Iraq’s Electricity Ten-Year Plan

Middle East Economic Survey

VOL. XLIX

No 45

6-Nov-2006

Iraq’s Electricity Ten-Year Plan – Is It Credible?

By Isam AlKhalisi

The following article was written for MEES by Isam AlKhalisi, an independent consultant who worked in the construction, operation and management of power plants for Iraq’s National Electricity Administration, subsequently on design and project management of power plants and other public utility systems. Email: isam.alkhalisi@ntlworld.com

Iraq’s Ministry of Electricity in June issued its Central Plan (Master Plan) for the electricity system – years 2006-15 (limited circulation). It can be viewed or downloaded in its Arabic original from http://throughthepowerlines.125mb.com

The first doubts as to the credibility of the document are sown in the second paragraph of the plan’s first page. Here, it states that four conditions must be satisfied for the plan to succeed. These are:

Availability of funds.
Availability of primary energy sources.
Availability of technical cadre.
Availability of security.

This appears to be a series of pre-emptive excuses for failure: to improve the present dire situation, a professional endeavor would look at means to overcome and bypass the obstacles to achieving its objectives, not suggest that the plan is impossible from the outset.

The document itself contains no surprises as to the course of action intended for the next 10 years. It is no more than a continuation of the design philosophies that directed the management of Iraq’s public electricity supply industry since the 1960s. Accepting the traditional thinking as a given, the report has therefore come out devoid of supporting records, studies or analyses of even the most obvious of Iraq’s present grim circumstances.

For example, the Ministry of Electricity has been reporting on a near-daily basis acts of sabotage which interrupt electricity supplies. The plan does not mention such incidents once in its 42 pages, let alone define, quantify and analyze these cases for guidance to the size, location and routing of power lines in future electricity projects. Most sober-minded analysts foresee continuation of the present chaos and lawlessness for some years, if not a decade or more.

Sabotage and large-scale theft or electricity assets are not the only crucial factors sidestepped by the plan: Also,

There is no mention or consideration of the difficult relationships between the recently-enfranchised local authorities and the centrally-managed electricity authority, which account for some major disparities in the rationing and distribution of electricity supplies between various areas of the country.
No figures are given to show the present installed capacities relative to that available to the public.
No costing of the processes of providing electricity to the public from generation to distribution is presented.
No explanation and treatment is given for the present acute problem of disparity between quantities of fuels supplied to the power plants and what are required for electricity production or as demanded by plant designs.
There are no maps or schematics for the system, an obvious omission in any report of this kind, nor is there any indication of load distribution around the various parts of the country to rationalize distribution and location of the proposed projects.
No effort is made to examine private generation in its present chaotic form, and its interaction with the public electricity supply system or its impact on the environment and public health and safety.

The management and fiscal sides of the plan are no more adequately covered either. Apart from stating the requirement for a total of $23.3bn in foreign currency over the next 10 years for new projects:

There is no indication if that amount includes or excludes foreign contributions and interests, whether it is for capital equipment only, for other supplementary needs or if it includes imported electricity and fuels that will be needed in that period.
No requirement is indicated for Iraqi currency funding for operational costs and management overheads.
Nor is there any indication of the organizational structure – changed more than once over the last three years – which will oversee the disposal of such vast amounts of funds.
No budget balances or cash flow tables of expenditure and revenue over the planned period are presented.

External Grants/Loans

It is worth noting that external grants/loans from the Japanese Government and UNDP sources for electricity projects, totaling $632.7mn and delivered through the Ministry of Planning, are correctly pointed out and listed. But there is no mention of monies allocated or yet to be allocated from the American Iraq Relief Reconstruction Fund. A recent US government report published on the internet suggests there are ongoing projects, to which $1.3bn is yet to be “expanded”, and around $740mn is yet to be allocated by the end of September 2006 in concurrence with the Ministry of Electricity. It is inexplicable as to why such a major involvement in Iraq’s electricity system, which falls in within the Plan’s timescale, should be omitted.

The text, tabulated data or curve formats by which the plan is outlined are mostly incomplete, distorted or evasive. In some cases, they also betray ignorance of the basics of the electricity supply industry. For example:

The tables and curves fail to distinguish between the system’s electricity production (generation), supplies to the network and, further downstream, supplies to consumers. In Iraq, the difference between the first and the last could be as high as 30%.
Electricity imports from neighboring countries are, strangely, lumped within the figures for the indigenous electricity generation, thus clouding the issue of accountability for shortcomings in performance.
On page 23, the curve for Production may have been intended for Available (or Installed) Capacity as it is not possible to supply electricity to the network more than the demand requires.

In referring to some past records the plan makes statements which are contradicted by common acknowledgment or by records in other reliable references. For example, “the achieved” part of the curve in page 24 indicates that no power cuts whatsoever took place in the country immediately and for two years after the January 1991 war. The curve also shows that in that year, electricity supply had dropped to around 4,000mw and that the 1990 electricity supply level of around 5,000mw was recovered by 1993. In fact, a UN report of 2001 – based on information supplied by Iraq’s officials – showed available generation to have dropped to around 1,750mw, and that recovery by 1993 was to only around 3,750mw: approximately half of the available power pre-1991. Reports by US authorities and Iraq’s Ministry of Electricity officials all indicate that Iraq’s electricity generation capacity before April 2003 was in the region of 4,000mw, not just under 6,000mw as shown in the plan’s curve.

Discrepancies/Sloppiness

Discrepancies and sloppiness are also evident in some of the lists and data tables:

Some power stations listed do not appear to be supplied with any kind of fuels, and some sourced fuels are not destined to any named power station.
The electricity balance table shows that self-sufficiency in the electricity supply will be achieved by 2009 and that electricity will be imported only in the years 2006 and 2007 (300mw and 312mw respectively), but no electricity imports are planned for 2008 in spite of a substantial shortage foreseen in that year.
No electricity imports are built-in for the years from 2008 onwards either. Yet the Ministry has already signed, or is in the process of negotiating, contracts for electricity imports totaling 1,900mw from neighboring countries, as mentioned elsewhere in the report.
Apart from the cost of imported electricity being phenomenally high, certainly some, if not all, of the electricity purchase contracts have been signed on “take-or-pay” terms. No explanation is given why these foreign supply contracts are being processed when they are not expected to be needed in less than two years.

Most figures (if not all) used in the relevant tables and on which the electricity forecasts are based are seriously flawed, as they are based on assumptions which are neither supportable nor realistic. These assumptions include: all projects will come on-stream on schedule; all generators will give full nameplate ratings; there will be no unscheduled outages of any kind; correct fuels in the right amounts will be available on demand; and there will be no outside interferences whether natural or human sabotage. The electricity supply industry has well-developed rules (mandatory in some countries) and methods for assessing risks, reliability and economy of all projects which take these and other factors into consideration. Clearly, they were not applied in this case.

Interconnection Types

Finally, although electricity importation from neighboring countries is not quantified in the plan, two types of interconnections are referenced. Differences between these are subtle and may be overlooked by the layman, but are too serious not to be reported to higher national authorities and made public to the country.

The first type is of synchronized (parallel) connections, a purely commercial arrangement. Cost apart, this type requires the imported electricity to be of certain qualities conforming to the nationally produced electrical power rules and specification. Imported electricity is metered and controlled at the points of interconnection. With any deviation from the specification, the imported electricity is instantly and automatically cut off by the protection devices and appliances installed at the point(s) of interconnection.

The second type is referred to in the plan as “isolated connections”, as supplied to two Iraqi provinces. Electricity supplies to consumers in these cases follow the rules, regulations and laws of the supplying foreign countries: Turkey in the case of Dahuk Province, and Iran in the case of Diyala Province. This type of connection between two sovereign countries seems to be unprecedented. It is doubtful if the contracts for electricity supply of this type are within the authority of the Ministry of Electricity, as they mean abdication of its responsibilities towards its citizens and surrendering them to organizations operating outside the laws of the country.

Another type of direct electricity feed from one national network to another is in use in other parts of the world. Asynchronous connections, which apply AC-DC-AC feeding, could have been taken up by Iraq’s electricity authorities. Under such a scheme, receiving networks may remain within the national grid system and operate on its rules and instructions. This would be the most appropriate, but has not even been considered.

To conclude, Iraq’s public electricity supply industry had installed generating capacity of just under 10,000mw in April 2003. Since then that has been added to, theoretically, to the tune of 4,000mw, including imports, against an estimated present demand of around 8,500mw. Any honest and proficient approach to Iraq’s present electricity problems would make a start by studying and analyzing these figures, and proceed with measures to eliminate or at least reduce the gap.

Plans for additional installations must take into consideration all factors and circumstances in the light of historical experiences, prevailing circumstances and future likelihoods. None of these feature in Iraq’s 10-Year Electricity Master Plan, as issued by Iraq’s Ministry of Electricity in June 2006. The plan appears to be a document intended for public relations purposes and personal promotion only. It makes no proper evaluation of the present status of the industry and its proposals for the future can only be described, at best, as superficial.