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Swiss-Swedish group ABB has won orders from the Ministry of Electricity in Iraq to deliver five fixed and 15 mobile 132-kilovolt substations that will help strengthen the power grid and provide electricity in central Iraq.

The government of Iraq is rebuilding the country and investing in its grid as part of its ambitious plan to develop its power infrastructure to meet electricity needs. The substation projects are supported by Swedish government financing.

As part of the projects ABB will also deliver key products like gas- and air-insulated switchgear, power transformers and  capacitor banks to improve power quality and advanced IEC 61850-based  automation, protection and telecommunication systems for control and monitoring of substation assets. The 15 mobile substations will enable fast electrification in some of the mostneedy areas.

Patrick Fragman, head of ABB’s Grid Integration business, a part of the company’s Power Grids division, said:

“The substations will help to improve the electricity supply by expanding capacity and strengthening Iraq’s power infrastructure. These projects add to our extensive installed base in the region and support our focus on growing markets, reinforcing ABB’s position as a partner of choice in enabling a stronger, smarter and greener grid.

”ABB is the world’s leading supplier of air-insulated, gas-insulated and hybrid substations with voltage levels up to 1,100 kV. These substations enable the efficient and reliable transmission and distribution of electricity with minimum environmental impact, serving utility, industry and commercial customers as well as sectors like railways, urban transportation and renewables."

(Source: ABB)

Iraq’s Institutional Performance Management System endorsed for implementation across Iraq’s Public Sector

The Council of Ministers has endorsed “Iraq Government-Wide Institutional Performance Management System” for immediate application across public sector institutions in Iraq. The system is a non-prescriptive business excellence framework for organizational management, designed to help organizations to become more competitive.

It provides a framework that allows public sector institutions to determine their current level of excellence and identify areas for improvement.

With the technical assistance provided by Iraq Public Sector Modernization Program under UNDP, who shared international best practices and standards, the system was developed by the Council of Ministers Secretariat (CoMSEC), in consultation with key Iraqi stakeholders, including the Federal Board for Supreme Audit (FBSA).

The system design was guided by the “European Foundation for Quality Management (EFQM)” standards. It was first piloted during the second half of the 2017 in the ministries of Electricity, Youth & Sports and Trade.  Lessons learned from the pilot were used to further refine the model for the implementation throughout the public sector.

UNDP Iraq supported the Government of Iraq’s preparedness to implement this innovative performance management system through a major capacity development program, which concluded on the 22nd of March, 2018.  This program benefited a total of 142 staff from 21 federal ministries and CoMSEC who received training in the fundamentals and procedures of the institutional performance management.

The Government of Iraq’s institutional capacity was further strengthened through the specialized training of a team of 20 Iraqi staff from CoMSEC and FBSA who will be leading the implementation of the new performance management system.  This team has successfully completed the European Foundation for Quality Management (EFQM) Assessor Training (EAT), the internationally recognized standard for performance management.

With this training, the team will be equipped with the skills and knowledge required to effectively assess the public sector institutions in the year 2018 and beyond. Effective public sector management allows the Government to set clear goals, monitoring the activities of the ministries in order to better allow it to expand on successes and correct deficiencies. This helps ensure that all Iraqis are better served by their government.

This nationally-owned and -led initiative falls within the framework of UNDP Public Sector Modernization Program support to Government of Iraq to reinforce its mechanisms for accountability and efficiency, IPSM works to support more efficient, accountable and participatory governance at national and sub-national levels in Iraq.

(Source: UNDP)

Australia Substantially Increases Support to Stabilization in Iraq

The Government of Australia has contributed an additional USD 13.5 million (AUD 18 million) to the UNDP Funding Facility for Stabilization (FFS), which finances fast-track initiatives in areas of Iraq liberated from the Islamic State of Iraq and the Levant (ISIL). This brings Australia’s total contribution since 2015 to USD 16.5 million (AUD 22 million).

UNDP Resident Representative for Iraq, Ms. Marta Ruedas, said:

“The progress being made is clearly visible across the country. Roads are being repaired, hospitals are reopening, electricity is being restored and people are returning to work. More than 60 percent of the almost 6 million people who fled during the conflict have returned home.

"UNDP deeply appreciates the timely and flexible funding provided by the Government of Australia, and while there remains a great deal of work to do, this generous contribution will help liberated areas get back on their feet.”

The Australian Ambassador to Iraq, H.E. Dr. Joanne Loundes, said:

“Australia is committed to the stabilisation and redevelopment of Iraq.  On top of restoring essential public services and rehabilitating critical infrastructure in liberated areas, the FFS prioritises projects that meet the needs of the most vulnerable, including women.  

"Gender equality and women's empowerment is a core part of Australia’s foreign policy, economic diplomacy and development work and I welcome the opportunity to support work that directly contributes to this objective.”

At the request of the Government of Iraq, UNDP established the Funding Facility for Stabilization in June 2015 to facilitate the return of displaced Iraqis, lay the groundwork for reconstruction and recovery, and safeguard against the resurgence of violence and extremism.

The Facility currently has more than 2,000 projects underway in 31 liberated cities and districts, helping local authorities to quickly rehabilitate essential infrastructure. Over 95 percent of all stabilization projects are carried out by local private sector companies, providing a key source of employment for local people.

(Source: UNDP)

Germany's Siemens has won a contract to add 700 megawatts (MW) to the Rumaila Gas Power Plant, which currently has a power generation capacity of 1500 MW.

Siemens will supply its highly-efficient SST-5000 steam turbines, ensuring the additional power supply comes at no extra fuel requirement while increasing the overall power plant efficiency to more than 50 percent by converting the facility into combined cycle mode.

This upgrade delivered by Siemens equipment will supply around one million Iraqis with clean and efficient electricity

Siemens was awarded the contract by Sinohydro, the Chinese state-owned hydropower engineering and construction company. The developer is KAR Electrical Power Production Trading FZE.

Previously, Siemens had supplied five of its SGT5-4000F gas turbines to the plant, which was one of the first large-scale gas-fired facilities installed and commissioned in Iraq in 2013. The upgrade works are scheduled for completion by 2020.

(Source: Siemens)

By Omar Sattar for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News. 

Electronic Vote Counting sparks Controversy ahead of Iraqi Polls

This year, for the first time, Iraq’s general elections will be conducted via a modern electronic system. The initiative is intended to reduce the possibility of fraud while expediting results in the May 12 elections, according to the Electoral Commission, which announced the completion of the new system April 9.

Yet the supposed advantages of electronic vote counting and sorting have not prevented some of those on the country’s electoral lists from expressing anxieties about the new scheme. It is feared that Iraq’s lack of experience, capacity and modernization when it comes to such a system might bring the results into doubt and under dispute, especially among losing parties or those with fewer seats in the new parliament.

In a meeting with Al-Monitor, the vice president of Iraq’s Electoral Commission, Rizkar Haji, discussed the details of the electronic system. He said, “This system was prepared by the previous commission [whose members were replaced in November], which contracted with the South Korean company Miru [Systems] to import equipment for the electronic counting, as well as 40 Korean experts to implement and maintain the devices.”

He said voters this year will “use a special [rubber] stamp instead of the customary pen to indicate their chosen candidate or list, and the devices will only read this stamp.” He said the electronic counting and sorting system is integrated into a box that receives ballots "and sorts them immediately.”

Haji said continuing technical training courses have been held to “prepare Iraqi cadres for working with modern Korean systems. Around 100 employees have been trained so far, with dozens more expected to be trained before the election.”

With regard to the possibility that the counting machines will malfunction, be misused or be subject to power outages, Haji said, “The devices are equipped with batteries to power them for 12 hours without electricity, while boxes at the 58,000 polling stations contain flash drives that record results immediately for backup, comparing them with the results from counting and sorting devices.”

He said the Electoral Commission is “wired to satellites that send results from each electoral center to the headquarters of the commission’s president in Baghdad, ensuring speed and enabling the announcement of results within hours.”

Haji said the electronic aspect will not be limited to vote counting and sorting. There will also be special hardware (imported from the Spanish company Nidra) that reads each voter’s card and records fingerprints to prevent the repetition of votes and to establish the actual number of voters.

The Electoral Commission did acknowledge that some pressure had been exerted by political parties to cancel the electronic count and return to manual counting and sorting. Although these entities were not named, the most prominent bloc adopting a stance against the electric method is the State of Law coalition led by Vice President Nouri al-Maliki. In a statement March 30, the coalition declared the need for “manual counting after the closure of booths in the presence of local and international observers, to not give any opportunity for skepticism about the integrity of the elections.”

The leader of the Supreme Islamic Council, Jalal al-Din al-Saghir, told Al-Ghad Press agency April 14 that fraud in the parliamentary elections is inevitable. He questioned the accuracy of the electronic count, emphasizing the possibility of cheating in the calculation of results.

In any case, a judgment about the efficacy of the electronic counting devices has not yet been issued by the Electoral Commission's specialized technical committees, which ensure that the equipment has been manufactured specifically for Iraq.

However, Basil Hussein, the deputy head of the Iraqi Center for Strategic Studies and an expert on electoral issues, told Al-Monitor that the center “has obtained information suggesting that the equipment imported by the commission suffers from a lot of stalling, contains batteries that are no good and cannot operate for long hours. It has not yet been subjected to tests by the committee and the only test it will undergo will be just days before the election.”

The commission said earlier this month that it will test the Miru system later in the month and could resort to a manual system as an alternative in case the electronic system does not work properly.

In terms of the possibility of fraud, Hussein said:

“The most worrying element is that the results will be sent via a satellite headquartered in an Arab country [the satellite server is in the United Arab Emirates], without any encryption. After 200 hours, they will then be sent encrypted to Baghdad, meaning that there is a vast window of time to penetrate the results. This raises a lot of questions about the purpose of spending $100 million on buying these miserable devices and around $166 million on electronic servers, while leaving 200 hours without any oversight of the election results.”

(Picture: Hand of a person casting a vote into the ballot box during elections, from Roibu/Shutterstock)

GE Power has installed its Advanced Gas Path (AGP) gas turbine upgrade solution at the Iraqi Ministry of Electricity’s (MOE’s) Najibiya Power Plant.

The solution is expected to enable the MOE to increase the duration between the maintenance inspections of the gas turbines. This will decrease the downtime of the turbines and improve the availability and performance of the plant, allowing each gas turbine to feed power into the national grid for longer periods, helping to meet the country’s growing energy needs. It will also help the MOE to lower annual operations and maintenance costs.

Mussab Almudaris, official spokesperson of the Iraqi Ministry of Electricity, said:

“We are focused on enhancing access to electricity for our people and one of the critical means to achieve this goal is to make the best possible use of existing power generation infrastructure. GE’s upgrade technology at the Najibiya Power Plant is helping us to do just that, supporting the delivery of electricity for longer periods of time from the same turbines. This was a much-needed solution, particularly with Ramadan, the month of fasting, and the hot summer months right around the corner.”

Operational since 2015, the Najibiya Power Plant is equipped with four GE 9E gas turbines, and runs primarily on heavy fuel oil (HFO) to generate a total of up to 500 megawatts (MW) of power that is fed into the national grid. The site is located in the southern governorate of Basra, close to the Iraq-Kuwait border – one of the hottest inhabited locations in the world, where temperatures often exceed 50 degrees Celsius.

The power generated at the facility is largely supplied to residents, businesses and industries in the area, and vital for the local population to cope with the extreme temperatures in Basra, helping to operate fans and air conditioners.

Joseph Anis, President & CEO of GE’s Power Services business in Africa, India and the Middle East, said:

“Access to uninterrupted electricity is a cornerstone of modern civilization and essential to a high quality of life ... GE’s Advanced Gas Path solution can help each turbine at the Najibiya Power Plant run for up to an additional three months per year when the plant is powered by heavy fuel oil, substantially increasing the amount of electricity available for both domestic and commercial use.”

In addition to providing the AGP solution, GE Power has also signed a five-year agreement in 2015 for the supply of parts, repairs and services at the Najibiya Power Plant. Furthermore, GE Power is providing round-the-clock on-site monitoring services for the gas turbines at the facility, whereby parameters such as the units’ temperature, vibration, speed and other indicators are continuously tracked and any disturbances immediately reported so the underlying issue may be identified and fixed to prevent faults and unplanned downtime.

Najibiya Power Plant is one of 8 sites where GE is installing a total of 36 AGP units under the Power Up Plan II. To date, over 130 GE turbines have been installed across Iraq and GE-built technologies generate up to 50 percent of Iraq’s power. The company has supported the development of the energy, healthcare and transportation sectors in Iraq for over 40 years and employs up to 300 people in the country, more than 95 percent of whom are Iraqi nationals.

(Source: GE)

The Iraq Britain Business Council (IBBC) has announced that Al-Nukhba-OFS FZCO has become the latest member to join the Council.

Al-Nukhba OFS is one of Iraq’s preeminent organisations, involved in numerous sectors of the economy with many years of experience and has developed strong relationships with a host of international companies.

Al Nukhba OFS started its business in 2005 as an investor in the Basra area in the specialized fields and expanded business areas in water and wastewater treatment plants and pre-drilling oil field services, logistics & custom clearance and oil field services.

Al Nukhba OFS provides services such as end-to-end logistics solutions and services along with of value added services to customize your supply chain to meet your precise goals and requirements. Their dedicated teams select and apply the exact resources you need to improve your business’s performance and provide flexibility for a dynamic marketplace.

Al Nukhba OFS has relationships with major companies for energy projects and has a contract with the Ministry of Electricity, Iraq and hold an exclusive HCL distribution contract with the Ministry of Industry & Minerals for AL Furat Factory. Al Nukhba is cooperating with major power companies i.e. Ansaldo Energia to develop the power sectors in Iraq and have strong support from Wood Group P&W through their Iraq Agent for the development of power section as well.

Al-Nukhba OFS are associated with numerous notable companies, such as Baker Hughes, ENKA, Eni, Scania, Daewoo, Petromid, KOGAS, Techno Engineering, TAAZ, Oilserv. Al-Nukhba OFS have successfully completed a number of projects for them, including mobilization/maintenance of RIG, Logistics and other life support services, Surveillance, Fuel & Manpower supply, Distribution & Warehousing, Camp & Site Preparation/Maintenance besides 4PL logistics and other subcontracting jobs and provide immigration services too.

Al-Nukhba OFS currently act as an agent, supplier and distributor for:

• Parker Trade Link International (A Supply Chain Management Company)
• Chesterton
• Bentonite, Calcium Carbonate and other minerals for all varieties
• Power Generator
• Nystrom Building Materials

(Source: IBBC)

The Kurdistan Regional Government (KRG) and Pearl Petroleum have signed an agreement to increase production of gas from the Khor Mor field later this year, to boost much needed electricity generation for the people of the Kurdistan Region and Iraq as a whole.

The 10-year gas sales agreement will enable gas production from Khor Mor field to increase by 25% later this year, from 320 million cubic feet per day currently to 400 million cubic feet per day.

Dr Ashti Hawrami, KRG Minister of Natural Resources, said:

“We are pleased to see the further commitment of expansion and investment by the companies and the anticipated growth in gas supplies will make a positive contribution to the growing domestic needs for more electricity.”

As part of a final settlement of arbitration in August 2017, Pearl Consortium, which is led by Crescent Petroleum and Dana Gas, committed to expanding their investment and operations in the region.

The companies plan a multi-well drilling program in the Khor Mor and Chemchemal fields, as well as installation of new gas processing and liquids extraction facilities. The overall aim is to increase gas production by a further 125% within two years, to 900 million cubic feet per day.

KRG also welcomes Dana Gas and Crescent Petroleum’s expansion of their local training and employment programs, as agreed in the arbitration settlement. The companies employ close to 500 full-time local personnel representing over 80% localisation, and have training programmes to increase this figure further.

See also the Dana Gas press release on the Gas sales agreement (external link)

(Source: KRG)

By Ahmed Mousa Jiyad.

Any opinions expressed are those of the authors, and do not necessarily reflect the views of Iraq Business News.

The Parliament voted in its session No. 14 of March 5, 2018 on a law reinstating the Iraqi National Oil Company-INOC.

Briefly, the law passed hastily at a critical pre-election time with clear populist politics orientations and motivations.

The law suffers from serious gaps and inconsistencies between the functions of the company and its organisational structure and composition of its management; creates two competing entities for the management of the petroleum extractive sector; it is a blatant afoul to the Constitution; converts sovereign revenues into commercial proceeds for a public company; assigns tasks that are not at all related to its nature as an oil company and, the most dangerous assertion, it legalises the breakup of the country.

Views expressed by its proponents manifest a tactic of known populist politics taking advantages of the national election campaign and thus contributing to the timing and passing of this damaging law; INOC deserves much better law than this.

The executive authority (the Council of Ministers) should act immediately to stop the promulgation process of the law; ask the State Consultative Council to examine the due legitimacy of the law and finally, challenge the constitutionality of the law before the Supreme Constitutional Court.

This was premised on the following assessment:

At the outset, it is necessary to make a caveat. The "final version" of the law was not published on the website of the Parliament; what was published on March 7 is the text of the "first reading" before the vote. The "final version" was posted to me by three parliamentarians; it is the version that was adopted in this evaluation after ensuring that the three copies were identical.

First, the text of the law is completely different from the draft law submitted by the government in April last year; so why and why now?

In the substantive, this is an imposed law by the parliament on the government, which turns the constitutional process upside-down and, thus, the legislative branch breaches the prerogatives of the executive branch. This would surely prompt the latter to invoke its constitutional rights before Supreme Constitutional Court; and it should do so..

Moreover, one could questions the motives and the timing as the country is in the height of the national election and thus, it is the time for populist politics by the proponents of the law.  They, i.e. the advocates of the law, assume that those in government are preoccupied with the election campaign and thus would dare to object to such populist appealing politics that is translated into specific provisions, i.e. Article 12, as discussed latter.

 

Second, the law attaches INOC to the Council of Ministers-CoM and gives its chairman the status of a Minister. In spite of INOC importance, there are serious concerns on this setup:

• There are absolutely no compelling and convincing justifications to or merits in attaching INOC, which is an oil producing company, to the highest executive authority in the country; it was never directly attached to CoM since its creation in the sixties;
• INOC, according to this law, deals with only one sub-sector of petroleum and, thus, this formula may cause damage and conflict in the management of upstream petroleum between two entities, each is headed by a minister. Case to remember is the trade of accusations and blame-game on power shortage and outage between the Ministries of Oil and of Electricity regarding the supply of fuel to power plants;
• The proponents of the law argued for the need to separate the “regulator”, i.e. MoO from the “regulated”, i.e., INOC. That is really absurd; how is it logically, organisationally and operationally possible to have a healthy and functional regulator-regulated relationship when the two entities have an unequal “legal” status and, moreover, when the regulated is attached to higher authority than the regulator!? Illogical and inconsistency and the outcome could very well be a chaotic relationship that could impact negatively the entire petroleum sector.

Ironically, the proponent of this arrangement consider this as “checks and balances”; they really and apparently do not understand what checks and balances entail and between what authorities.

 

Third: Among the objectives of INOC is, "investment in processing oil and gas industry"; this means investment in refining, gas utilisation and petrochemicals. Leaving rhetorical phrases that dominate the law, there is too much ambiguity regarding the above objective.

• Does the law consider INOC as “investment agency” and it should or could invest in the above mentioned activities/industries? Will it invest in the current or future projects or in its own projects? How it could do that while the law provide nothing in its structure and tasks on these activities;
• Currently, refining activities and gas processing are within the domain of MoO, while petrochemicals fall within the Ministry of Industry and Minerals-MIM. Yet, there are no representatives for the refining sub-sector, i.e. the three state refining companies: North-NRC, Central-MRC and South-SRC in INOC Board of Directors-BoDs;
• It is also strange that the two state gas companies, i.e. North Gas and South Gas were excluded from the list of companies owned by INOC and they are not represented on INOC BoDs. Obviously, gas related activities remain with the Ministry of Oil and this generates further complications, which the law ignores to address: I- it split the upstream petroleum activities between MoO and INOC; II- while INOC, under this law, is responsible for all fields contracted under the licensing rounds, the above split leaves in limbo all free gas fields contracted under third bid round; all gas utilisation provisions under second bid round and all gas discoveries under fourth bid round; III- the organic direct linkage between oil and gas issues since all current gas production is associated gas, which could have detrimental impacts on gas utilization and leaves gas flaring accelerating at a faster pace;
• Under current modalities, SOMO, the oil marketing company, is responsible for imports and exports of all petroleum products though it could assign some of these tasks to other entities, e.g. export of fuel oil through IOTC. Now, with SOMO been part of INOC and the latter is not part of MoO would create further hurdle especially for exporting excessive fuel oil, LPG, naphtha and condensate/NGL

 

Fourth, among the means INOC has to achieve its objectives is to "manage and operate the main oil pipeline network and ports of export." However, the state Oil Pipelines Company is not mentioned in the list of companies owned and associated with INOC; the same applies to southern oil export terminals, i.e. al-Basra Oil Terminal-BOT, Khor al-Amaya Oil Terminal-KAOT and the four single point moorings (SPMs). How could INOC manage and operate the pipelines of another company and ports of export it does not own?

To operationalise that, INOC has to conclude arrangements with MoO, but the law avoids specifying such requirements.

 

Fifth, the law did not specify INOC “organizational structure” except the composition of its BoDs, which was assigned that task when drafting INOCs’ bylaws.

But the law returns to restrict BoDs by stating, "INOC Board of Directors can, with the approval of the Council of Ministers, introduce any change to its organizational structure”.

 

Sixth, BoDs functions did not include any reference to the contracts (in terms of type, the power to sign and ratify, and the manner and stages of the contracting modality and other legal, procedural and operational aspects) to be concluded by INOC for the development of petroleum fields. This is a fundamental flaw, whether by intention or omission, and leaves the door open to conclude contracts afoul to the Constitution.

 

Seventh, SOMO occupies critical and significant importance, but this law is rather ambiguous about it.   The article specifying the functions of the Chairman of BoDs does not include any mention of SOMO, while the law links this company to the Chairman where it mentions, "directly responsible for supervising the oil marketing company".

Apart from the ambiguity of the law, this could create managerial complexities that could undermine SOMO operational flexibility in a highly competitive and volatile international oil market; the history of SOMO justifies very clearly such flexibility and thus it would be a grave mistake to ignore the obvious lessons of the distant and recent past!!

Probably, a way out from this impasse could be through:

• Appointing SOMO’ DG as INOC Deputy Chairman for SOMO matters;
• Any decision by INOC BoDs regarding SOMO should be subject to the agreement and approval of SOMO DG;
• In case of disagreement, that should be resolved by debating the matter before and by the decision of the Council of Ministers.

 

Eighth: The law included a paragraph akin to that has been repeated in the budget laws since 2015 that "obliges INOC to review the concluded service contracts and modify them to ensure the interest of the Iraqi people."

This rigid and politically motivated mind-set seems to be unaware that these contracts have been amended already and to the detriment of the Iraqi interests and any further amendments would be even more devastating.

It is also apparent that the advocates behind inserting this paragraph are behind leaving the mention of the contracts type (discussed above).

It is strange that this text was included in the specific paragraph on "the management of service contracts that were concluded in the bid rounds ", while the law mentions nothing at all to the, illegal as officially declared by the government, production sharing contracts of the KRG!!!

 

Ninth, the law comprises too many generalities that are not directly related to the nature of national oil company work; undefined terms for BoDs; complete exclusion of KRG petroleum, though the "Undersecretary of the Ministry of Natural Resources in the Region" is includes in INOC BoDs among others.

 

Tenth, but the most ridicule, disintegrative, destructive and unconstitutional aspects of this law is those covered by Article 12. Moreover, the proponents of this law have actually expressed confused inaccurate and shallow understanding of basic issues and known terms and concepts they themselves use such as “Alaska model”, “checks and balances”, “renter state”, “role and functions of INOC”, “oil and gas ownership”, “societal forces” among others.

This (Article 12) must be completely deleted from the law for the following reasons:

• It considers revenues generated from the export and sale of oil and gas as "financial revenues for INOC”. This is a flagrant violation of the Constitution, which states that oil and gas belong to the Iraqi people and not a financial return to one public company. Moreover and as mentioned earlier, gas industry and gas companies were excluded from INOC so what are the legal premises that make gas revenues income to INOC?
• Currently, as have been the case since early years of the Iraqi state, petroleum export revenues are, legally considered sovereign revenues, and in the international standards they are managed by sovereign entities namely the Ministry of Finance and Central Bank of Iraq. Thus, such revenues acquire good degree of sovereignty protection under international financial law and international banking and financial institutions. By considering these state sovereign revenues of oil exports as financial revenues for a public company deprives these revenues of the sovereign status and thus exposes them to all forms of seizure and confiscation in implementation of any judicial action in any place where the proceeds exist. This exposes oil export revenues to many high risks.
• The law gives the unelected limited number of INOC BoDs the supreme powers and authority to effectively determine the contribution of oil export revenues in the annual state budget and thus decides the welfare and development of the entire economy! This means that INOC BoDs becomes more important than the Ministry of Finance, the Central Bank and the Cabinet in determining the level of budget expenses; hence the Fiscal Policy, the Monetary Policy and Development Policy all became captive to INOC BoDs. What a non-sense!!
• The Law authorizes INOC BoDs to establish, finance and manage financial entities that are not related to the nature of its activities as an extractive oil company. These entities are the “Citizens Fund”, “Generations Fund” and “Reconstruction Fund”. It is rather strange that these entities, which are usually the functions and powers of the government, especially the Council of Ministers and related ministries, become the exclusive authority of INOC BoDs under this law!

The proponents of this article seem to repeat the same misguided views they insisted on more than ten years ago when they inserted the same funds into the ill-fated oil and gas law and thus contributed to the demise of that law. Strangely enough they argue that these measures by INOC BoDs would end the “renter state”! What a gross misunderstanding of a deep and complex macro structural issue, which what renter state really means, and what it entails of structural changes in the real economy sectors.

 

Undoubtedly, these three funds are important and urgently needed but INOC has absolutely nothing to do with them. They should be considered and debated thoroughly, explore best possible way to create, manage and fund them through well-articulated legal and institutional framework and transparent governance; as I have debated them previously.

• This article provides the legal cover for disintegrating the country by legalising the breakaway of the producing provinces. “One of the architects behind the new law” was reportedly said the following on the importance of Citizens Fund, “If Basra decides for tomorrow to be independent and sell their oil and gas without INOC. INOC is a window for upstream and marketing, okay? If they decide that fine, it's your decision, but you will not get your share in that fund. Basra people will not [receive] it, because you are not delivering oil and gas to INOC.” What a shocking, irresponsible and misguided statement!!

First, Basra oil company-BOC produced, in January 2018, 73.6% of total Iraqi production; Basra people would be better-off to keep this percentage against losing their share in the Citizens Fund, which is almost nothing compared with what they will keep. Moreover, their action according to this law is fully legal. The same applies to Missan province, which produces 10.6% of total Iraqi oil production, and so on;

Second, if Basra, Missan and any other oil producing provinces apply this law and keep the revenues of “their” oil what will be left to INOC BoDs?? Nothing, and that terminates the existence of INOC!!

Third, if the above occurs then the constitutional basic principle of “oil and gas are owned by all people of Iraq” would be grossly and emphatically violated.

Fourth, in consequence to the above, the country will practically disintegrate and most likely severe civil war irrupts and regional conflicts escalate.

Hence, the unconstitutionality of this law becomes apparent and why it is very doubtful, therefore, that the proponents of this article have never understood the Constitution correctly though they keep referring to it!!!!

• Also this Article 12 provides the legal cover for formalised corruption and Kleptocracy by assigning to the above three Funds at least 10% of the revenues of the oil exports at the discretion of INOC BoDs. Apart from the high likelihood of abusing such significant funds, a newly reinstated INOC does not and would not have the capacity to manage these funds and thus could derail the company from performing its core functions and duties as an oil company concerns with the development of the upstream petroleum.

In the light of the above it is vital and absolute urgency that:

1. The Executive Authority (Council of Ministers) to immediately move to interrupt the process of promulgating this law with the President of the Republic (to hold his approval of the law) and with the Ministry of Justice (to suspend publishing the law on the Official Gazettes- Alwaqee Aaliraqiya);
2. The Council of Ministers should request the State Consultative Council to review and identify the illegality of the law;

3 - The Council of Ministers should challenge the constitutionality of the law by launching an appeal before the Supreme Constitutional Court.

INOC deserves much better law than this as this law would disintegrate the country and thus must be revoked.

Norway

12 March 2018

Earlier Arabic text was circulated 8 March 2018 among my network and posted on many websites including: http://www.akhbaar.org/home/2018/3/241534.html

 

My previous writings on INOC law can be accessed as below:

For Effective and Relevant Law for Iraq National Oil Company-INOC (in Arabic, with Tariq Shafiq), Posted on 19 May 2017 on IBN website https://www.iraq-businessnews.com/2017/05/19/for-effective-and-relevant-law-for-iraq-national-oil-company-inoc/ ) and on many other websites.

The New INOC Law: Brief and Dysfunctional, Posted on 24 April 2017 on IBN website https://www.iraq-businessnews.com/2017/04/24/the-new-inoc-law-brief-and-dysfunctional/ the Arabic text was published by Assabah Aljadeed (NewSabah) Newspaper, Baghdad on 26 April 2017  http://newsabah.com/newspaper/119474

Proposed INOC Law Could Disintegrate Petroleum Sector and Damage the Iraqi Economy, Posted with updated 16 & 22 March 2016 on IBN, https://www.iraq-businessnews.com/2016/03/16/proposed-inoc-law-could-disintegrate-petroleum-sector/  Also posted on the Iraqi Al-Akhbar  http://www.akhbaar.org/home/2016/3/208752.html  and  http://www.akhbaar.org/home/2016/3/209136.html

Article-by-article analysis of INOC Law. Expert Opinion submitted before the Experts’ Hearing Session, Oil and Energy Committee, Iraqi Parliament. 3^rd July 2011, Posted on: http://iraqog.com/oil/oillaw/jiyadjuly2011.htm; and https://www.iraq-businessnews.com/2011/07/07/detailed-analysis-of-draft-inoc-law/

INOC Law: Shaky Premises and Doubtful Prospect, MEES v54:n20, Monday 16 May 2011.

Remarks on the Proposed INOC Law. Presentation delivered before MENA 2009 Oil &
Gas Conference, Imperial College, University of London, UK. 28^th- 29^th September 2009.
http://www.targetexploration.com/MENA09.pdf and published on MEES 52:40, 5 October 2009.

Technical assessment of the INOC Law. Posted on Iraq Oil Report http://www.iraqoilreport.com/the-biz/technical-assessment-of-the-inoc-law-2121/

The new draft INOC law takes us back to square one” posted on Energy Intelligence http://www.energyintel.com/n/portal/iraqs-second-oil--gas-bid-round.aspx

 

Please click here to download the full article in pdf format.

Mr Jiyad is an independent development consultant, scholar and Associate with the former Centre for Global Energy Studies (CGES), London. He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN organizations in Uganda, Sudan and Jordan. He is now based in Norway (Email: mou-jiya(at)online.no, Skype ID: Ahmed Mousa Jiyad). Read more of Mr Jiyad’s biography here.

By John Lee.

Iraq’s Minister of Electricity Qassim Mohammad al-Fahdawi has met with a visiting delegation from Tehran headed by Iran's Minister of Industry, Mine and Trade, Mohammad Shariatmadari.

They renewed for an additional year a contract under which Iran sells electricity to Iraq.

Through four major supply lines, Iran sends 1,000 megawatts of electricity to Iraq.

(Sources: Ministry of Electricity, Rudaw)