Energy Minister Asks Iraq to Settle Huge Energy Debt

The two sides discussed issues of mutual interest, namely in the key energy sector. Ardakanian asked his Iraqi counterpart to clear debts related to gas and electricity export to Iraq, IRNA reported. The two sides also exchanged views on expanding cooperation in other economic sectors. 

He also called on the Governor of Iraq Central Bank Mustafa Ghalib Makhif. The two men discussed ways and means for clearing the long delayed Iraqi debt to Iran.

In talks with the Iraqi Trade Minister Alaa Ahmed al-Jubouri the two explored ways to expand trade between the two neighbors.

The Iranian delegation discussed effective mechanisms to bolster private sector cooperation and holding a joint economic commission.

An estimated 20 million cubic meters of gas is exported to the Arab neighbor every day (worth at least $200 million per month). However, Baghdad has not settled the debts for more than a year.

On Dec. 27 Iraq Electricity Ministry said in a report that Iran plans to cut its gas shipments to Iraq due to outstanding payments.

The report added that Iran intends to lower gas supply to cash-strapped Iraq to 3 million cubic meters per day.

According to published reports, the last time the neighbor cleared a part of its large debt was last year when it paid $2 billion and after that none of the bills have been paid. Iraq's debt to Iran for electricity and gas imports is around $2 billion.

Iraq is the biggest importer of Iranian electricity for more than a decade. It needs more than 23,000 megawatts of electricity for domestic demand but decades of war, the US military invasion, civil strife and terror attacks have ravaged its power infrastructure. 

Iraq has a 7,000 MW power deficit and large parts of the country have for years struggled with systematic blackouts of several hours a day. The country depends on Iranian gas to feed three power plants—Rumaila, Shatt al-Basra and al-Najibiyah — to partially offset the blackouts.