Economic Situation Update – Baghdad
As the summer season approaches, the Iraqi government is proactively implementing alternative strategies to stabilize energy supplies in the country. This comes in response to the recent revocation of exemptions that previously allowed Iraq to import gas and electricity from Iran, as part of a broader US sanctions initiative targeting Tehran. This decision presents significant challenges for Iraq; however, the Ministry of Electricity is working to mitigate the impact of this crisis with viable alternatives.
US President Donald Trump recently announced the cancellation of the exemption that permitted Iraq to import electricity and gas from Iran, a move included in a newly established sanctions package aimed at increasing pressure on Tehran.
According to Ahmed Moussa, the official spokesperson for the Ministry of Electricity, approximately one-third of Iraq’s electricity generation—equating to about 8,000 to 9,000 megawatts—relies on imported gas. This reliance underscores the insufficiency of national gas production to meet the electricity sector’s demands.
Moussa elaborated that the government and the Ministry of Oil are fast-tracking initiatives to invest in national gas fields. Nevertheless, the immediate requirement remains for imported gas. Consequently, the government has established an agreement with Turkmenistan as part of its strategy to diversify gas sourcing, with financial arrangements presently underway for the transportation of gas through Iranian territory into Iraq.
Furthermore, Moussa emphasized that any reduction in gas supplies—whether domestic or imported—could significantly impair power generation, given that electricity stations operate on a mix of national gas, fuel, and imported gas.
The electricity imported from Iran flows through four main lines: Mersad-Diyala, Sirbin-Khanaqin, Khormeshahr-Khor Al-Zubair, and Karkha-Building, capable of delivering up to 1,000 megawatts of energy.
Regarding the existing agreement with Iran, Moussa clarified that it stipulates the supply of 50 million cubic meters of gas per month, with variations dependent on the time of year. He noted that a halt in Iranian gas supply has already resulted in a loss of 8,000 megawatts of electricity generation, particularly affecting Baghdad and the Middle Euphrates region.
On another note, Moussa mentioned that the distributed gas allocated to southern regions stands at 8.5 million cubic meters. An agreement has been made with the Ministry of Electricity to divert this quantity to Baghdad to enable certain units at the Basma station, enhancing the overall energy output for the capital.
In preparations for the peak summer of 2025, Moussa indicated that the Ministry of Electricity is undertaking significant measures to ensure readiness, including upgrades to production stations, ongoing maintenance of critical units, and the expansion of transformation stations and carrier lines. The ministry is also converting old lines into double circuits to bolster capacity and improve load management across provinces.
Moussa concluded by outlining a comprehensive plan to address bottlenecks in distribution networks, promising a complete initiative by the start of the summer load season, with the Ministry of Electricity set to release its full summer load management strategy on May 1st.
During a recent meeting, Prime Minister Mohammed Shaya Al-Sudani instructed the renewable energy team and the Electricity File Committee to initiate entrepreneurial projects focused on solar energy production across the provinces. The objective is to achieve tangible results in terms of energy efficiency and to reduce losses, while evaluating the economic viability of these initiatives to support the national electricity grid.
Simultaneously, the Ministry of Oil reported that it is currently securing 1,500 scales for energy stations, while total requirements range from 6,759 to 7,500 cubic meters per day, highlighting the pressing need for approximately 7,000 cubic meters of gas for optimal power station operations.
Energy expert Dr. Furat Al-Mousawi cautioned that the elimination of current exemptions will directly affect Iraq’s energy landscape, noting that Iranian gas constitutes about 40% of the fuel required for electricity generation in the country. He proposed several measures to navigate this crisis, such as acquiring mobile power stations capable of operating on crude oil derivatives, which could deliver an additional 500-800 megawatts until national gas investments are fully operational. He also advocated for the adoption of solar energy systems, supported by direct government incentives, as a sustainable energy source.
