The ‘Explosion’ plan in the electricity sector

By Dhyaa Almurib and Harem Karem:

This study was conducted in 2008 to investigate the false promises of mealy-mouthed opportunist demagogues in Iraq and Kurdistan who were promising heaven on earth during elections, like no religious priest or prophet has ever done, but in reality were after power and prosperity for themselves and their gangs. After updating the study, we believe it is still relevant and will shed some light on the current mysterious questions surrounding the electricity sector in both Iraq and Kurdistan – issues highlighted by the recent dismissal of Iraq’s electricity minister Raa’d Shalal, who has had all his assets frozen following allegations of corruption.

The Iraqi minister of electricity Dr Karim Wahid, during his visit to Al-Sabah daily on Friday 27 of June 2008, underlined that he will start an “Explosion” plan to solve the electricity crisis and he promised that the year 2012 (and again he said 2012) would be the end of the crisis: “Reassuring the citizens that 2012 would be the year of relaxation of the crisis. The output would reach 14000MW”. It is our right and the rights of other citizens and official alike, to ask, what happened to the past promises of the minister and the ones after him? Will the ministry ever solve this crisis? And what happened to the contracts which they mentioned and what was the fate of the money spent thereon? Why have we gone backwards after spending billions of dollars?

First: We read the following in the 2004 – 15 Ten year Plan which was issued in Oct 2004 in the introduction section 3 under the heading of ‘The plan for the Build up of the generation capacities’:

“Measures and efforts shall be taken to secure the continuity of the electricity supply to all consumers and it should be sought to reduce the hours of planned outages until it is completely eliminated in 2007 through the fulfilment of increase in the installed capacities which generate at present (5200) MW, which are easily available now? For this purpose new generation capacities must be read as follows:

The year 2004 (1000 MW REHABILATION + MW NEW)

The year 2005 (1000 MW REH + 1000 MW NEW)

The year 2006 (1000 MW REH + 1000 MW NEW)

The year 2007 (1500 MW REH + 1000 MW NEW)”.

That is to say the total rehabilitation is to reach 4500MW whereas the new units would add up to 3800MW. Sub-para of the same article underlines that the rehabilitation would add new capacities to the grid totalling 2010 during the years in question.

If we stop at this point and add capacities to the contribution of the rehabilitations, the total would come up to 5810MW. If we add this to the then existing capacities as disclosed by the tables attached to the plan which were 4400MW (and not as they are alleged to be, 5200MW), we would come up to a total of 10210MW which surpasses the load expected for that year (2007) of 9460MW.  (According to the reports of the Special Inspector General for Iraq reconstruction submitted to the US Congress and IMF reports).

So what happened?

Second: The minister made statements to ‘As-Sabah’ Daily on 9-10-2006 which can be summed up as follows:

  • The minister of electricity said that the ministry had prepared a plan to boost the network with 1300MW before next summer (i.e. 2007 summer).
  • The ministry will announce building new units in south Baghdad gas turbine station to provide 360MW, 8 of which will enter into the service before next summer (2007) and the other will be completed this year.
  • The council of ministers approved the building up of the new ‘musayeb’ power station which will provide 500MW. Also units will be rehabilitated in South Baghdad and Dora with total capacity of 250MW.
  • The minister intimated that the ministry personnel succeeded in producing 6000MW from the existing stations.
  • Two units will be added to Al-Hartha power station in coordination with the World Bank, hoped to be completed at the end of 2007 and boost the network with 400MW.
  • He emphasized that the contract to build the Waset Station which will add (1300) MW had been submitted to the council of ministers. The station will be completed within 34-months. Four stations will be built at AL-Sadr City with a capacity of 500MW within 18-months (i.e. 9 Mar 2009). Let us suffice with that and add up the figures:
    • 1300+2500+360+500+6000+400+500 = 9560MW the last of which is to be accomplished in Mar 2009.

Can we ask whether had gone these promises and what happened to the contracts which were said to have been awarded and signed? We have seen from the IMF data which were taken from highest official Iraqi sources that the monthly production at the highest. Peak reached which was in July 2006 was only (4477). This figure represents only 74.6% of the figure which the minister said that they were fulfilled (Before the accomplishment of those projects) and only 46.8% of what he promised to achieve.

The ministry with all its responsible brass hats still insists that they are on the thresholds of solving the crisis while the people are scorched by the summer heat and frost by the winter glacial, and the factories are at stand still. The new industrial projects were forced to manage their own power supply, and they are building such power station, as was the case with the new cement plant in the Kurdistan region.

Before proceeding to discuss the explosion plan, we would like to mention some points which we deem extremely important in this connection.

First: All the reliable and internationally recognized technical sources assert that the gas turbine achieve their optimum operating efficiency in operation and planned duration on by using proper fuel which is natural gas, and by using the combined cycle which can attain efficiency ranging between 48 – 60% (As in the case with some units in Jordan) whereas the gas turbine in our country operate at 38% according to the ministry, yet the minister insisted fuelling the turbines with all kinds of fuel such as imported diesel, crude oil and even (HFO). The journal of the American Independent Electrical and Electronics Engineers (IEEE) commented on this by saying it was like someone trying to make Boeing aircraft fly by burning tar!! The result was the continuous outages, the high costs of maintenance and the disruption which led to total collapses of the entire grid.

Second: It is true that the time needed to install and operate the gas turbines is less than that required for the steam thermal stations, but the latter are more reliable in production and continuous performance and less need of maintenance. They can be operated by a flexible variety of fuels (although the natural gas is the ideal for them too). Once again we quote, what ‘Spectrum’,the journal of the IEEE, wrote in February 2006: “The gas is sorely needed. Most of the generation units installed or refurbished so far during the reconstruction-40 out of a total of about 57-are based on combustion turbines. They run optimally only when being fuelled by natural gas, which few of them are at the moment. The rest are running on diesel fuel or heavy derivatives of crude oil left over after the more desirable grades are separated out in refining. Those more desirable grades of crude are shipped out of Iraq, to bring desperately needed revenue into the country. And the ministry of electricity pays the ministry of oil a small fraction of world-market price for the fuel it needs to generate electricity. Thus, the electricity ministry must be content with whatever it can get, and generally what it gets are fuels that few other utilities in the world would be willing to burn”.

The fuel situation is a mess, says Keith W. Crane, senior economist at the Rand Corp’s Washington Office. He was an adviser to Ambassador L. Paul Bremer, the civil administrator of Iraq after the war. “There are no prices, no incentives, nothing”. Diesel fuel which is produced in sufficient quantities in Iraq is trucked to the generation plants from Turkey at great cost. But that obstacle is nothing compared with the problem of the heavy fuel, including something called Banker C, which powers a lot of Iraq’s generation plants. Even under the best circumstances, a PC generation specialist in Iraq tells us, a combustion turbine running on crude oil or diesel fuel requires two or three times as much as maintenance as one running on natural gas. And present-day Iraq isn’t an example of the best circumstances. Before these heavy fuels can be burned in a combustion turbine, they have to be treated with a substance called an inhibitor to mitigate the affect of elements like vanadium that would damage the turbine blades. The inhibitor binds the vanadium to magnesium, to keep the vanadium from corroding the blades. Unfortunately, the resulting compounds are deposited on the turbines blades. So the units have to be taken out every week to have their blades cleaned. “To buy inhibitor in dollars per litre, is more expensive than crude,” one engineer told us: “Last summer”, he went on, “we bought all the inhibitor on the shelf in the world for a four month supply in Iraq. Let me put it in simple terms: nobody’s dumb enough to do what we are doing.”

Third: When the power crisis reached suffocating points, the ministry resorted to importing it from neighbouring countries, especially Turkey, Syria and Iran. A specialized publication wrote about the purchase of electricity from Turkey saying: “Iraq’s importation of electricity from other countries encumbered it with heavy costs as the result of the price differences between domestic production and importation”. This is all the more so after missing the opportunity for building the power station from 2003 until the present. It suffices to mention in this respect that a non-completive contract was signed in February 2005 with a Turkish company to supply Iraq with 300MW for five years at the cost of 7 cents per unit, and then to supply 700MW at the cost of 5.85 per unit for the same period.

Both prices were subject to annual increases, in which case the cost of the electricity will be seven times the expected domestic cost. Besides the construction of national projects such as generators etc are usually financed by long-term credits unlike the electricity imported from abroad which is usually paid on the monthly basis. The total cost of the Turkish contract, 2.6 billion dollars, is enough to design, install and operate generating plants with a capacity of 2000MW all over the country.

We cannot but observe here the repetition of the tragedy of importing oil products on which more than 9 billion dollars were spent in three years only (from 2004/2006) which was enough to build refineries to meet double the requirements of the country for oil products.

There is no harm to draw from the experiences of neighbouring countries. In Jordan, for instance, natural gas constitutes 81% of fuel used in power stations, while HFO only 18% for the thermal steam stations and 1% of hydropower, wind and diesel.

Jordan has combined cycle stations with a capacity of 900MW, with other 370MW under construction and 370 under consideration. The simple cycle units, however, are very small in number and fuelled by diesel for emergency cases only. The available data shows that the efficiency of simple cycle turbine does not exceed 36%, whereas those of combined cycle 48% to 60%. This difference in the efficiency is due to the exploitation of the exhaust gases at the outlets of the turbine to generate the necessary steam to operate the steam turbine.

Besides the fuel which is used has a big affect on the frequency of the maintenance is four times less, compared with the H.F.O.

It should be pointed out that the cost of production of one kilowatt. Our by using liquid fuel is 15 times more than the use of natural gas.

However, blame should not be confined directly concerned authorities, but should include the higher planning and consulting authorities in the state which compromise people with high university qualifications of various specialties. What is their role if not to point the position of the disorder and deviation? How can a politician be asked to lay down and follow up a correct policy without the assistant of experts?

The ‘Explosion’ Plan

Although no information is available on this plan apart from the brief report, which was not published by As-Sabah, by a correspondent who said that the output would be 14.000 megawatts, in 2012, we shall take his figures as they were reported.

The new gas units in the south:  2500MW

When oil output rises to 6 MBD it will rise to:  4500MW

A contract with GE: 650MW

Another (with GE): 12000MW

Waset and Nassiriya: 1400MW

Al-Hartha: 700MW

Total (by ignoring the second figure because it is groundless): 17250MW

The figures add up to 17250MW apart from currently available at present. What is this contradiction? And will this plan have the same fate as its predecessors – on paper only – or what? Before winding up our subject we reaffirm the importance of the thermal steam plants. There is an insistence to underrate these plants and exaggerate the use of the gas turbines (SIMPLE CYCLE). Mr. Raad Al-Hares, the senior under secretary of the ministry, was quoted to say that the operation of the gas turbines requires 2-3 years to finish. He said that the shortfall in output is about 5000 – 6000 MW and that the construction of gas turbines to produce 5000MW requires only $2.5 billion.

In the same breath under-secretary went on:

“The appropriation of the ministry in 2007 were 1.2 billion dollars and in 2008 the same sum was appropriated, whereas our real need to go up to $4 billion dollars for five years until the shortfall is covered”. Can the reader solve the riddle? While he says he can cover the shortfall of electricity with $2.5 billion, he says again that he needs $20 billion.

The under-secretary concluded by saying: “The thermal power station requires 3-4 years to put them in operation and the cost of the 5000MW is about $5 billion dollars or double the gas turbine station and take 1-2 years more, that is why the ministry gives priority to the gas turbines”.

We ask how the under-secretary that his ministry spent more than $7 billion up to the end of 2006 – which was mostly spent on gas turbines – and yet the highest record of daily generation was in Aug 2006 which was 4477MW from the whole grid, new and old? Does he consider this as a parameter for the plants, they could have been completed with these five and more years and we would have put the country truly on the threshold of solving this crisis which is “artificially” rigged up by the conception authorities and the authority entrusted with solving it?

In order to be brief and not to overburden the reader with unnecessary details, we sum up the following axiomatic facts to take them as criteria to tackle this matter:

1. To put long-term solutions on the basis of central planning which takes into consideration the development in the other sectors, especially oil and their ability to meet the requirements of the ministry of electricity Re the necessary fuel, especially natural gas (Associated and free). The ministry of oil on its part must take into consideration the fuel requirements of the power station and gives them priority. The country has such enormous financial resources that it does not need foreign investments. This plan must encompass the requirements of the national economic growth and of dusting of the under-development and ruin which riddled our society for a long time.

2. To focus on the authentic and reliable projects, namely the thermal plants with the most advanced specifications.

3. As a temporary solution to focus on the combined cycle gas turbines, benefiting from the experience of countries which preceded us in this respect, and with earnest and immediate coordination with the oil ministry to provide natural gas.

We do not know how he got this figure when the then minister of oil, Dr Hussain Al-Shahrestani, said in statements to ‘Al-Sabah’ (on 3 & 4/12/2007) that his ministry would invite authentic companies to rise the output by 500000 B/D annually through to 4.5 MBD within five years. Five years on and output is still nowhere near this.

Kurdistan Region

Although it is run separately, the Kurdistan region’s ministry of electricity is not much different from Iraq. Its electricity supplied by four power stations that are able to produce only 1900MW, while consumers demand is around 3000MW.

Slemani 700MW

Hawler 700MW

Dhuk 350MW

Ba’adare 130MW

The current outages in the region have recently increased from six to around eight hours a day. In a press release on 11/12/2011, the KRG’s ministry of electricity revealed: due to lack of fuel, eight units have stopped producing electricity in Hawler (Erbil) and this will mean the production will drop by 500MW.

In total, five million litres of fuel are needed on the daily basis in order to operate the power stations and the ministry of natural resources currently struggling to keep up. On the other hand, an agreement has been signed between the former electricity minister Hoshyar Siwaily and natural resources ministry in 2009, in order to provide the Duhok power station with natural gas, but this agreement has been ignored, forcing them to use 700 thousand litres of fuel every day instead.

Former KRG Prime Minister Barham Salih, who was also Iraq’s deputy Prime Minister during the false promises of Dr Karim Wahid, has not only failed to introduce any measures to reduce the hours of outages in the past two years, but he also did not make any efforts to secure the continuity of the current electricity supply to all consumers and meet the increasing demands.

During September 2011, Salih’s government revealed its plan to increase production to 6000MW by 2020. However, this plan comes ‘too little too late’ as the consumer demand is rising by up to 20% every year and is likely to reach 6000MW much sooner than 2020. The KRG electricity ministry is currently struggling to continue providing 16 hours of electricity a day, while consumer demand is constantly rising. We believe the Kurdistan region will face an electricity crisis by 2013, in time for the general election. This time round, mealy-mouthed opportunist demagogues may no longer be able to con people through their false promises. Unless, of course, they squander the nation’s finances once more by buying electricity from neighbouring countries at a much higher cost.

Dhyaa Almurib was a writer and journalist from Baghdad focusing mainly on energy sector. He moved to UK after the US-led invasion in 2003. With Harem Karem (co-founder and editor of The Kurdistan Tribune), he investigated several corruption cases, mainly involving the oil companies operating in Iraq and Kurdistan. Dhyaa was suddenly diagnosed with cancer and three weeks later died on 24 December 2010.

Copyright © 2012

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