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Iraq to launch IPP tenders by year end

At least five major IPPs will be awarded, says key advisor to PM.

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Iraq's power generation surge will rely mainly on natural gas.
Iraq's power generation surge will rely mainly on natural gas.

The Iraqi government will be launching tenders for five major independent power projects (IPP) in the fourth quarter of 2010, in a bid to meet surging demand for electricity by involving the private sector, said a former oil minister and key advisor to the country’s prime minister.

Thamir Al Ghadhban, chairman to the advisory committee to the prime minister of Iraq said that the tenders will be launched “by the end of this year.”

“At least five big major stations will be offered for private investment , each one is between 750MW and 1,000MW so this is about 5,000MW,” said the former minister, who believes the contacts will be awarded early in 2011.

“I expect [the contracts to be awarded in] the first quarter of next year but the ministry is working hard, they are about to finish the model contracts for investors and at the same time, the government is financing a number of EPC contracts for the new GE and Siemens gas turbines and on top of that all thermal stations,” he added.

Iraq is struggling to meet rising demand for electricity. Estimates for peak demand in 2009 are between 10,000MW and 13,100MW. Conversely, electricity supply from the national grid averaged at 5,952MW, according to the US Special Inspector report to Congress.

Iraq has already invested a total of US$5 billion in new equipment, buying 56 gas turbines from GE for $3 billion and 16 gas turbines from Siemens for $2 billion.

To catch up with demand, the government has set the ambitious targets of growing generation from a nameplate capacity of around 15,500MW to 27,000MW by 2013, according to a report by Business Monitor International.

Ghaban disputes those figures and targets: “What we generate now is about 7,000MW, we require at least 14,000MW, but we are going ahead in the next 10 year to reach levels of 22,000 to 24,000MW.”

He believes the gap between supply and demand will be solved within five years time with private sector involvement in the power generation sector: “There is a huge scope for growth for power generation in Iraq and we are encouraging foreign investors and at the same time we are working with contractors on EPCs.”

“I expect we need some five years from now to solve the gap between supply and demand and after that we have to cater for the growth, we expect now there is a 10 percent annual growth in demand and this means 1,000MW per year to satisfy the growth.”

In addition to greenfield projects, the government is also looking to resurrect four power projects that were left uncompleted by the old regime. Some of those will become operational within two to three years, according to Ghaban.

“There are a number of major projects that were actually initiated by the former regime and were stopped because of the sanctions and each one is around 1,000MW or 1,200MW. There are four of them around Baghdad and west of Baghdad and in Mosul,” he says.

Power generation capacity is to further increase through plant expansion, while international oil companies are set to build small scale plants to cover their electricity needs.

“There will be an expansion of existing stations throughout the country, plus the oil companies are also going to build power stations on gas that will be produced and will therefore be self-sufficient while supplying the surplus to the national grid,” says Ghaban.
 

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