Analysis of the problems of electricity in Iraq and recommendations of methods of overcoming them

Abstract

The Iraqi power sector is at a critical stage that requires urgent reforms. Concerns regarding the ability of the system to provide steady power and its operational inefficiencies, in general, have been expressed by the industry and academia. Currently, the power industry is experiencing one of the highest demand growth in the world, and given that it is capital intensive, it takes up a large share of Iraq’s government capital investment program. More so, there is a huge increase in the financial burden of the Iraqi electricity supply industry due to the high subsidies required for the coverage of the recurrent expenditure. This subsidy is regarded as one of the highest in the world, given the extremely low traffic which does not cover up to 20% of the periodic expenditure. Apart from the huge subsidy in electricity tariff, another major and indirect socioeconomic subsidy is the fact that the industry is over-staffed with over 50,000 employees which under normal circumstances should not be more than 15,000. The estimated annual cost of the aforementioned inefficiencies and insufficient power supply is about $3 to 4 billion. In 2013, about 70% of the generated electricity was lost, and this loss is in three areas, including commercial, technical, and administrative losses. Therefore, there is a need for massive reforms that are targeted at addressing the entire issue. This can be achieved through the engagement of the private sector, higher competition, and the introduction of novel regulatory and legislative frameworks. In addition to that, the available sources of energy in Iraq need to be optimized alongside gas usage related to oil extraction, while solar energy in Iraq is explored and the solar hybridization of the current power stations.