Content from the Brookings Doha Center is now archived. In September 2021, after 14 years of impactful partnership, Brookings and the Brookings Doha Center announced that they were ending their affiliation. The Brookings Doha Center is now the Middle East Council on Global Affairs, a separate publi Contact online >>
Content from the Brookings Doha Center is now archived. In September 2021, after 14 years of impactful partnership, Brookings and the Brookings Doha Center announced that they were ending their affiliation. The Brookings Doha Center is now the Middle East Council on Global Affairs, a separate public policy institution based in Qatar.
The decade-long electricity crisis has severely damaged the competitiveness of Iraqi industry and agriculture, imposing a significant social and economic burden on normal Iraqis. Citizens in dire need of electricity have been forced to pay for the output of expensive private generators. Poorer households, lacking funds to cover generator costs, have endured long hours of blackouts.
Clearly, the restructuring of the Ministry of Electricity (MOE) and its personnel—more than 100,000 employees are on the ministry''s staff—is long overdue as the government strives to improve the service and meet future demand. Draft legislation to reform the sector has been on the parliament''s agenda since 2010, but has not yet been adopted. This is due in part to the complexity of the issue, but also as a result of fears of another political fiasco should disagreements arise among various parliamentary blocks. As a result, the draft act has been left in limbo, unlikely to pass before the parliamentary elections next month.
The minister for electricity, Karim Aftan al-Jumaili, highlighted this role during a recent Dubai conference on Iraqi energy. He outlined a number of investment projects which would bolster Iraq''s electricity-generating capacity from 12,000 megawatts (MW) now to 20,000 MW by 2015. According to his presentation, this would require more than $75 billion worth of investment. The government expects some of this to come from private investors. Funding the MOE imposes a heavy financial burden on government finances: support for the ministry totals $9 billion (6.5 percent of the overall budget) per year, hindering spending on other crucial sectors, including social security, housing, health and education.
While the draft legislation''s proposals for involving the private sector are economically feasible, effective privatization needs an independent electricity regulatory authority in order to guarantee a fair, effective and transparent market. Beyond this, there is also the need for a strategy to frame the deregulating process that combines short-term practical measures to combat shortages and long-term policies which plan for a stable, reliable electricity supply for Iraqi citizens.
The extreme polarization of Iraqi political life has expanded beyond security matters, affecting core debates over economic and social development. As the sectarian allegiances of Iraqi lawmakers have hardened since the end of civil unrest in 2008, it is unlikely that any reform effort would gain a majority consensus among the various political blocs. Any such efforts would be subject to hard-hitting negotiations among the lawmakers.
Even if the Cabinet and parliament secure agreement on the adoption of the proposed new legislation, bureaucratic difficulties have in the past hindered implementation due to resistance from the strongly hierarchical structures of the government''s departments and the nature of Iraqi legislation. Framework laws such as the Draft Electricity Act, for example, would typically require further implementing legislation in order to make practical changes on the ground, providing yet another opportunity for political debates between the ministry, the council of ministers, and the parliament. So any true reform would have to run a gauntlet of competing political and economic interests.
Such a plan needs to be outlined in a comprehensive legislative and regulatory framework with adequate institutional set-up. Legislative draftsmen need to identify medium- to long-term policy objectives along with means of implementation, taking into consideration future needs across various sectors of the economy. This strategy should be developed through a process of consultation with all major stakeholders, including the council of ministers, parliamentary committees, provincial councils and experts, with clear deadlines for deliberation and implementation.
The experiences of key developing countries in electricity sector reform confirm that governments with weak institutions tend to have poor records of implementation, despite ambitious agendas for reform. In Iraq, identifying technical requirements for electricity reform is only the start of the solution – and even these the various technical options for electricity reform are not clearly stated in the draft act. The process of translating technical plans into politically acceptable measures requires agreement on the overall strategic objectives of reform.
A realistic, long-term solution to Iraq''s electricity problem will need to incorporate political concerns and the expectation of the various stakeholders. Despite these apparent difficulties, though, there are encouraging signs of support for reform efforts.
First, there is a relatively high percentage of the population willing to pay a higher price for electricity – provided quality of service improves along with it. Although the draft act is vague about capping the billing tariff for low-income families, which represent 20-25% of the population, this presents an encouraging sign for phasing out existing heavy subsidies.
Second, the timing of the phases of electricity reform is critical, especially when the issues of privatization and increase in tariffs are addressed. The timeframe for a comprehensive sector reform usually runs long, between five and 10 years, and generally takes even longer in the Middle East. The highest policy priority in the electricity sector should be rebalancing the structure of tariffs, realigning prices with underlying costs over the next 10 to 15 years. This will partially restore revenue adequacy and generate internal funds for capital investment, while working to eliminate poorly targeted and inequitable subsidies.
The logical place to address revenue shortfalls is at the distribution end. One method would entail the creation of retail companies, disconnecting them from the rest of the monopolized industry by separating them from distribution companies. These retail companies could then be subjected to price or revenue cap regulation, with an explicit commitment from the government that it will refrain from interfering in the tariff determination process.
The draft act implicitly calls for gradual reforms, similar to those that have been successfully implemented in countries with mature electricity systems with the full support of well-functioning institutional arrangements. However, a gradual approach to electricity reform may not be the right prescription for a country that is already in the midst of a severe power shortage, affected by poor operating efficiency as well as poor management, and suffering from high technical and non-technical losses. In the face of such severe performance problems and the serious mismanagement of the sector, far-reaching reforms based on radical structural options may constitute a sensible, even conservative response to Iraq''s electricity crisis.
Iraq has been grappling with a severe electricity crisis for over two decades, marked by persistent disruptions in its infrastructure. This prolonged struggle has made the country increasingly vulnerable to acts of sabotage in recent years. Notably, in July and August 2023, there has been a resurgence of attacks specifically targeting the electricity sector. This has ignited various speculations regarding the motives behind these operations and the individuals or groups responsible.
There are several potential explanations for these attacks. One possibility is that Iran is using them as a means to convey a message to Baghdad. This message could be a warning to halt its efforts to establish closer ties with Gulf states, as Iraq pursues the importation of electricity and liquefied natural gas from these neighboring nations. Another angle to consider is an internal dispute, possibly aimed at encouraging the Kurdistan region to adopt a more flexible approach in its dealings with Baghdad within the energy sector. Additionally, there remains the ominous possibility that these attacks could be orchestrated by ISIS.
In recent times, a series of sabotage operations have taken place across various regions of Iraq, specifically targeting the electricity sector’s infrastructure. The perpetrators responsible for these attacks have not been definitively identified. This information has been disclosed through data released by the Iraqi Ministry of Electricity, covering the months of July and August 2023. The incidents are detailed as follows:
On July 22nd, an act of sabotage occurred on the electrical power transmission line connecting power lines in the Khour Al-Zubair district to the Rumaila gas station in the southern Basra province of Iraq. The line was subjected to gunfire, resulting in its disconnection.
On July 24th, sabotage targeted the electrical power transmission line located in northwestern Baghdad, specifically in the Al-Hamamiyat area. Firearms were used in this attack, leading to the line’s disconnection and subsequent power outage.
On July 28th, two power transmission lines, one in northern Samarra – Mulla Abdullah and the other in Dowr – Hawija, were taken out of service due to the targeting of transmission towers with explosive devices in the Rishad district. This action resulted in a decreased power supply in the Kirkuk and Salahuddin provinces.
On August 2nd, a terrorist sabotage act occurred on the high-voltage electrical power transmission line connecting Kirkuk and Diyala. This incident took place in the Wadi Awasaj area near the Anjana checkpoint, causing the line to disconnect from both ends.
On August 3rd, sabotage attacks targeted three high-pressure electrical power transmission lines connecting Diyala and Kirkuk provinces. Additionally, high-voltage lines linking the Doer and Hawija districts in western Iraq were subjected to similar sabotage actions.
It’s important to note that the recent systematic targeting of the Iraqi electricity sector is not an isolated incident. This sector’s infrastructure has experienced numerous acts of sabotage in recent years. Notably, estimates suggest that Iraq suffered a significant loss, with approximately 58% of its electricity generation capacity compromised between 2011 and 2020 (refer to Figure 1).
The targeting of Iraq’s electricity sector ceased when Mohammed Shiaa Al-Sudani assumed the position of Prime Minister on October 27, 2022. During the tenure of his predecessor, Mustafa Al-Kadhimi, there was a series of attacks on power transmission lines, particularly during the summers of 2021 and 2022. These attacks exacerbated Iraq’s ongoing electricity crisis. It’s also worth mentioning that these incidents tend to be concentrated during the summer months when temperatures soar.
The return of sabotage operations targeting the infrastructure of the Iraqi electricity sector raises several speculations regarding the motives behind these actions and the responsible parties. This can be discussed as follows:
The establishment of electrical connections with Gulf countries is pivotal in reducing Iraq’s reliance on Iranian power supplies, particularly given the substantial capacity of these newly established connections. These connections are poised to provide Iraq with electricity imports, initially capable of reaching up to 1600 megawatts, with the potential for expansion to 2800 megawatts. This would significantly surpass the agreed-upon supply from Iran, which currently stands at 1200 megawatts through four transmission lines (Khormashahr – Basra, Karkhah – Amara, Kermanshah – Diyala, and Serbil Zahab – Khanaqin).
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