Iraqi Finance Committee to Vote on Budget Law Amendment
The Finance Committee within the Iraqi Council of Representatives has confirmed that a vote is set for tomorrow, regarding a government proposal to amend Article 12 of the Public Budget Law. This legislative change aims to address key economic factors affecting the Kurdistan Region.
Committee member Jamal Koger highlighted that the proposed amendment encompasses two primary components. The first pertains to the costs associated with the production and transportation of oil within the Kurdistan Region. The second part stipulates that, should there be no consensus between the regional and federal governments on these costs, the Ministry of Oil will appoint an entity responsible for determining them. This will subsequently lead to a formal calculation of the oil extraction costs from the region’s oil fields.
Koger emphasized that the amendment is crucial for facilitating governmental processes and ensuring the timely submission of the 2025 budget draft to the House of Representatives for approval.
Earlier this week, the Finance Committee announced the resumption of meetings to deliberate on the amendment’s specifics. Fellow committee member Hussein Moanes indicated that the existing budget law estimates the cost of extracting oil from the region at $6 per barrel. However, the government’s proposed amendment revises this figure to $16 per barrel.
Moanes further elucidated that the proposed amendment would bind the government to cover the extraction costs for 400,000 barrels per day from the region’s oil fields. This increase in extraction costs is anticipated to exacerbate the deficit within the public budget.
On January 7, Koger previously projected that the financial budget schedules could be dispatched in February, though he acknowledged potential delays due to ongoing disputes surrounding Article 12.
Article 12 specifically entails compensation for the Kurdistan Regional Government concerning production and transportation costs related to oil extraction in the region. Additionally, Jiai Taymour, a member of the Kurdistan Democratic Party, pointed out that the Iraqi government’s previous baseline of $6 per barrel is significantly understated compared to the $26 average cost incurred by foreign companies engaged in oil extraction.
In June 2023, the Iraqi Council of Representatives enacted the General Budget Law covering the financial years 2023, 2024, and 2025.
Summary of Proposed Changes to Article 12
| Aspect | Current Estimate | Proposed Amendment |
|---|---|---|
| Cost of Oil Extraction | $6 per barrel | $16 per barrel |
| Daily Extraction Volume | 400,000 barrels | 400,000 barrels |
The developments surrounding this legislative amendment are pivotal for Iraq’s economic strategy and the stability of its oil sector, especially within the Kurdistan Region.
