Electricity in Iraq: Hostage to Deficits and Political Dilemmas

This article sheds light on the state of electricity in Iraq, the deficit in generation rates, and how successive governments after 2003 have dealt with this file. It also includes accurate figures and information based on official reports.

Iraq’s electricity crisis is often described by Iraqis as “the crisis of all crises” — one that remains unresolved despite the enormous financial resources enjoyed by the Iraqi state after 2003. This chronic deterioration is reflected in repeated power outages, particularly amid the irregularity of scheduled cuts.

A Wide Gap Between Production and Demand

According to official reports issued by the Iraqi Ministry of Electricity, the International Energy Agency, and updates from the Iraq Energy Institute, actual demand during peak hours — especially during the harsh summer months, when temperatures exceed 50°C — ranges between 35,000 and 40,000 megawatts. Meanwhile, actual production by the national grid fluctuates between 24,000 and 26,000 megawatts at best, despite the massive budgets allocated by successive governments.

In parallel with the continuous rise in demand — driven by population growth and the unregulated expansion of residential units — Iraq continues to suffer from a chronic and persistent electricity generation deficit ranging between 10,000 and 14,000 megawatts. On the ground, this translates into scheduled power cuts of between 12 and 16 hours per day in many provinces, according to the aforementioned sources.

Losses in Multiple Forms

What makes matters worse is what World Bank studies on infrastructure and energy in the Middle East, as well as reports by the United Nations Assistance Mission for Iraq, have indicated: Iraq’s distribution network suffers from one of the highest rates of technical losses and illegal consumption in the region, ranging between 40% and 50%.

These losses are divided between technical losses, caused by aging transmission networks, wires, and transformers, and non-technical losses resulting from illegal connections to the national grid, the absence of organized billing, and the lack of smart meters.

The Dilemma of Dependence on Imported Gas

One of the most prominent reasons behind the stalled development of Iraq’s electricity sector is the dilemma of imported gas and alternative energy. Iraq relies heavily on importing gas from Iran to operate its gas-fired power plants, importing enough to generate approximately 5,000 to 7,000 megawatts.

This dependence on Iranian gas is marked by fluctuating supplies during summer and peak winter periods. In many cases, these supplies are reduced for technical or financial reasons related to payment mechanisms and U.S. sanctions on Iran. This can lead to a sudden collapse in electricity supply, with losses exceeding 3,000 megawatts at once, according to reports from the Iraqi Ministry of Oil, statements by the National Iranian Gas Company, and periodic waiver notices issued by the U.S. Department of State.

Local Gas Burned in Vain

Iraq’s dependence on Iranian gas to operate its gas-fired power plants comes at a time when successive governments have heavily invested in building such plants over recent years. This is despite the fact that Iraq possesses a vast oil industry that produces significant volumes of associated gas — gas that continues to be deliberately flared.

World Bank reports confirm that Iraq flares around 17 to 18 billion cubic meters of associated gas annually during oil extraction operations. If properly utilized, this quantity would be sufficient to help end the country’s power crisis and save billions of dollars every year.

The Economic Cost and the Drain on Citizens’ Pockets

Official and international estimates — including reports by Iraq’s Federal Board of Supreme Audit, statements by former prime ministers, and remarks by other officials — indicate that Iraq has spent more than $45 to $60 billion on the electricity sector since 2003. Yet self-sufficiency has not been achieved due to mismanagement, corruption, and contracts for gas-fired power plants without securing the local fuel needed to operate them.

Because of the failure to fix the national electricity system, Iraqis are forced to pay a costly parallel tax. The amounts collected by private generator owners from citizens to compensate for shortages in public electricity are estimated at around $4 to $6 billion annually. This represents a heavy financial burden on low- and middle-income families, as noted in field surveys by Iraq’s Central Statistical Organization, affiliated with the Ministry of Planning, and in analytical reports issued by the United Nations Development Programme in Iraq.

Available Solutions Awaiting Implementation

Iraq’s electricity problem has evolved from an engineering and generation crisis into a political and geopolitical dilemma. Technological solutions are available, including the Gulf interconnection, the connection with Jordan, contracts with Siemens and General Electric, and solar energy projects. However, their activation is moving at an extremely slow pace due to conflicting political interests and regional pressures that prefer to keep Iraq as a consumer market for energy rather than a producer of it.