ERBIL, Kurdistan Region – Saudi Arabia will sell Iraq electricity generated by a new solar power station at a fraction of the price currently charged by Iran, a Baghdad official reportedly told a western business news wire on Sunday. Together with a raft of new business deals with Erbil, Riyadh’s move looks like a bold effort to counter Tehran’s influence.
The Saudis have potentially agreed to sell Baghdad electricity generated by the new plant at a knock-down price – cheaper than power supplied by Tehran, Bloomberg reported Sunday, citing comments by Iraq’s Ministry of Electricity spokesman Mussab Serri.
However, the Iraqi Ministry of Electricity issued a statement on Monday denying its spokesman had given Bloomberg deals on the deal. It is not clear if the ministry chose to deny Serri's remarks in order to preserve relations with Iran.
“Mussaid Serri, spokesperson for the Ministry of Electricity, denies he has spoken to the US-based Bloomberg agency about details of an agreement with Saudi Arabia,” the ministry said on its website, adding the information provided by the agency “was incorrect.”
Based on the deal, the Gulf kingdom would reportedly construct a 3,000-megawatt plant in one year’s time and then sell the electricity to Iraq for $21 per megawatt-hour, a quarter of the price offered by Iran, Bloomberg reported.
Throughout July, Iraq’s southern provinces were rocked by widespread protests over the government’s failure to provide consistent electricity and water.
Recent blackouts were caused by Iran cutting electricity to Iraq.
Iran’s energy minister said on July 17 that high energy consumption during the hot summer months had forced the country to stop exporting electricity to neighboring Iraq.
Several cities in Iran, including the capital Tehran, have experienced daily power cuts for hours at a time because of high demand and a shortage of water to keep power stations running.
With Iran’s economy already struggling under the weight of forthcoming US sanctions, Riyadh has a rare opportunity to exploit its rival’s weakness and draw Iraq and the Kurdistan Region into its sphere of influence.
A Saudi delegation headed by Sami Bin Abdullah al-Obeidi, head of the Kingdom of Saudi Arabia’s chambers of commerce, visited the Kurdistan Region on July 23, to explore possible investment projects.
Kurdistan Region Prime Minister Nechirvan Barzani met with the delegation, assuring “all readiness for supporting and facilitating Saudi Arabian investment in the Kurdistan Region”.
Sunni Saudi Arabia has been locked in a geopolitical standoff with the Shiite Islamic Republic of Iran for decades.
Following the US withdrawal from the 2015 Iran nuclear deal in May, Riyadh backed Washington’s new wave of sanctions on the Iranian oil industry, promising to increase its own oil production to meet the shortfall.
Both the Saudis and the US accuse Iran of meddling in Iraq, Syria, Lebanon, and Yemen.
Updated 7.40 p.m.
