Iraq still plagued by outages

IRAQ - Lack of electricity is still a big problem in Iraq, and there's lots of blame to go around. Much of it goes to the usual suspects: too many insurgent attacks, too few experienced engineers and technicians.

But there's another factor, big and getting bigger, which you probably haven't read about. It's one that Prime Minister Nuri Kamal al-Maliki and his bureaucrats could solve quickly, if they wanted to: Iraq's Ministries of Oil and Electricity are at loggerheads.

While they bicker, Iraqis seethe. During a cold snap this January, I spent a morning interviewing people on the streets of Falluja. Over and over again, I heard variations on two basic themes: appreciation that the coalition had driven the insurgents out of town, and anger over the inability of their government, with American assistance, to provide them with more than an hour or two of electricity each day.

The number of hours may vary, but much the same complaint can be heard just about anywhere in Iraq. Electricity remains a scarce commodity, even though more than $6 billion, mostly in American money, has been devoted to improving supply.

From an encouraging peak of 5,530 megawatts last July 11, typical daily peaks have slipped back to around 4,500 megawatts, according to a recent report by the Special Inspector General for Iraq Reconstruction. That's only about 500 megawatts more than what it was shortly after the start of reconstruction five years ago - before the completion of thousands of American-supported projects. Summer peak demand will be at least 11,000 megawatts, the U.S. State Department estimates.

While the insurgency is a major factor, the heart of the matter is that the oil and electricity ministries have coexisted uneasily ever since they were reconstituted by the Coalition Provisional Authority in 2003. To run its generating plants, the cash-starved Electricity Ministry must beg for whatever fuel the Oil Ministry can spare, while buying as much as it can from places like Kuwait. But charity isn't a priority for Iraq's Oil Ministry - quite the contrary.

Almost all of the Iraqi government's revenues come from oil exports. They totaled $39.8 billion last year, the government says, accounting for about 95 percent of its income. So it is not surprising that the oil minister, Hussain al-Shahristani, has been acting as though every barrel not exported is money wasted.

But that attitude, and the tacit approval of Maliki, is helping to prolong the economic, social and security quagmires that continue to afflict the country. All over Iraq, generating plants sit idle for lack of fuel. The State Department estimates that on a typical day about 1,500 megawatts of power, or one-third of the country's peak output, are unavailable because the Electricity Ministry cannot get enough fuel.

While the Oil Ministry swells the government coffers, hospitals, water-pumping stations and sewage systems function sporadically or not at all. And now countless Iraqis are preparing for yet another summer of sweltering nights and spoiling food.

The Oil Ministry's also refuses to pay for any oil-related projects that do not help the cause of exporting more crude oil. "The Oil Ministry has done zero projects to benefit electricity," an American diplomat in Baghdad told me. "They couldn't care less."

Reconstruction experts at the American Embassy in Baghdad told me of a dozen or so proposed oil projects that could make a big difference in the electricity supply. One is the renovation of the pipeline that brings crude from the southern oil fields to the Doura refinery in Baghdad, which is the nation's largest producer of kerosene and gasoline.

A branch of this pipeline also feeds the Musayyib power plant, south of the capital. Workers there are now finishing a $50 million structure, called a topping unit, to produce diesel fuel for 10 new turbine-generators. Unfortunately, the troubled project to buy and install those generators has dragged on for years and has cost American taxpayers more than $300 million so far. Only four of the generators are ready to operate, but even they sit idle for lack of fuel. A few more generators are expected to be ready in the next couple of months, but the pipeline still won't be capable of delivering enough crude oil for conversion into diesel at the topping unit to run the generators.

To allow this to happen, the pipeline would need an additional pumping station and some general refurbishing. The cost would be very small compared to the money already invested at Musayyib, or compared to alternative fueling schemes like bringing in diesel fuel in convoys of dozens of tanker trucks every day. But the Oil Ministry refuses to modernize the pipeline's pumping system because it wants the oil flowing south for export.

Meanwhile, at the big Qudas power station north of the capital, workers are adding two new generating units to the eight already installed. There's an old oil field literally across the street from Qudas that now pumps enough crude-oil distillate to supply three of the plant's generating units; the other units, however, rely on fuel being trucked in.

It would cost an estimated $50 million to rehabilitate enough of the fields' aging wells and equipment to supply enough an amount of crude, diesel and gas sufficient to fuel 7 of the 10 generating units that Qudas will soon have. Consultants from the American engineering firm Fluor estimate that, given the cost savings from no longer having to truck in the crude, the $50 million would be recouped in about a month. But, here, too, the Oil Ministry isn't interested. "They have no dog in that fight," an embassy official told me. "There's no way for them to make money out of it."

Perhaps the biggest waste of all in Iraq involves not oil but natural gas, an enormous resource that is literally squandered all the time. It comes out of the ground along with oil, and is simply burned off, or "flared," to prevent it from exploding. Yet several studies have concluded that if the gas from the southern oil fields alone were used to generate electricity, it could provide 4,100 megawatts, nearly doubling Iraq's total capacity. Nevertheless, the Oil Ministry has pushed back on every Electricity Ministry proposal over the past five years aimed at capturing and delivering the gas to generating plants.

Not only the two ministries are at odds, their leaders are as well, American diplomats tell me. The oil minister, Shahristani, was trained as a chemical engineer, worked as a nuclear specialist and spent years in Saddam Hussein's prisons - but he had no experience in the oil industry before his appointment.

He is, however, well connected with the Supreme Council for the Islamic Revolution in Iraq, the country's dominant Shiite political party. Meanwhile, the electricity minister, Karim al-Hasan, holds a Ph.D. in electrical engineering and came up through the ranks of the ministry, which gives him great expertise but little political sway.

Efforts to bring coherence and compromise to Iraq's energy ministries have been sparse and fruitless. A multi-ministry "energy-fusion cell" was set up nearly a year ago to work with the Pentagon and State Department on an integrated energy plan, but this has gone nowhere.

One promising note: The Iraqi government's new agreement on sharing oil resources among regions apparently has language mandating that the government stop flaring its natural gas and start capturing and using it.

Iraq has some of the world's largest known oil reserves, but it spent nearly $1 billion - maybe twice that - importing refined oil products last year. That's not the only paradox. Iraqis are experiencing the unfortunate results of America's failure to anticipate the fuel requirements of the three dozen generating units it installed early during reconstruction.

Sadly, thanks to bureaucratic infighting and an obsession with export revenue, their own government is now on a path to institutionalize and perpetuate those energy problems indefinitely.