Iraq to repay Iran $500 million for electricity debts

Iraq to repay Iran $500 million for electricity debts
Iraq set to resume repaying $1bn energy debt owed to Iran that was racked up in just four months.
1 min read
19 July, 2017
Iraq reportedly owes Iran $1 billion in energy debts [Getty]
Iraq will pay half a billion dollars to Iran within the next two weeks to help cover an energy debt owed to the Islamic Republic, an Iranian minister said on Monday.

Speaking to the state-run IRNA news agency, Deputy Energy Minister for Energy and Electricity Affairs Houshang Falahatian said that Baghdad still owed $800 million to Tehran for energy costs accrued over the last four months.

He said that energy supplies would continue despite the significant debt.

Baghdad had previously attempted to clear its debt by paying $100 million a month. This agreement failed after only three instalments, Iran's Financial Tribune reported.

Baghdad and Tehran finalised a $3.7 billion per year gas exporting project last month, which will see Iraq receive around seven million cubic-metres (mcm) of natural gas per day. 

The agreement was reportedly delayed due to Baghdad's inability to pay its outstanding debts.

Despite being one of OPEC's major oil producers, Iraq has struggled to meet its population's demand for electricity. According to a Reuters report from 2016, Iraq's peak electricity demand in the summer was 21,000 megawatts, however the country's grid can only produce 13,000.

Years of Islamic State group control of vast swathes of Iraq also further damaged the grid's ability to meet electricity demands.