Lebanese PM Mikati in Baghdad to hold talks over fuel delivery

Continuous fuel deliveries to prevent power blackouts in Lebanon, as well as economic opportunities, were high on the agenda in a meeting on Sunday between Iraqi Prime Minster Mohammed Shia Al Sudani and his Lebanese counterpart Najib Mikati in Baghdad, a government official told The National.

Mr Mikati led a senior delegation that included the ministers of energy and water, interior and municipalities, industry, agriculture, and public works and transport, the official said.

The head of the Investment Development Authority of Lebanon and the deputy director general of state security were also among the delegation, he added.

The talks "covered relations between the two countries, ways to develop and enhance economic partnership pathways, the bilateral agreement on the supply of Iraqi oil to Lebanon," a statement from Iraqi PM's office said.

Following the meeting, Mr Mikati said there was a "possibility of engaging in projects, including the establishment of Iraqi industrial cities in Lebanon and diversifying areas of mutual investment opportunities".

The two leaders also discussed ways to "raise the level of security co-operation" in combating terrorism and tracking drug trafficking, a statement said, without giving further details.

They also discussed "the situation in the region and the latest political and security developments," it added, calling for "halting aggression against Lebanon and Palestine and exerting efforts to prevent the regional conflict from escalating and resulting in more innocent casualties".

A joint economic committee meeting between the two countries will be held at the end of next September.

The Iraqi government released no further information on the meeting, but that continuous fuel deliveries to prevent power blackouts in Lebanon were high on Mr Mikati's agenda.

Lebanon, which has few natural resources and is suffering from an economic crisis, imports heavy fuel oil from Iraq under a swap deal signed in 2021.

Iraq has yet to make use of the $550 million worth of goods or services offered in return, funds that sit in Lebanon's central bank as part of the complex arrangement.

This month, Iraq approved the delivery of fuel to two Lebanese power plants, after a delay in payment had halted the delivery process.

As the heavy fuel supplied by Iraq does not meet Lebanon’s fuel specifications, the deal allows Beirut to swap it on the international market – through traders who make a profit – for types of oil suitable for its power plants.

State electricity in Lebanon is available for a maximum of around four hours a day. Those who can afford it rely on expensive and diesel-powered private generators, although very few provide power for 24 hours.

Lebanon has long struggled with providing enough power to its people, but the situation has been made worse by an economic crisis that began in 2019.

Iraq-Turkey power link

Meanwhile, Iraq on Sunday inaugurated an electric interconnection with Turkey, a government statement said, the latest effort by Baghdad to tackle the decades-long power shortage.

Turkey will feed 300 megawatts through the Kisk power plant near the northern city of Mosul through the 115km line, it added.

Iraq's electricity crisis dates back to the early 1990s when the majority of its infrastructure was damaged during the First Gulf War, in which a US-led coalition drove Saddam Hussein’s army out of Kuwait.

Subsequent UN-imposed economic sanctions and conflicts, coupled with decades of mismanagement, corruption, unstable security and political wrangling have only worsened the situation.

In late 2020, former prime minister Mustafa Al Kadhimi said Iraq had spent at least $60 billion on the electricity sector since the 2003 US-led invasion that toppled Saddam. Aside from money lost to corruption, much has been misallocated.

The Ministry of Electricity says it has added 3,000MW this year, bringing total production to slightly more than 27,000MW. However, it is far from the 48,000MW needed during summer, according to the ministry.

To deal with the problem, Iraq imports between a third and 40 per cent of its supply of electricity and gas from Iran, but continues to suffer from widespread power cuts, especially in the hot summer months when demand for power for cooling surges.

Tehran frequently cuts its supply when it requires more electricity domestically and also because Iraq has trouble paying for imports due to US sanctions on Iran. The US has pushed Iraq, Opec's second-largest oil producer, to cut its reliance on Iranian gas.

In March, Iraq inaugurated an electricity grid interconnection with Jordan, feeding in another 40MW.

In June last year, the GCC Interconnection Authority launched long-discussed plans to connect electricity-poor Iraq to its grid through Kuwait to help meet some of its growing demands.

The project is intended to begin exporting electricity to southern Iraq by the end of 2024. It will initially provide 500MW until reaching a 1,800MW capacity.