Iraq’s bid for sustainable economic growth starts with electricity

Summer in Iraq: Private generators rumble throughout the night. They illuminate the darkness and power air coolers in houses connected by a web of haphazard wiring and a grid prone to routine outages. It’s a time when frustration can simmer on par with an increase in temperature levels – often hitting a scorching 50 degrees Celsius in Iraq’s central and southern parts, igniting public dissent.

Siemens Energy’s vision for the electrification of Iraq though seems to have an answer to the country’s power woes. In October 2018, a memorandum of understanding was signed with Iraq to rebuild its power sector in three phases within four years from financial close. “There was a need,” says Siemens Energy Iraq Managing Director Musab Alkateeb, who hails from the capital of Baghdad. “The electrical grid was designed many decades ago for a population that was probably a third of what it is today. So we rolled up our sleeves and decided that we would provide Iraq with a plan.”

The “Roadmap for the Electrification of the New Iraq” is a series of projects under way to revamp the country’s ailing electricity sector and provide Iraqis with reliable and efficient energy necessary for economic growth. A national redevelopment plan for electrification has already been put into action in Egypt (which included the multiple award-winning Egypt Megaproject: the world’s largest combined cycle power plants). Other roadmaps that have been developed by Siemens Energy are in progress in Afghanistan, Libya, and Nigeria.

Under the roadmap, Iraq’s existing power plants are being rehabilitated and modernized, transmission grids strengthened and greatly expanded, and extra generating capacity added – creating tens of thousands of jobs along the way. The plan also entails the installation of tailor-made 132-kilovolt mobile substations directly connected to fast-track power plants in different locations across the network, allowing energy to be quickly added to the grid. More than 35 of these substations are planned for installation in the first two phases of the roadmap, along with other investments in grid stability to increase transmission performance. The final phase will include a high-voltage direct current (HVDC) link, one of the largest in the world, between Iraq and countries in the Gulf Cooperation Council (GCC) with a capacity of 5,000 megawatts. All in all, the ambitious plan will see no less than a staggering 11 gigawatts in additional generation capacity. And that’s “a conservative estimate,” says Alkateeb. “Our promise is to deliver electricity to 40 million people.”

The roadmap seems to be an ideal solution, as it includes developing a smart grid pilot project that could reduce both technical and nontechnical losses as well as maximize collections and revenues. Thus, according to local energy experts, the power sector will be more efficient. The Siemens Energy Iraq Managing Director points out the inefficiencies in Iraq’s power grid, which amount to 50 percent in losses. “Even if we just improve on the efficiency side,” he says, “the delivery of electricity to Iraq’s homes and factories will be improved.”

Iraq’s current power generation capacity stands at 19 gigawatts according to former officials at the ministry of electricity. Yet, a recent World Bank report said that the provision of electricity “remains well below total demand of 26 gigawatts with frequent interruptions in services delivery.” Siemens Energy Iraq Managing Director Musab Alkateeb laments: “Yes, there is incremental improvement. But there’s not the kind of leapfrogging development that we [Siemens Energy] wanted to make happen.”

Iraq still partly relies on outside energy sources to feed its electricity grid, importing up to 1,200 megawatts of electricity per year and up to some 1.2 billion standard cubic feet per day of gas when demand hits a peak during baking summer times. Alkateeb points out that “Iraq could very well be an energy exporter rather than an energy importer. In fact, once domestic demand for power and gas is satisfied it’s not inconceivable that Iraq could engage in significant energy trade with its neighbors by becoming an energy hub for the Middle East.” Implementing Siemens Energy’s roadmap will see Iraq run its power plants with its own fuel instead of imported gas or environment-damaging heavy fuel oil, thereby significantly reducing its expenditures on the energy sector as well as air pollution.

One of the company’s goals is to make the flares go out, providing the infrastructure necessary to capture and utilize flare gas to power the gas turbines that generate electricity. Thus, bringing more revenues by selling surplus portions of flare gas and natural gas liquids in the market. This alone could bring Iraq additional revenues worth approximately US$5 billion that are currently wasted. “Imagine how many hospitals and schools you could build with an extra US$5 billion a year,” Alkateeb says.

Decades of conflicts and sanctions have weighed heavily on Iraq’s infrastructure. Its dilapidated power sector wasn’t spared. Meager supplies have irked millions nationwide, including health workers who say power cuts put the lives of patients in danger. Dr. Kamal al-Rubay’i from Baghdad says any electricity outage could mean a halt in the work of essential medical devices such as ventilators and vital signs monitors. “A patient’s condition will be dangling between life and death,” he affirms.

Electricity outages are “normal” says al-Rubay’i. But usually emergency generators in hospitals and clinics are immediately turned on. However, he remembers “a prolonged” outage at a government hospital in Baghdad where patients with cardiac and respiratory diseases are treated. “It caused panic and triggered a wave of complaints from the patients. It was a hot summer day and some of them even wanted to leave.” As backup batteries were drained, medical devices went out of service in the Coronary Care Unit and the doctors could no longer monitor the pulse of patients – “We felt lost,” the doctor recalls.

Implementing Siemens Energy’s roadmap will see backbone power plants like Baiji 1 and Baiji 2 – both destroyed by Islamic State (IS) militants – reconstructed and put back into service. This, along with other projects in the country such as the construction of  Maysan, Rumaila and Shatt Al Basra plants are expected to add 2200 megawatts to the national grid, upon completion. This is enough power to supply over 1.5 million Iraqis with reliable electricity. 

At the same time, the company didn’t lose sight of another urgent need for the liberated areas in Iraq – good healthcare.

The company has already left an imprint on Baiji. Al-Tawheed clinic, which suffered bomb damage during the war to dislodge IS militants, was rebuilt with the help of donations from Siemens. The donations included medical and power equipment to ensure a seamless operation of the clinic, including a digital X-ray machine and cutting-edge laboratory instruments such as a hematology blood analyzer. The clinic is now operational and thousands from Baiji and the surrounding areas can enjoy access to health services throughout the year.

With unprecedented backing from the German government of €14.4 billion in financial guarantees to international banks, Siemens Energy remains geared up and ready to implement the roadmap. It aims to kick off what Musab Alkateeb describes as “a virtuous cycle in Iraq’s development.” Implementing the roadmap will not only boost the economy, generate billions in revenue and invest in the country’s workforce – it will also pave the way for other companies to invest and implement their projects in Iraq. “It’s a scaffolding of benefits that we have erected with the Iraq Roadmap,” Alkateeb says, referring to the plethora of gains Iraq could reap.

But while the roadmap is an opportunity offered on a silver platter, the completion of the entire plan faces serious challenges. After just one year, the government of former Prime Minister Adel Abdul Mahdi was forced to resign in response to unprecedented protests that erupted in October 2019 due to a host of grievances – among them meager electricity provision. The new Iraqi government now faces collapsing global oil prices, a budget deficit, and, of course, the outbreak of the Covid-19 pandemic that is paralyzing economies the world over.

Iraq watchers and commentators have repeatedly urged subsequent governments to address the issue of electricity. Any solution must entail plans to reach fuel self-dependence by investing in associated and nonassociated gas projects. This, observers say, will provide feedstock for power stations, revenues to finance development projects, and wean Iraq off the burden of importing gas from neighboring states.

Another priority must be to relieve citizens from paying large sums of money for private diesel generators, and instead direct these expenditures to the treasury in return for a sustainable 24/7 provision of electricity by the state. This will also help to reduce air pollution and reclaim some serenity in neighborhoods buzzing with the noise of generators.

Today, as Iraq witnesses unprecedented heat waves scorching its rapidly increasing population, finding permanent solutions for its ailing power sector must be a top priority for Iraq’s leaders. As Siemens Energy Iraq Managing Director Musab Alkateeb promises, “despite all the challenges, the principle idea of the Iraq Roadmap is still viable and it can still bring about positive change on a scale Iraq has never seen before.”