of Oil.

On Monday 22nd, outgoing Chairman of TBI Dr Salem Chalabi hosted a dinner for the delegation at the Babylon Hotel when Dr Salem introduced his successor, Mr Bilal Al Hamdani. The dinner was also attended by Dr Fareed Yasseen immediate past Ambassador to the USA and present Advisor to the Iraqi Prime Minister.

Baroness Nicholson of Winterbourne gave her warmest thanks to the President of Iraq, Prime Minister and all government for their support and looks for another opportunity  for IBBC to visit Iraq.

Christophe Michels stated:

"IBBC has just undertaken one of our most successful trade missions thanks to the open and helpful support of the Government of Iraq and especially thanks to the hospitality of the Prime Minister and President.

"Our large contingent of members all benefitted from the meetings and insights that were shared in relation to investment and educational opportunities. I am delighted to highlight of the continuing growth of the business being done between and among IBBC members and Government entities. 

"We look forward to a positive relationship with the Government and to welcome them to the Mansion House conference on June 16th ."

(Source: IBBC)

By John Lee.

Two new projects were officially launched in sector 128 of Ankawa district on Monday, January 16th.

The projects, which include street paving, sidewalk construction, water supply, and sewerage will be financed by the KRG's Ministry of Municipalities and Tourism.

Additionally, an expansion of the sector's electricity network will be financed by the Ministry of Electricity of the Kurdistan region.

The cost of the projects is estimated at 6 billion Iraqi dinars ($4.1 million).

The ceremony was attended by Sasan Auni, Minister of Municipalities and Tourism, Ano Jawhar, Minister of Transport and Communications, and Dr. Umid Sabah, President of the Diwan of Council of Ministers.

(Source: KRG)

By John Lee.

Federal Government welcomes Germany's contribution to the sustainable development of Iraq's energy infrastructure

The CEO of Siemens Energy AG, Dr. Christian Bruch, has signed a cooperation agreement with the Iraqi Minister of Electricity, Zayad Ali Alrzij [Ziyad Ali Fadel, Ziad Ali Fadhil Sudani], on the further electrification of Iraq.

The agreement was signed in Germany in the presence of Vice Chancellor Habeck and the Iraqi Deputy Prime Minister and Foreign Minister, H. Fuad Mohammed Hussein, and it will see Siemens Energy provide another 11 GW for local power generation.

Federal Minister Habeck said:

"Iraq will invest heavily in its energy infrastructure in the coming years. Siemens Energy will play a key role in this development. I am pleased that renewable energies are used as far as possible. This is an immense contribution to a climate-friendly, sustainable and reliable energy supply in Iraq."

The list of projects includes projects for the development and improvement of power generation from conventional and renewable energies.

All turbines that are newly installed in power plants are fully H2-capable and can also be operated with hydrogen or its derivatives.

In addition, an energy system study on the increased use of renewable energies is to be drawn up, the electricity transmission network is to be improved and prepared for the increased use of renewable energies, and existing systems are to be modernized.

The Federal Government has classified this project as a strategic foreign project in the interest of the Federal Republic of Germany.

(Sources: German Ministry for Economic Affairs and Climate Action, Media Office of the Iraqi Prime Minister)

In order to solve the problem of electricity shortage and increase the amount of electricity production, the Ministry of Electricity of the Kurdistan Regional Government (KRG) last year installed several new electricity generation units.

According to the director of electricity generation of the Ministry of Electricity, two units with a capacity of 500 MW were installed in Bazian last year and 95% of the work is now completed.

"Another work is the installation of a combine cycle in Bazian power plant with a capacity of 250 megawatts, which will use the heat emitted from the exhaust of other turbines during operation,".

He added that similar to Bazian station in Khurmala gas station design and survey work has begun to install (combined cycle) with a capacity of 500 MW, which is using the heat emitted from the exhaust of other turbines during operation.

In another step to increase electricity production, the Ministry of Electricity began preparations, studies and collection of data and information for the establishment of three solar power plants with a capacity of 25 MW each, two of which are located in Erbil province and one station is located in Duhok province.

Director General of Electricity Generation said: ''Last year, the installation of the largest solar power plant in Iraq and the Kurdistan Region was completed in Duhok University with a capacity of 2 MW on December 21, 2022, which consists of 3,782 solar panels on an area of 20,400 square meters."

In order to increase the level of electricity production from clean energy sources, the contract was signed to install four kinetic power plants in all four autonomous administrations of the Kurdistan Region, including 100 MW in Soran, 100 MW in Zakho, 50 MW in Raperin and 50 MW in Garmian,.

According to the General Director of Electricity Generation, the necessary land in all four places has been handed over to the investment company, is currently in the design and preparation stage to start the implementation of the projects.

At the same time, four other power plants that were stopped and did not work which have been repaired and are work again with very low fuel consumption, so that the cost of production has decreased significantly, the plants are 51 MW Tasluja, 29 MW Erbil and 29 MW Sulaimani and the 29MW Duhok power plant, which is 90% complete.

Peshraw Nuri, pointed out that 95% of the work of the Deraluk hydropower project is completed and is planning to sign a contract with a private sector company to operate and maintain for seven years.

Another task of the Ministry of Electricity was to use waste gas from oil wells and for this purpose a contract was signed with an investment company to build a power plant with a capacity of 100 MW in the first phase, and then increase the production capacity to 300 MW base on the gas which will be available.

According to the Director General of Electricity Generation, the ministry has continuously carried out maintenance for both Dukan and Darbandikhan hydropower plants and currently in Dukan hydropower plant, four out of five units are ready for production, but due to low water levels and low rainfall The production capacity has been limited to suit the amount of water flowing from the Dukan Dam.

Also, the works of Darbandikhan station mantenace have been continued by the engineers and technicians of this station so that two out of three units are ready for production, but due to the low water level, the production capacity is limited.

(Source: KRG)