Iran cuts Electricity supply to Iraq, payments and contract needed

Iran cuts Electricity supply to Iraq, payments and contract needed

Iran has said it halted electricity supplies to Iraq as the contract between both countries had expired, but failing to explain whether Iraqi debts related to the deal were a factor.

Iran was able to force control in Iraq after Saddam’s defeat by empowering the Shiite armed militias and planting Iraqi politic figures that rule the country according to Iran’s plans. However, the cost of this control became too high, so Iran started to put pressure on the Iraqi government to pay for the services Iran provide.

Arash Kurdi, CEO at Iranian government-owned company Tawanir, was quoted by Fars news agency on Tuesday as saying that supplies to Iraq were halted as the contract governing the deal expired and needed amendments before proceeding. He said changes to the contract should take into consideration the changing currency rates.

An Iranian delegation traveled to Iraq last week to discuss terms for a new electricity export contract, Kordi said, speculating that power supplies would resume in a month.

Iraq imported 800-1,000 MW of electricity from Iran under the previous contract.

Though Iraqi electricity officials were quoted as saying that the supply halt was carried out without prior notification, Kurdi stressed that his company had notified the Iraqi side earlier that the contract was nearing its expiry date, and that delegations from the company were sent to Iraq to discuss the matter.

Iraqi electricity ministry spokesperson Mosaad al-Modares said Monday Tehran took the measure after Iraqi debts pertaining to the deal had reached US$1 billion. But Kurdi declined to go into details at that point, and only assured that means to settle Iraqi debts would be discussed by both sides.

According to reports, Iran cut power supplies to Iraq in April 2015 because of unpaid dues. But exports returned to normal several weeks later after Baghdad pleaded with Tehran to resume supplies as the country faced day-long power outages which had led to nationwide protests.

Iran’s Energy Ministry said last year that Iraqi authorities had agreed to repay the debt by paying $100 million per month. However, after three installments they started to procrastinate.

Al-Mudaris confirmed that the last $100-million payment was made in May “but since then no further payments have been made.”

Kordi suggested that Tehran intends to hammer out a better deal with Iraq. “One of the important considerations (in the new electricity export contract) is transparency in payments by the Iraqi side,” said the energy official.

This move may be the first of many following that Iran may take to cover the costs of its wars in Yemen, Iraq and Syria. Iran gave the Shiite population in Iraq the power, gave them both political and military force and helped them to control the country. It seems that the time has come for them to start paying for Iran’s favor, so it can go on with its expansionary plans in the region.