01/08/2021 09:30 Number of readings 129 Section: File and Analysis
Fearful steps towards the privatization of electricity in Iraq..Voices of warning and others of welcome
Baghdad/The Obelisk: There is a renewed debate in the Iraqi media, between the economic elites and the Ministry of Electricity, about the feasibility and realism of privatizing the electricity sector in Iraq.
While the resigned Minister of Electricity, Majed Hantoush, said on May 12, 2021 that “privatizing electricity will cost the citizen one million dinars per month,” referring to its high cost, economists see on June 09, 2021 that “the solution lies in privatizing the electricity sector.” Electricity, due to lack of confidence in its proper management.
According to a report written by Adnan Abu Zeid to Al-Monitor, opposition to the electricity privatization project has emerged since the era of former Prime Minister Haider al-Abadi, who said on December 6, 2017, that “the ones who raise public opinion against the privatization of electricity are the rich who do not pay and consume two-thirds of them.” Public consumption.”
And these oppositions continued during the era of Prime Minister Mustafa Al-Kazemi, who pushed for the privatization of electricity, and began its first steps in selling electric stations in Basra Governorate (south) on January 28, 2021, to private companies.
In another face of the objections, Member of Parliament Zahra Al-Bajari says that "Article 47 in the 2021 budget allows the government to sell state assets in order to consolidate resources, and this leads to the sale of power stations, which were established from public money."
In contrast to the opposition to the privatization of the energy sector in Iraq, the Washington-based Atlantic Council Research Institute calls on October 30, 2020, the Baghdad government to "accelerate the privatization of the distribution sector and end the monopoly of government institutions in this sector in order to improve services for citizens," noting that
"the paper Al-Bayda, which was adopted by the Al-Kazemi government, includes a detailed plan to develop the electricity sector.
Dr. Mazhar Muhammad Salih, Economic Adviser to Prime Minister Mustafa Al-Kazemi, admits that “the Ministry of Electricity and with this thorny central structure in the management of production, transmission and distribution of electricity, has become at the weakest point in the history of energy regulation in Iraq,”
calling for “an entity that works on the basis of the market and more.” Awareness of managing energy affairs and changing the management style to a new ownership close to the philosophy of the private sector.
Saleh suggests "separating the distribution or collection sector from the government administration to turn it into public or mixed joint stock companies, and give priority to its shareholders for workers in the energy sector itself."
Saleh suggests "a gradual transformation of the production and distribution sector to private companies, according to the amended Public Companies Law No. 22 of 1997, and that centralization will be limited to the regulation of energy policies, and decentralization is in the management of production, transmission and distribution according to market rules."
A member of the Iraqi Parliament’s Energy Committee, MP Amjad Al-Aqabi, holds the Ministry of Electricity responsible for the failure of the privatization experiments that began in the era of Al-Abadi, because it did not provide the requirements for the success of the experiment and did not take measures related to modernizing the dilapidated distribution networks.
Al-Aqabi said, "The privatization succeeded in areas in Baghdad, where the processing amounted to 24 hours, and at the cost of an occasion that won the satisfaction of the citizens."
Al-Uqabi considered that "the first obstacle, today, to privatization, which is called service and collection contracts, is the distribution networks for which the Ministry of Electricity bears the responsibility."
However, the head of the Iraqi National Business Council, Daoud Abd Zayer, evaluated privatization projects in the era of al-Abadi, Adel Adel, "failed, which caused political, social and parliamentary opposition to it as a result of concluding contracts that lack transparency and competition, and lack professionalism."
Abd Zayer reveals that "projects to produce more than ten thousand kilowatts, were referred to contracts without legal umbrella, and the government was restricted to paying 5 to 7 billion dollars annually, for a period of twenty years, at a time when the budget of the Ministry of Electricity is about three billion dollars."
Abdul Zayer believes that "the collection department in the Ministry of Electricity is a failure, and it has concluded contracts with unsound companies, which stole the collection money and did not hand it over to the state."
Abdul Zayer said that "the Iraqi National Business Council is proposing to the government a company specialized in renewable energy that works on clearing with an electricity network, and the one with the lowest cost of production is the one that supplies the distribution network with energy, according to the stock exchange system."
Abd Zayer points out that "planning in new cities must include independence from the national electrical network, and registration in them should be through supplying renewable energy," noting that
"the Ministry of Electricity is unable to find a solution to the problem of energy shortage due to administrative and legal problems, and the contracts that restricted it to payment." For about 20 years, she doesn't have enough money."
However, monitoring of popular attitudes towards privatization captures successful and positive field scenes that citizens talk about through social media in the Zayouna, Yarmouk and Al Harthiya areas in Baghdad, which were included in the privatization of electricity distribution and the supply reached 24 hours a day, and the need for private generators was no longer needed, and considered them Citizens have a successful experience despite some shortcomings.
In one of the images of the Iraqis' willingness to accept privatization, writer Hussein Ali Al-Hamdani writes that "the citizen's dependence in providing electricity by more than 80 percent on the private sector represented by private generators means that the Iraqi street is psychologically and even economically prepared to deal with the privatization of electricity as a fait accompli, especially as it is It will provide him with electric current around the clock."
In light of the escalation of popular resentment against the deterioration of the energy sector in Iraq, the fastest way to address the imbalance is through privatization, a system that is in force in many developing countries, and in developed countries in Europe and the United States, but success remains dependent on the lack of projects.