Iraq reduces its external debt…1.5 billion dollars

Iraq reduces its external debt…1.5 billion dollars

2024-04-03 11:02

Iraq reduces its external debt...1.5 billion dollarsShafaq News/ The Iraqi Council of Ministers decided, on Tuesday, to reduce the country’s external debt by one and a half billion dollars, while taking a number of service and energy-related decisions.

The Prime Minister’s Media Office stated in a statement received by Shafaq News Agency that Prime Minister Muhammad Shiaa Al-Sudani chaired the fourteenth regular session, in which the general conditions in the country were discussed, and a number of vital files in the economy and services were discussed, in addition to discussing the topics listed on Agenda and making decisions and recommendations thereon.

The Council approved reducing the external public debt and regulating the borrowing process, and adopting the recommendation of the Ministerial Council for the Economy No. 24207 of 2024, which included the approval of the Customs Order Committee’s recommendation No. 23942, related to external debt. The recommendation included:

1- The Ministry of Planning’s study of projects canceled from loans; To discuss the possibility of including it with funding sources from the federal general budget.

2- The Ministry of Finance will verify the existence of any financial obligations that may result from canceling these projects with the loan donors when implementing the decision.

3- Cancel delayed loans, worth $1.05 billion, and complete important projects from government funding sources.

4- Canceling borrowing requests worth $5.8 billion for the Basra water desalination and sky train projects, financing the first project from the regional development budget, and financing the second project by offering it for investment.

5- Reducing the current external public debt, amounting to $10.5 billion, to $8.9 billion.

6- Redirecting World Bank loans for lagging projects and other surpluses towards implementing the vital railway link project (Faw – Rabia – Fish Khabour).

7- Contracting with an international financial consultant to audit and manage foreign debts in the future.

The Council voted on:

1- Increasing the reserve amount and the total cost of the project to build 29 schools of different capacities, using the prefabricated construction method, by 4 schools in Dhi Qar, 7 in Maysan, 5 in Karbala, 3 in Muthanna, 6 in Diwaniyah, and 4 in Najaf.

2- Increasing the total cost of the rain conveyor lines project/m3, with the two lifting stations (46SL) and (47SL), the left side of the city of Mosul, which has been runway since 2012.

3- Increasing the total cost of the component (implementing the second phase of developing the University Corniche in the city of Kut).

4- Increasing the total cost of the furniture furnishing component, in the project to rehabilitate the two buildings of the National Center for Administrative Development and Technology (B and 2A), which has been listed since 2021.

5- Increasing the total cost of the construction component of the Fallujah University Presidency building, which has been listed since 2010.

6- Increasing the total cost of the project (Al-Rashid district sewers) included since 2012, with an increase in the amount of reserve for the component (preparing a study and designs for a sewage treatment station project with rain networks, secondary and main heavy sewers, and lifting stations) in Al-Rashid city, Baghdad Governorate, with preparation, implementation and operation. And maintenance of the first stage.

Within the framework of supporting the agricultural sector and farmers and supporting the national product, the Council of Ministers approved the continued receipt of the local wheat crop in full from farmers (within and outside the approved plan) for the current season.

In the energy file, and based on the Federal General Budget Law, and instructions to facilitate its implementation, the Council of Ministers approved the recommendations of the Sovereign Guarantees Committee, held on March 24, 2024, regarding the project (Bin Omar gas field investment), according to the following:

1. Amending Cabinet Decision No. 23693 of 2023 to make the guarantee amount indicated in the aforementioned decision a debt guarantee and not a payment; Because what was stated in the decision represents the amount of the loan payment guarantee with the interest resulting from it according to the economic model of the Bin Omar field gas project and is not a payment guarantee.

2. Issuing a sovereign guarantee (debt guarantee) with interest to the lending banks in a total amount of ($3,246,000,000), with interest, for a period not exceeding (11) years for the Bin Omar field gas project, after the Ministry of Oil/South Gas Company amended the contract, By organizing a contract addendum to determine the scope of the government guarantee.

3. Excluding the aforementioned guarantee from the provisions of Article (17) of the aforementioned instructions.

4. Excluding Halfaya Gas Company from Cabinet Resolution (219 of 2020); Because it is a company that does not have previous accounts, and that it was established for the purpose of establishing (Bin Omar Field Gas Project), provided that Raban Al Safina Company submits the financial accounts for the previous two years to the Ministry of Finance, audited by one of the reputable, accredited auditing companies, after the Halfaya Gas Company submits evidence that it is a branch. From this company.

It was also approved to exclude KEPPT from the qualification criteria and exemption from the instructions for implementing government contracts (2 of 2014), and to extend an exclusive invitation to the company to invest in the Ajeel field only, provided that the company pledges to include within its consortium one of the companies qualified for oil licenses and submits a pledge to do so.

The Council of Ministers approved the recommendations of the Sovereign Guarantees Committee regarding (Al-Khairat Steam Station), as follows:

1- Granting a debt guarantee for the first phase only (1400 MW), in favor of Harlow Company, for the Al-Khairat Thermal Power Station project, which is valid for 15 years, including 4 years for the period of construction of the station, and in the amount of 3 billion dollars, according to the following conditions:

– The Ministry of Electricity signed a contract addendum with Harlow Company, which includes transferring ownership of the Al-Khairat Thermal Station to the Ministry of Electricity, after the expiration of the 25-year power purchase contract (BOOT).

– Granting a payment guarantee for the purchase of energy, after the debt guarantee runs out for 15 years, according to the amount of energy that will be purchased for the remaining period of the purchase contract.

– Amending the guarantee for filling the first and second phases (2800 MW), in the event that the completion rate of the first phase reaches 70%, provided that it includes transferring ownership of the first and second phases to the Ministry of Electricity, after the expiration of the term of the energy purchase contract for the two phases.

2- Harlow Company will pay ($10 million) fees for issuing the guarantee for the Al-Khairat Thermal Power Station project, provided that the project’s financial closing date is December 31, 2024.

3- The guarantee is not considered effective unless the aforementioned conditions are met by the Ministry of Electricity, and it is presented to the Council of Ministers for approval to issue the guarantee.

4- Taking into consideration the requirements set forth in Cabinet Resolutions (476 and 477) of 2021, and Ministerial Energy Council Recommendation No. 162 of 2021.

Based on the directives of the Prime Minister in implementing the government’s approach to supporting the private sector, the Council agreed to the following:

1- Modifying the price of products (naphtha, natural gasoline, and condensates) to include unifying the percentage reduction in their prices to become 50% of the global price of the product prepared for dye factories, and 60% of the global price of the product prepared for hydrogenation, and support will be for investment projects that obtain License, in accordance with the amended Investment Law (13 of 2006), equal to the support granted to approved projects, in accordance with the Industrial Investment Law (20 of 1998).

2- Approval to amend the price of the processed LPG product to include the price of (415 thousand dinars per ton) for the product supplied to the battery recycling and production plant and similar cases of an industrial nature, and to the price of (330 thousand dinars per ton) for the product supplied to modern brick factories. The above prices will be reviewed after one year.