Coal, Gas

Rebuilding Iraq

Issue 11 and Volume 109.

An interview with the Iraqi Minister of Electricity explores the status of rebuilding efforts for the country’s beleaguered electric power infrastructure.

By: Brian K. Schimmoller, Chief Editor

The government and people of Iraq face immense challenges in establishing and maintaining a power network that can reliably provide electricity to the country in its efforts to promote economic development. Power Engineering magazine recently had an opportunity to speak with the Dr. Muhson Shlash, the Iraq Minister of Electricity, about the Iraqi power system and the status of rebuilding efforts. The Iraqi Parliament appointed Minister Shlash on May 15, 2005. Although born in Baghdad, Dr. Shlash moved to Canada about 15 years ago. Prior to his appointment, Dr. Shlash was the Technical Director of the Iraqi Professional Forum, an energy consulting firm.

PE: Can you describe the Ministry of Electricity’s role, responsibilities and how it interfaces with the rest of the Iraqi government?

Minister Shlash: The Ministry of Electricity (ME) is responsible for providing electric power to the country and is therefore considered one of the most essential ministries because power feeds essential services, industries, businesses, schools, and homes, all of which stimulate the economy. Without power, neither the economy nor the security situation stands much chance of improvement.

The ME interfaces with other ministries providing essential services, such as the Ministries of Oil, Water, Transportation and Trade, as well as those that provide funding and security, such as the Ministries of Finance, Defense and Interior. Meetings take place frequently, particularly to coordinate efforts to address the security situation.

Insurgent activity has been a persistent threat to Iraq’s electric infrastructure.
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PE: Can you give an overview of the Iraqi power system in terms of generation sources, installed capacity, and power demand?

Minister Shlash: The ME has 32 power stations: 13 natural gas, nine hydro and eight thermal. These power stations comprise 142 generation units: 71 natural gas combustion turbines, 37 hydropower turbines and 34 thermal steam turbines. The installed capacity at this point is 9,700 MW, derived from 2,208 MW of gas, 2,477 MW hydro and 5,015 MW thermal. This summer, demand hit a new all-time high of 8,845 MW, which is a dramatic increase from 6,800 MW last summer.

PE: The Iraqi power infrastructure was reportedly in a state of significant disrepair when rebuilding efforts began. Can you provide a snapshot of the generation, transmission and distribution systems at that time?

Minister Shlash: Iraq spent 12 years after the defeat of Saddam Hussein’s invasion of Kuwait trying to increase and maintain its electricity generation. By February 2003, just before the commencement of combat operations by coalition forces, the Iraqi electrical system was struggling to generate 4,300 MW per day. Power plants and generating units were producing less than half of their rated 9,662 MW capacity.

Several factors contributed to the dire state of Iraq’s electricity sector after 1991. First, the United Nations embargo limited Iraq’s budget. Rather than using limited resources to fund the electricity sector, Saddam diverted money to other, more favored programs. This forced the ME to cannibalize (e.g., scavenge parts from one system/machine to replace another) the electricity infrastructure, leading to a steady decline in electricity generation. Second, the Iraqi government invested very little capital in electricity operations and maintenance (O&M). The ME was unable to buy spare parts, replace parts at the end of their lifecycle or conduct routine maintenance. Third, Iraq faced declining availability of its most cost efficient, clean and productive fuel – natural gas.

PE: How extensive were power outages before the war? How extensive have they been over the past several years during reconstruction?

Minister Shlash: Under Saddam’s regime, certain areas of the country received more electricity than others. For example, Baghdad had electricity 24 hours per day during the off-peak seasons, while areas in the south would receive only six to eight hours per day. As a result, Iraq became increasingly dependent on more costly and maintenance intensive fuels such as crude oil and heavy fuel oil. Moreover, the Ba’athist regime de-emphasized technical competency and didn’t feel it was essential for managing and supervising technically complex facilities such as the power plants. This attitude resulted in a degradation of ME technical competency.

PE: How large of a role do imports play in Iraq’s power network?

Minister Shlash: About 350 MW of power is imported from Iran, Turkey and Syria. This power goes directly into islands in border regions that are not connected and synchronized to the national grid due to voltage differences. Economically, power imports are feasible because the cost to import power is lower than the cost of the diesel fuel used at the power plants in these areas.

PE: Can you comment on each of the following challenges confronting the rebuilding effort? First, physical security. How extensive have insurgent attacks been on the power infrastructure? Is the 7,000-person security force in place as of July 2005 sufficient to safeguard vulnerable assets?

Minister Shlash: Insurgent activity is a serious concern for the Ministry because these external forces are overwhelmingly difficult to counter with the ME’s existing security force, the Electricity Protection Security Services (EPSS). The EPSS needs additional specialized training and more effective equipment to resist and protect the massive infrastructure. It is virtually impossible to protect every tower in the most volatile corridors that have been subject to continuous attack, let alone the 17,000 km of line and 66,000 towers across the country. Most of the insurgency groups travel in large packs with numerous cars and abundant ammunition. These groups extend their terror further by threatening the families of the security guards.

Turbine installation activities proceed at one of Iraq’s new power plants.
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PE: Challenge #2, equipment and material availability. Have you faced problems in obtaining the equipment and materials necessary to facilitate the rebuilding process?

Minister Shlash: Yes. Damage to the grid has created a significant need for spare parts to sustain the system. Due to the security situation, however, it is extremely difficult to obtain and transport needed parts and materials into Iraq. To complicate matters, it is virtually impossible to sustain an accurate records system for the equipment and materials. Current record-keeping systems are predominantly manual in nature and lack the transparency needed at the individual power plant level. The supply chain management and warehousing functions also need vast improvement.

PE: Challenge #3, funding. The United Nations Development Program’s 2003 assessment estimated that $18 billion would be required to fully restore the Iraqi electrical system. Is your annual budget sufficient to achieve the desired goals?

Minister Shlash: The UNDP figure is not realistic, as it only accounts for the restoration of the grid prior to the war. Demand for electricity has increased dramatically, and billions of dollars are required to refurbish existing thermal units as well as construct new baseload power stations. The 2005 budget includes $300 million for capital improvements and $66 million for operating expenses. The Ministry’s annual budget is insufficient to cover the capital investments necessary to rehabilitate the plants at a rate to meet the growth in demand. We have estimated $2 billion in capital investments is required for a period of five years to be able to meet demand.

At this point, revenue from customer billing is extremely low and insufficient to cover operating costs. Due to the critically insufficient supply of power in Iraq, the public has been forced to rely on private generators during load-shedding periods. Although the public is prepared to pay for privately supplied power, any significant increase in tariffs for the current level of power supply would likely be received with overwhelming and perhaps violent resistance due to the depressed state of the economy and the astronomical unemployment rate.

PE: Challenge #4, personnel. Have you faced any difficulties in filling positions related to power sector rebuilding, operations and maintenance?

Minister Shlash: The Ministry of Electricity is over-staffed with employees who are behind their counterparts in developed countries in terms of technical knowledge and skills. There is still a long road ahead to attain the level of technical proficiency that would enable the Ministry to meet existing and growing demand for power. However, despite the lack of funding, the Ministry pursues every opportunity through donor funds or through budgeting to seek training for its employees in O&M and business operations.

PE: Challenge #5, fuel shortages. How have fuel shortages impacted power plant operation in Iraq and what is being done to address these shortcomings?

Minister Shlash: The shortage of fuel applies to both diesel and natural gas, and has significantly impacted electricity production efficiency. Running the plants on less-than-optimal fuels compromises efficiency and triples the maintenance cost because plants have to come off-line for scheduled cleaning. Although natural gas is available, the current gas infrastructure is still in its infancy due to lack of equipment and pipelines. Certain areas in the south, for example, do not have reliable access to gas supplies. However, the Ministry of Electricity plans to aggressively build its capability to source natural gas and is in regular discussions with the Ministries of Oil and Finance to facilitate the execution of this long-term plan.

PE: Where do things stand today in terms of capacity brought online, diversity of supply, new technology installed, daily power availability, transmission lines replaced, etc.?

Minister Shlash: Prior to the war, generation averaged 3,400 MW; by the end of the war, generation had fallen to 2,325 MW. Baghdad at that time enjoyed 24 hours of power per day and 14 to 16 hours per day during summer and winter peaks, while the remainder of the country was often deprived of electricity. Currently, average peak production is at 4,820 MW, with Iraq daily production at 102,500 MWh. Country-wide, power is available 14 hours per day on average, with Baghdad at 12 hours per day.

Despite efforts to restore electricity to the grid, the Ministry faces a number of obstacles in gaining sustainable MW capacity. The primary factor undermining reconstruction efforts is the escalation in interdiction to transmission towers and lines that have contributed to severe power cuts in Baghdad. Responding to these activities consumes valuable resources.

Aside from the security situation, as rehabilitation projects at some generation units near completion, fuel supply grows more critical to facilitate commissioning activities. In light of the current fuels available and until such requirements are met, the Ministry will resort to burning less than optimal fuels. Use of incorrect fuel will consequently lead to higher O&M costs, as plants will need to undergo maintenance to prevent plant deterioration at a disproportionately higher rate than if proper fuel was used.

Exhaust stack erection at a gas-fired power plant being built in Iraq
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PE: Can you profile a few specific power generation projects crucial to the overall rebuilding effort?

Minister Shlash: Project Phoenix was launched in late 2004 as the best and most efficient way to get megawatts on the grid with the then present conditions in Iraq. Project Phoenix consists of projects in seven separate locations, with a total of 26 gas-fired combustion turbines. These combustion turbines were either partially constructed, in need of repair, or needed fuel conversion because of the varying fuels available in Iraq.

Project Phoenix was designed to put a total of 699 MW of power on the national grid as quickly as possible. The project was 75 to 80 percent completed for the 2005 summer peak period. This was a strong objective in the very beginning in choosing these sites. All seven sites are to be completed by the end of 2005. The difficulties in implementing this project were numerous, including the insurgency, very difficult weather conditions with desert temperatures exceeding 120 degrees F, and continuing sand storms.

The Khor Al Zubayre Generation Project near Basrah, Iraq is a nominal 240 MW simple-cycle combustion turbine project. The project is scheduled for first fire on Unit #5 in November 2005, and Unit #6 is scheduled for first fire in early December 2005. Both units should be commissioned by the end of the year and turned over to the Ministry of Electricity of Iraq. This project will add another 220 MW to the electrical grid when fired on natural gas.

Iraq’s future power sector will consist of several thermal power plants providing 400 MW to 1,200 MW each and installed in locations where the proper fuel supply exists. Conditional upon the guaranteed supply of natural gas, more gas turbines will be installed in combined-cycle configuration.

PE: Moving forward, what are your main priorities in establishing a reliable power network for Iraq?

Minister Shlash: The Ministry needs to execute a comprehensive and manageable plan to support both reconstruction and preservation of the infrastructure assets. In its assistance to the Ministry, the Iraq Reconstruction Management Office (IRMO) has developed a short-term action plan for winter 2005 that focuses on a number of areas: generation, transmission and distribution projects; O&M and capacity building programs; fuel supply management; power imports; and infrastructure security.

The Ministry recognizes that the ME’s workforce needs to advance its technical skills to effectively operate and manage new and rehabilitated assets. However, the Iraq Transitional Government (ITG) and the U.S. Government currently lack the funds to ensure execution of necessary O&M and capacity building activities. Unfortunately, the ME does not have sufficient funds in its budget to support such a program going forward. Therefore, the significant funding gap for both O&M and capital investment may hinder the preservation – let alone the advancement – of the system.