Abu Dhabi, UAEMonday 21 October 2019

US still mulling waiver for critical Iraqi gas purchase from Iran

Without the Iranian gas, Bagdhad will struggle to keep electricity flowing through the hot summer

A man checks the wiring on electric cables reaching out to homes in Saadoun Street in the Iraqi capital Baghdad. AFP
A man checks the wiring on electric cables reaching out to homes in Saadoun Street in the Iraqi capital Baghdad. AFP

The United States is yet to decide on whether to continue allowing Baghdad to buy energy from Iran without facing sanctions, raising uncertainty about electricity supplies as Iraq grapples with shortages made worse by summer demand.

Electricity is an explosive political issue in Iraq, seen emblematic of rampant corruption in the political system and the bureaucracy. Summer blackouts in 2018 triggered mass protests among mostly underclass Shiites in southern Iraq, which the authorities met with deadly violence. The Iranian consulate in Basra was torched in the unrest.

A spokesman for the US State Department told reporters in Washington that Secretary of State Mike Pompeo has not made a decision whether to extend a 90-day US waiver that allows Iraq to buy gas from Iran as fuel to help generate Iraqi electricity. The deadline for renewing the waiver is May 2.

Mr Pompeo was in Baghdad on May 7 as tensions escalated between Tehran and Washington. Iraqi sources said Mr Pompeo pressed Iraqi officials on the issue of a multitude of Iranian-backed Shiite militias seen as posing a threat to US forces in the region. Many the militias have acted outside the authority of the government since they were formed in 2013-2014 to fight ISIS or to act as a major component of the ground Iranian support for Syrian President Bashar Al Assad.

Iraq's Electricity Minister spokesman, Musab Al Mudaris, said last month that Iraq would lose 4,000 megawatts of electricity, equivalent to a quarter of Iraq’s production capacity if the US decides to end the sanction waivers.

While Baghdad is in talks with several international companies to increase the domestic supply of electricity to bridge the shortfall, plans could take years to be completed.

Iraq relies heavily on Iranian gas imports to generate electricity and has a capacity to produce an estimated 16,000 megawatts, still massively short of the 24,000 to 30,000 megawatts of demand. Before UN sanctions were imposed on Iraq for its invasion of Kuwait in 1990, Iraq’s electricity production comfortably exceeded demand.

The Trump administration gradually tightened sanctions on Iran but granted eight countries exemptions allowing them buy Iranian energy products. Washington announced the end of the exemptions on Monday. Iraq had received separate extensions to continue importing Iranian gas, the latest was an extra 90-day waiver in March.

Updated: June 2, 2019 09:34 AM