Iran ramps up power flow to Iraq despite debt

EghtesadOnline: Iran has stepped up electricity exports to neighboring Iraq even as the Arab country owes the Islamic Republic $800 million in outstanding debts over power purchases.

News ID: ۷۷۶۳۶۶

20 May 2017

Baghdad has just cleared another $50 million of its $1.2 billion debt which has accumulated over years to Iran, Deputy Energy Minister Houshang Falahatian said.

The balance from the outstanding dues now stands at $800 million, taking into account the first installment of the debt worth $350 million which Iraq had already paid to Iran, he added.

Iran’s electricity exports to Iraq have steeply risen this year, hitting 1,350 megawatts recently, according to Falahatian.

According to PressTV, the Islamic Republic sells electricity to a number of countries, with Falahatian saying the exports have risen three-fold over the past two months against the same period a year before.

Iran was reportedly exporting some 1,500 MW of electricity to Iraq as of November 2016, when the country defaulted on its payments. Plans were to increase exports to 2,000 MW. At the time, Falahatian said that Iraq owed Tehran money for over a year of power supplies, adding that ways of addressing the problem were being discussed.

While the discussions lasted, Iran cut off the power supply to its neighbor over the first two months of 2017, but in March started ramping up deliveries again.

The two countries are also discussing shipment of Iranian gas to Iraq through two pipelines.

Iran’s Minister of Petroleum Bijan Zangeneh traveled to Baghdad in February at the head of a delegation to review energy agreements between the two neighbors.

The oil-producing neighbors signed an agreement in 2013 under which Iran would start exporting gas to Iraq to feed three power plants in Baghdad and Diyala but exports have not begun yet.

Iran is about to send 25 million cubic meters (mcm) a day of gas to Sadr, Baghdad and al-Mansuriya power plants through a 270-kilometer pipeline, with the volume rising to 35 mcm/d during the summer.

The Islamic Republic has another plan to ship 50 million cubic meters of gas per day through a separate pipeline to Basra for electricity generation.

In July 2015, Iran said it was building a natural gas combined cycle power plant in the southern Iraqi city.

The project implemented by Iran’s MAPNA Group aimed to add 3,000 megawatts to Iraq’s national grid which is saddled with acute shortfalls at its current 8,500-megawatt capacity.