Iraq’s Perennial Electricity Problem and its Implications for Social Stability

The growing social unrest we see in Iraq today can be directly linked to the government’s inability to provide basic services, including electricity, to its citizens. Power disruptions have increased in recent years and are likely to reemerge this summer, placing an immense strain on the government’s relationship with the Iraqi people.

Nearly two decades after the fall of Saddam Hussein’s statues, the Iraqi government still struggles to provide its society with electricity around the clock. The Iraqi electricity sector suffered even before the 2003 invasion, but the last 19 years have seen it weakened even more due to severe corruption and gross negligence. The plans put forth by the government to tackle the lack of electricity have more often proven an easy way for officials to embezzle funds through lucrative contracts than a way to improve the lives of Iraqi citizens. As a result, instead of leveraging its own resources, Iraq has become more reliant on Iran to meet its electricity demands.

A Mounting Crisis

Widespread electricity outages are part of daily life in Iraq and affect citizens regardless of class. To compound this issue, the gap between available electricity and state-wide demand is set to widen in the future. The past five years have already witnessed a growing disparity between electricity supplied by the government and the electricity demanded by the Iraqi people; so far, Iraqi electricity consumption—which grew nearly 30% during this period—has outpaced the government’s efforts to meet surging demand. The outages also contribute to the government’s inability to provide other basic public goods, such as hospitals, airports, and other government buildings whose good functioning has suffered from the interruptions.

These problems will only grow worse in both the short and long term. For example, the next scorching summer will dramatically stretch Iraq’s capacity to meet demand. Observers noted last year that, as the government struggles to meet the people’s need for electricity, protests and demonstrations become more likely, as observers noted last year. Long term, the challenge will be more arduous. Some estimates point at an increase in demand of nearly 10 percent year-on-year, while others suggest that if Iraq’s population increases by one million persons per year, total demand for electricity will double by 2030. Meanwhile, terrorist groups have sought to take advantage of Iraq’s discontent against the government by sabotaging electricity grids and attempting 18 attacks against transmission lines.

The Curse of Corruption

Rampant corruption remains the central reason behind the frequent disruption of electricity in Iraq.  Iraq desperately needs to modernize its entire electricity supply chain— from generation to transmission and distribution. It also needs “to rehabilitate the country’s grid that generates about 15,000 megawatts, although peak demand can reach around 24,000 MW.” There is a nexus among businessmen, politicians, and armed groups that benefit from the status quo that ensures that each party receives their cut from the government’s contracts. Billions of dollars are siphoned away from public coffers by inflating the prices of construction materials; those officials who refuse to take part in these corrupt practices face threats and often lose their jobs. The result leads to both a dearth of reliable electricity and a waste of the country’s natural resources and taxpayer funds. Iraq’s Prime Minister claimed that Iraq has spent more than $62 billion on restoring electricity. A parliamentary committee put the number even higher; an investigation of the utility sector estimated that Iraq has invested $81 billion since 2005 without any noteworthy improvement to its electrical output or the grid’s reliability.

Iraq’s shortages of electricity also stem from its failure to tap into the country’s natural resources. For example, Iraq is endowed with significant amounts of natural gas, but the country lacks the capability to capture it and leverage its immense reserves into electricity. At the same time, the country flares (or burns) huge quantities of methane gas associated with oil extraction. According to the World Bank, Iraq is one of seven countries that account for “roughly two-thirds (65%) of global gas flaring.” In 2017 alone, Iraq flared more than 600 billion cubic feet of natural gas, making it second only to Russia. The more oil Iraq produces, the more gas it will inevitably flare. If Iraq were to harness the natural gas emitted by its oil wells instead of wasting it in this way, it could achieve a more balanced energy portfolio and alleviate some of its domestic electricity problems.

Failing to do so will only leave Iraq more reliant on Iran for more expensive natural gas and electricity. According to the Iraqi Oil Minister, Ihsan Ismael, Iraq pays Iran $8 per million British thermal units (BTU) for Iranian gas. By comparison, it is estimated that it would cost the government less than $2 BTU to produce Iraqi natural gas. Iraq also relies on Iran for nearly a third of its electricity, though this too has been subject to interruptions. For instance, when Iran reduced gas supplies from 50 million cubic feet to 8.5 million cubic feet to Iraq because of unpaid bills, widespread electricity shortages struck central and southern Iraq. Though Baghdad has sought to diversify its electricity supply through overtures to countries such as Saudi Arabia, Turkey, Jordan, and Kuwait, progress on these fronts has been hindered due to disagreements over pricing. Nor will the government’s plan of purchasing natural gas from Qatar be realized soon. Reconfiguring Iraqi infrastructure so that the country may import natural gas will take significant investments over a long period of time. Meanwhile, global demand for natural gas is increasing amid the Russia-Ukraine war. Therefore, gas exporting states like Qatar will likely prioritize fulfilling existing contracts before taking on new customers.

Finally, part of Iraq’s electricity problem can be traced back to the country’s neglect of renewable energy resources. Given the intense sunshine in Iraq— particularly in the western and southern parts of the country—more than half of Iraq could rely on solar energy if Iraq fully realizes its capacity to harness the power of the sun. The growing demand for electricity could be met with cost effective and self-sufficient solar power. The government currently plans to generate between 2.24 and 7.5 GW of electricity from renewable energy by 2025. This is likely an exaggeration of future capacity, as harnessing renewable energy sources will face many hurdles; Iraq lacks a coherent solar policy, a strong legal system, and the ability to attract foreign investment because of byzantine bureaucratization. At the same time, the government must balance its desire for a diverse energy portfolio with its other objectives, including  distribution, transportation, fee collection, and electricity infrastructure reconstruction.

Electricity is one of the public goods that impacts essential parts of daily life for millions and has been one of many reasons behind widespread discontent with the central government in Baghdad. Although the current government is trying to ameliorate the situation by devising new plans and diversifying its energy supply, these measures will prove to be a short-term fix for a deeply ingrained and worsening problem. Iraqis will endure another sizzling summer without appropriate access to electricity. As significant improvements to Iraqi electricity infrastructure remain elusive, the likelihood of protests will only increase.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.