Iraq solves the electricity crisis with the money of others, so where does its money go?

Iraq solves the electricity crisis with the money of others, so where does its money go?

3-9-2023

Iraq has large financial reserves, and despite this, the government chose to solve the electricity crisis with the money of others, through contracts with private companies that enable them to rebuild the sector and sell electricity to citizens, while corruption networks continue their methods of plundering Iraq’s money and resources.

Baghdad – The electricity crisis in Iraq is closely linked to the governments after the US invasion of Iraq in 2003, until it became a symbol and a title for corruption in the new regime established by the invaders and subject to the control of Iran for two decades.

Since electricity is a vital and indispensable commodity, acts of corruption in it provided quick avenues for enrichment and financing of political groups. But the discovery of new ways of plundering resources now provides opportunities to solve the electricity problem.

The new methods rely on currency trading and money smuggling through daily offers organized by the Central Bank to buy hundreds of millions of dollars daily. It is a faster and more secure method than the complex and suspicious contracting methods associated with buying gas from Iran or equipping power plants with machinery and maintenance contracts.

The importance of these methods lies in the fact that they allow not only to get rid of the electricity problem, but also for the new methods to be financed indirectly. With the exception of maintenance and operation service contracts for existing power plants, the energy production plants that Iraq desperately needs are being funded by external “investments”, meaning that Iraq will keep its money (to continue the cash transfer trade) while foreign companies finance the construction of new plants and collect returns from their investments for decades. coming of time. This is similar to the manufacture of an energy source, for which citizens pay, while the state contributes only a small part of the responsibility for the purposes of covering the costs of services, not the costs of assets, which makes it unconcerned with the revenues earned by the companies that own those assets.

The groups that dominate the political system have devised different methods to plunder through state contracts in the areas of health, education and other basic services, but this method provides them with a way to make oil revenues the main source of resource plunder.

Electricity is a vital and indispensable commodity and its corruption has provided quick avenues for enrichment and financing of political groups in Iraq

Iraq’s oil revenues in the past twenty years amounted to more than 1124 billion dollars. It is strange that all this money was spent without solving a single vital crisis such as the problem of electricity.

All current and former Iraqi government officials criticize corruption and call for combating it, but as a pun and to absolve oneself. This is something that has become very familiar, even to ministers and prime ministers who have looted hundreds of billions of money during their time in power. There are no ways to prosecute them, because they depend in their actions on “blocking investigations” that could affect them.

In preparation for larger investment contracts, the government signed three contracts with the German company “Siemens” to rehabilitate three electric power stations. It includes “rehabilitation works” for the Kirkuk stations, and two other stations in Baghdad, which are Al-Rashid and Al-Sadr, and the service stations will last for five years, and they are stations that produce up to 1,400 megawatts.

The government of Muhammad Shia’ al-Sudani boasted that it had reduced the cost of contracts by 30 percent. However, these contracts, which cover only a limited part of the required production capacity, pave the way for other basic investments by Siemens and other foreign companies such as the American General Electric, and Chinese companies that have been contracted recently.

Existing service contracts target initial infrastructure repairs. They merely constitute guarantees that the Iraqi government will commit to providing funds for other reforms so that it becomes reasonable for foreign companies to come in with their own money to invest in rebuilding the electricity sector.

The current reality is very bad, not because it depends on importing Iranian gas while Iraq burns the gas associated with its oil production, but because it depends on a dilapidated infrastructure as well. Based on this structure, all that Iraq produces of electric energy amounts to about 24 thousand megawatts, while the actual needs amount to 32 thousand megawatts only in order to address power outages from homes. As for industrial needs, they exceed 24,000 megawatts, which means that Iraq still needs generating stations sufficient to produce at least another 32,000 megawatts, which provides energy companies with opportunities to make huge profits, which the Iraqi treasury could have turned in their favor. , Even with the possibility of contracting to purchase complete power plants, or to build nuclear power plants, at costs ranging between 15 and 20 billion dollars, sufficient to meet Iraq’s needs and make profits.

Observers say that Iraq, which has financial reserves amounting to 115 billion dollars, and produces about 5 million barrels of oil per day, does not need external funds to cover the costs of building new power stations. However, the current government wants to keep the money for other purposes, without noticing that the price will be paid by consumers of electricity produced by those companies, including the government itself.

On the surface, the matter seems like an “achievement”, but in fact it is intended to provide an opportunity to continue spending money in the ways that exist now and in the old ways as well, that is, spending money on imaginary projects or that are not being accomplished. While the government does not cost anything to build energy production plants, it “singles” the funds of the public treasury for the same purposes that led to the loss of hundreds of billions of dollars before.

There is a long line of examples of the above waste. The former Iraqi Minister of Electricity, Qassem Al-Fahdawi, stated in statements that followed his resignation in 2018 that “some believe that the electricity problem is solved by the ministry only, but the truth is that the problem is intertwined and the ministries of oil and finance and the security services are involved in the context of conflicts that depended on the stability of the supply of electric power in the Iranian artery.” .

He added, “The Ministry of Oil, since 2008, promised to provide gas in 2013 for all stations, and on this basis, the Ministry of Electricity went towards contracting to obtain stations, and after the arrival of the latter, the Ministry of Electricity found that gas was not available to those stations, which forced it to contract with Iran to supply gas.”

As for the Minister of Electricity, who was preceded by Abdul-Jabbar Laibi, he tried to invest gas in the Nahran Omar field, but he faced obstacles set by pro-Iranian parties to prevent benefiting from this field, which “could have provided 75 percent of the amount of gas coming from Iran at a very small cost.”

And after Iraq’s debts to Iran amounted to about $11 billion from unnecessary gas deals, reducing the use of Iranian gas has become an acceptable goal, even for Iran itself, as long as the business of smuggling dollars to it, through banking facilities, will remain.

Another resigned Minister of Electricity, Majid Mahdi Hantoush, revealed that about $80 billion was spent on the electricity sector from 2003 to 2021 as an operational and investment budget, but production remained limited, not exceeding 17,000 megawatts.

Now there is no need to continue in that complex game of purchasing equipment and sabotaging it to buy others, or signing fake contracts for its maintenance. It has become possible for the Iraqi government to rely on foreign companies that come with financing to produce electricity, while the Iraqi government takes the stand of spectators who claim to have achieved an “achievement” and spend what they have on what they are still spending before.

Iraq, which receives revenues from energy exports (oil), will return to pay the price from energy imports (electricity) produced by foreign companies, meaning that what comes to its right hand is dissipated from its left hand.

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