Iraq fears power cuts as US ends sanctions waiver for electricity purchases from Iran

BAGHDAD (AP) — The United States has declined to renew a waiver that had allowed Iraq to buy electricity from Iran without running afoul of sanctions, a U.S. official said Sunday.

The previous waiver expired Saturday and the U.S. Department of State did not renew it, the U.S. embassy in Baghdad said in a statement.

The decision came as part of President Donald Trump’s “maximum pressure campaign” on Iran, which is “designed to end Iran’s nuclear threat, curtail its ballistic missile program and stop it from supporting terrorist groups,” the statement said.

“We urge the Iraqi government to eliminate its dependence on Iranian sources of energy as soon as possible, and welcome the Iraqi Prime Minister’s commitment to achieve energy independence,” the statement said.

Despite its oil and gas wealth, Iraq has suffered from decades of electricity shortages because of war, corruption and mismanagement and has become heavily reliant on imported Iranian gas as well as electricity imported directly from Iran to meet its electricity needs.

Power outages are common, especially in the scorching summer months. Many Iraqis have to rely on diesel generators or suffer through temperatures that exceed 50 degrees Celsius (122 degrees Fahrenheit).

The waiver that expired applied to direct electricity imports. It remains unclear whether Iraq will be able to continue to import gas from Iran for its power plants.

The U.S. embassy statement asserted that electricity imports from Iran were only 4% of electricity consumption in Iraq

But a spokesperson for Iraq’s Ministry of Electricity, Ahmad Moussa, said that should gas imports also be forbidden it "would cause Iraq to lose more than 30% of its electricity energy” and that the government is looking for alternatives.

Already, Moussa said, Iranian gas had stopped supplying power plants in Baghdad and the central Euphrates region for the past two months, and the supply to southern power plants had been unstable.

A senior official in the electricity ministry, who spoke on condition of anonymity because he was not authorized to speak publicly, said the ministry had not yet been officially notified of the U.S. decision regarding gas imports. He said Iraq could lose about 8,000 megawatts of energy from power stations operating on Iranian gas and another 500 megawatts of electricity supplied directly by Iran.

There are some 7.5 billion euros in an Iraqi bank account set aside as payment for Iranian gas and about 6.5 billion euros have already been disbursed since the beginning of the year, the official said. The funds are limited in how they can be used and are only released when Iran needs to purchase food, medicine or other humanitarian supplies.

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Sewell reported from Beirut.