The aim of the deal is to boost Iraq’s electricity production by 1690 megawatts (mw) by restoring and reopening Baiji’s two power plants, which were badly damaged by ISIS.
Luay al-Khateeb, Iraq’s electricity minister, said its strategic partnership with Siemens has entered its second phase.
“The new deal is part of the long-term plan that the Ministry of Electricity has prepared to increase electricity production in all Iraq, specifically in newly liberated areas,” Khateeb said.
“The deal will increase Iraq’s electricity production by 1690 mw.”
The deal was signed during the Iraq Energy Forum 2019 – an annual event held in Baghdad where Iraqi ministers rub shoulders with businessmen and energy experts. Mohammad Sanusi Barkindo, the Secretary General of the Organisation of the Petroleum Exporting Countries (OPEC), is a regular guest.
The project will take up to 28 months to be completed, according to Iraq’s Ministry of Electricity. New electricity distribution networks will also be established in Baiji, it said.
The two Baiji power plant complexes are able to generate 1690 mw. One has a capacity for 676 mw while the other can generate 1014 mw.
Baiji in Sunni majority Saladin province, 210 kilometers north of Baghdad, is home to Iraq’s largest oil refinery and a large power plant.
In June 2014, ISIS captured the town of Baiji. Although the oil refinery remained under the control of the Iraqi army’s ‘Golden Brigade’ special forces, it halted production for more than 10 months during the fighting.
The power stations were less fortunate, sustaining serious damage in the fighting.
Iraqi forces, alongside the Popular Mobilization Forces (PMF) – known in Arabic as Hashd al-Shaabi – supported by coalition airpower, regained control over Baiji in October 2015.
Since the US withdrew from the Iran nuclear deal in May 2018, Iraq has been under pressure from Washington to stop importing Iranian energy. Doing so would require it to bolster domestic production and to find alternative regional suppliers.
To offset its chronic power shortages, Iraq imports around 1,400 mw of electricity and 28 million cubic meters (988 million cubic feet) of gas for its power stations from neighboring Iran, which together makes up about a third of Iraq’s power supply.
That reliance has angered the US, which slapped tough sanctions on Iran last year but has granted Iraq several temporary waivers to keep purchasing Iranian power until October.
The US insists Iraq must wean itself off Iranian energy, but Baghdad has said it could take up to four years, during which time it would need to keep purchasing at least Iranian gas.
Iran has exported electricity and natural gas to Iraq for more than a decade. It currently exports 3.5 to four billion dollars’ worth of electricity and natural gas per year to its western neighbour.
Baghdad aims to connect its electricity grid to those in Saudi Arabia, Egypt, and other regional countries in order to diversify its electricity imports.
Successive Iraqi governments have been unable to provide 24-hour electricity to the public since the 2003 war. Blackouts are a daily occurrence across Iraq and the Kurdistan Region and have become a serious source of public anger.
