First Published: 2006-01-18

Iraq needs $20 bln to end chronic electricity crisis

US work carried out worth just one-tenth of money being spent on power plants: minister.


Middle East Online

By Deborah Haynes - BAGHDAD

Now, where is the right switch?

Iraq needs 20 billion dollars over the next five years to solve a chronic electricity crisis after US reconstruction funds failed to flick the right switches, the Iraqi electricity minister said.

"When you lose electricity the country is destroyed, nothing works, all industry is down and terrorist activity is increased," said Mohsen Shlash.

Power cuts are part of daily life for millions of Iraqis who paradoxically have an ever increasing need for energy because of an influx of electronic goods, such as air conditioners, over the past three years.

Total power production is lower than before the March 2003 US-led invasion, at about 3,700 megawatts, because of insurgent attacks and other reconstruction problems, according to a Western diplomat with expertise in the sector.

Pre-war production peaked at about 4,300 megawatts -- well under half of Iraq's potential capacity.

The United States earmarked 4.7 billion dollars for the neglected electricity sector in 2003, but much of the money has gone and there is little to show for it, Shlash said.

The Iraqi government has a few projects underway to rebuild or replace parts of the country's dilapidated electricity infrastructure, he added.

"But this is not enough. There is a big need to build more power plants and of course this needs time and money -- and we lack both," Shlash said.

"From this day, we need 20 billion dollars over five years to cover the expected increase in the (electricity) load and the necessary reserves."

Such funds, however, must appear quickly and go towards competitively priced projects by Iraqi firms, in contrast to much of the US money, which went to US primary contractors, with large overheads and huge security costs, Shlash said.

"The American donation is almost finished and it was not that effective. They did a few power plants, yes, but that definitely is not worth 4.7 billion dollars," said the minister, noting that some of the work carried out was worth just one-tenth of the money being spent.

Daniel Speckhard, director of the US-funded Iraq Reconstruction Management Office, painted a slightly rosier picture of the US efforts, which included projects to repair or rebuild many of Iraq's 32 power plants as well as maintenance work on transmission and distribution lines.

"Electrical services today as a result of our entire programme are more evenly distributed through the country than before the war, but as you are aware challenges continue in that sector," he told a news conference on Monday.

Power in southern and northern Iraq, where most plants are based, is slightly higher than before the war, when Saddam Hussein used to divert electricity to Baghdad, the Western diplomat said, speaking on condition of anonymity.

But now the capital and much of the central regions are suffering some of their worst power shortages, with just two to six hours of electricity per day.

Shlash said US reconstruction money would have gone further in the hands of Iraqi contractors who charge a fairer price and carry a lower security risk.

Had this happened, "by now we would have had very little power problems or maybe no power cuts at all," said Shlash.

A US official, also speaking on condition of anonymity, said Washington was increasingly contracting Iraqi companies for its electricity jobs.

But he insisted it had been necessary to employ large, foreign firms with experience in organising the projects at the start.

The Western diplomat, meanwhile, said progress on the US reconstruction front had been slow because Washington underestimated the dire state of Iraq's electricity infrastructure and the inadequate training of its technicians.

In addition, daily attacks on power stations and transmission lines further damaged the infrastructure, destroying or delaying repair work.

As a result, the United States pushed back a goal to lift Iraq's power production to 6,000 megawatts from the middle of 2004 to the end of this year.

Going forwards, Shlash said the 20 billion dollars needed to generate power 24 hours a day should come from Iraqi coffers or in the form of loans rather than slow-to-emerge donations from the international community.

Iraq, however, is severely strapped for cash. The electricity ministry asked for 1.8 billion dollars for this year's budget, but the government only approved one third of that amount, some 650 million dollars, said Shlash.


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