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Iraq utilities profile: Power to the people

The US reconstruction programme is to conclude in 2011

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35 per cent of Iraq's power is lost through poor infrastructure and theft.
35 per cent of Iraq's power is lost through poor infrastructure and theft.

After eight years, the $61.45 billion US reconstruction programme to regenerate Iraq’s infrastructure is to conclude in 2011, marked by the planned departure of US troops by December 31.

Summarised from a Report to Congress by the Special Inspector General for Iraq Reconstruction, we take a look at Iraq’s power and water future.

In January this year, the Ministry of Electricity formally presented the Iraq Electricity Masterplan (IEM) which committed to adding more than 12,000 megawatts of generating capacity to the country by 2015.

Most of this capacity is planned to come from a series of GE and Siemens mega deals which, if commissioned on schedule, will meet projected demand by 2013 or 2014.

The implementation of these construction plans will require an investment of approximately $26 billion; looking ahead, demand for power is expected to continue rising with a further estimated $29 billion spend required between 2016 and 2030 to keep pace.

The IEM has estimated that the supply/demand gap will return in 2017 if no additional plants are constructed, with full implementation of the plan over 20 years expected to cost $77 billion in capital investment. However, estimates also show that the cost of unserved energy to Iraq’s economy is in the region of $40 billion per year.

In the short term however, public dissatisfaction with the delivery of utilities in the country combined with the prospect of another sweltering summer with meagre power and water supplies, has seen the government working swiftly to put safeguards in place.

A plan to add 5,000 megawatts of new generating capacity (albeit through non-recommended diesel plants), increases in fuel allocations for localised generators and collaboration with neighbouring countries to raise water levels in rivers are certainly steps in the right direction.

The measures can’t come soon enough - a large drop in power generation from the country’s hydroelectric plants (down by 70 per cent from Q1 2010) was due largely to insufficient water availability, with Iraq’s hydro plants generating a combined total of just 190 megawatts.

The combined generating output from all the Ministry of Electricity’s power plants reached 4,411 megawatts this quarter – the lowest level in two years. This drop was however, largely offset by increased output from three privately owned combustion turbine plants in the Kurdistan region.

Despite the country’s overall nameplate generating capacity standing at 16,500 megawatts, long-term outages and harsh operating conditions have lowered the feasible capacity to less than 12,400 megawatts, with actual production running at half of this figure.

The plan to introduce 50 new 100 megawatt diesel power plants, in an attempt to cater for increased summer demand, will cost in the region of $6 billion.

So far, two contracts have been awarded to MENA of South Korea (2,500MW) and Elite Company for Supplies of Jordan (600MW) to supply turnkey plants and provide a six-month training programme.

If these plants are completed by 2012 as intended, diesel generation will account for at least 20 per cent of the country’s power generation, going against recent recommendations from the IEM that diesel generation plants are ‘economically unattractive’.

Water
As of March 2011, the United States had obligated $2.65 billion and expended $2.57 billion in attempts to rehabilitate Iraq’s water and sanitation sectors.

According to the United Nations Educational, Scientific and Cultural Organisation, more than 7.6 million Iraqis lack access to safe drinking water.

Dependent on the Tigris and Euphrates rivers for drinking water, lack of infrastructure and poor water management cause interruptions in the supply, and reduce the quality of drinking water.

Power shortages also obstruct the pumping and filtration processes, further hindering the supply and quality of drinking water.

The US Army Corps of Engineers (USACE) has also reported the completion of three US-funded water and wastewater projects in the first quarter of 2011, at a total combined cost of $2.5 million.

This includes $1.9 million to design and reconstruct a sewer system to serve 17,500 people in Baghdad.

The USACE is also overseeing a further 14 water-related projects, valued at $33.7 million, and all but the delayed Falluja Area A House Connections project are scheduled for completion by July.

The $4.6 million Area A House Connections project aims to connect more than 9,000 homes to the Falluja Waste Water Treatment System, and was originally planned for completion in summer this year; instead, it’s tipped for a May 2012 inauguration.

This delay will, in turn, hold up the waste water treatment system, a $98 million project to construct a wastewater treatment facility in Falluja’s Anbar province.

Originally planned to be ready this month, the plant has been tested using water – but not yet wastewater – and a lack of training among local Iraqi engineers and the unavailability of spare parts has also caused some delays.

Key projects for Iraq
Fast-track Projects
Construction at three sites (Taji, Hilla and Kerbala) has begun on a series of combustion turbine plants, which are expected to add 660 megawatts of generating capacity to the grid within the next two years.

GE EPC Projects
EPC contracts for three GE mega deals were awarded in the first quarter of this year. Turkey’s Calik Enerji is to build the 1,250 megawatt al-Qaryat plant in Kerbala at a cost of $445m, and also the 750 megawatt al-Qayyarah plant in Ninewa for $388.5m.

South Korea’s Hyundai is also to provide an additional 500 megawatts of capacity to Baghdad’s Qudas plant at a cost of $219m. The 2,500 megawatts of capacity represented by these projects is expected to be online by 2013 or 2014.

IPP Projects
February saw bids received for the four GE projects the Ministry of Electricity plans to award to independent power producers, including the al-Samawa, Diwaniyah and al-Amarah sites (500 megawatts each), and the 1,250 megawatt Shatt al-Basrah site.

The MOE has announced that the list of preferred bidders has been narrowed down, but no contracts have yet been awarded. Depending on award dates, the MOE estimates the additional 2,750 megawatts could be fully operational by summer 2013.

Siemens Projects
With none of the Siemens mega deal projects yet contracted, negotiations for two are currently ongoing. The 1,325 megawatt al-Rumaila site and the 265 megawatt Kirkuk Taza site are both estimated to be completed before the end of 2015.

Revised Tariffs
Government-subsidised tariffs, insufficient metering and the MOE’s difficulty in collecting payment for unreliable services has left consumers with very little incentive to be energy efficient.

To address the issue of electricity wastage, the MOE altered its tariff structure in 2010, doubling the per kilowatt hour rate for domestic, commercial and government consumers for the first 1,000 kWh used per month, and more than doubling the rate for higher consumption.

Earlier this year though, the MOE proposed additional rate charges following protests about inadequate public services, with the new rules potentially seeing all consumers receiving the first 1,000 kWh consumed for free.

Features of the Iraq electricity masterplan
Generation - $37.2 billion
GE and Siemens mega deals, and other combustion turbine plants already committed to, are planned to be converted to natural gas as soon as is practical with simple-cycle combustion turbine units converted to combined cycle units.

The latter move will increase the generating capacity of the facilities by 50 per cent, with no increase in fuel costs.

The IEM also advises that to keep pace with rising demand, additional gas-fired combined-cycle power plants should be constructed starting in 2018, estimating that the cost of new generating capacity over the next 20 years is in the region of $37.2 billion.

Transmission - $9.9 billion
With the nation’s transmission network currently requiring extensive reconfiguration and upgrading, high fault levels need to be addressed, taking into account international best practices. The network also needs to be expanded to accommodate rising demand, and estimates for the upgrade and expansion are in the region of $9.9 billion.

Distribution - $8.5 billion
The IEM’s recommendation is for the nation’s first priority to be a loss-reduction programme, aimed at reducing the 35 per cent of Iraq’s generated capacity currently lost through technical faults and theft.

This loss exacerbates the supply/demand gap and impacts the Ministry of Energy’s income and, according to the plan, rehabilitation of the existing system will cost $8.5 billion, with the expansion adding a further $21.4 billion.

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