By John Lee.

Iraq‘s Higher Committee for Health and National Safety met in Baghdad on Tuesday under the chairmanship of Prime Minister Adil Abd Al-Mahdi. The meeting was conducted via video conferencing.

The Committee discussed a number of policy options to support Iraqi nationals abroad who wish to return home, and how to address the logistical and health challenges involved.  It is expected that the Committee will make an announcement on this issue shortly.

Following discussions on COVID-19/coronavirus, the Committee decided to:

  • Extend the curfew throughout Iraq until Saturday 18/04/2020;
  • Allocate 600 billion dinars [$504 million] over the next two months to support nearly ten million citizens. Applying and accessing this support will be via a phone app. Further details will be announced later.

(Source: Govt of Iraq)

By John Lee.

The Cabinet held its regular weekly meeting in Baghdad on Tuesday under the chairmanship of Deputy Prime Minister and Minister of Oil, Thamir Ghadhban. The meeting was conducted via video conferencing.

It discussed the health situation in the country and the economic impact of the curfew on citizens, and measures to mitigate it.

The Cabinet agreed a number of measures, including:

  • Suspending all repayments due on residential plots of land sold or leased to citizens from all government institutions until the end of the current emergency, with no penalty interest for a period ending on 31/07/2020 at the latest;
  • Exempting commercial, industrial and other government real estate tenants from paying rental fees for the duration of the current emergency;
  • Exempting occupants and tenants of commercial, industrial and other properties that belong to municipal institutions  from paying cleaning services fees for the duration of the emergency;

The Cabinet authorised the Minister of Finance, the Minister of Construction, Housing, Municipalities and Public Works, Baghdad Municipality and religious endowments to establish appropriate mechanisms to implement these decisions.

(Source: Govt of Iraq)

By Ashley Goodall.

How is the Iraq Britain Business Council (IBBC) adapting to the COVID challenges, as a Trade Council?

There is never a more important time to engage our members than now. Not only are Iraqi based businesses facing lockdown in Iraq, but the oil price, on which many are dependent, has crashed by half, putting pressure on everyone’s budgets.

To support members we have increased all forms of communication via phone, video and newsletters, to ensure they are not forgotten, and to gather as much intelligence data on how they are responding, to determine what kind of help is most useful, and to provide continued insights into business opportunities, as well as proactively sharing press releases with our audiences.

And, to make up for a cancelled Spring Conference, where they get to hear and see influencers and ministers first hand, we have arranged for online briefing Conferences with the British Ambassador, Iraqi Ministers and setting up panel discussions via Zoom. Already these are proving very popular with a higher attendance and engagement on line than in person — and, we are able to accommodate members in both Iraq, UK and Internationally at the same time and virtually one to one. In some respects, it’s a win for all.

For staff, similarly, we are working online and via video conference, to coordinate and keep and eye on everyone. It feels like we are more productive.

The upshot of the COVID disruption is that we are probably communicating more, in new technological ways, with more people than we normally do. So we expect there may be longer term adaptive benefits that IBBC will embrace, to upskill and build in more resilience for us and our members.

(Source: Ashley Goodall, IBBC)

By Ashley Goodall.

At this challenging time what kind of activities are businesses undertaking in Iraq and how are they doing things differently?

In canvassing Iraq Britain Business Council (IBBC) members, we found a consistent pattern of adaptation and response across the membership which can be summarized in three headings:

  • Firstly, taking care of staff and looking after their well-being and income. Members recognize that employees are the most valuable element in a business, and for those who wish to sustain their businesses longer term, employee care is top of the list, with regular online calls and management videos to support people working at distance. Ultimately this is good leadership and communications.
  • Secondly, Technical adaptation: in supporting employees and clients, businesses are undertaking various adaptations, mainly the move to work from home and using online technology to enable this. Often, home video conferences and use of Skype/Teams or Zoom are the first time these systems have been used and should well lead to longer term benefits and changes. In this way businesses are becoming more flexible and productive delivering work and client activities.
  • Finally, Communication: those who work with clients are spending more time supporting them online, especially where an intangible service such as Insurance, Banking or Consultancy are concerned. Communicating, regularly and constantly is key to retaining and supporting client business for the short and long term.

One of the most proactive is Sardar Group who tell us:

Due to the present lock down across all the cities we operate in Iraq, all our companies are working from home.

“Business, which was very busy until the 14th March 2020, has suddenly come to a halt and effected all our business big time by stopping all the operations and thereby stopped all turnover.

“To support our employees, we have Group-wide travel restrictions that are updated regularly based on changing conditions and on advice from governments and health ministries. As well as ensuring that we meet all local regulatory authority requirements, we have instituted additional measures such as reduced face-to-face meetings, working from home, split teams and locations, and cancelling or delaying community events.

“We are arranging salary payment to all the employees in regular intervals subject to the governments relaxing the lock downs. Many companies are unable to pay for salaries, but Sardar Group is planning to support our employees for a longer period of time.

John Goering of Constellis says:

“Our primary business in supporting the Oil & Gas industry in southern Iraq continues to function. With our staffing, we have adopted a one in one out system, so the majority of the staff in now are probably in for a bit of a long haul. We are operating at full capacity, but remain flexible to our clients’ needs and dispositions, it’s challenging times for sure!”

Sara Safa Kasim, MD of Al-Maseer Insurance, quotes:

“We are working from home and at a distance – and have put new systems in place to support that. Enjoyably, we are also connecting more with clients to support them at this time.”

Mike Douglas of SKA said:

“We stand firm in the face of adversity and get the job done. These combined challenges just make us more determined to succeed. Fuel supplies are vital to industry, transport and power generation and we will keep them flowing.

“Of note, the vital dredging we just completed during the curfew, guarantees that the biggest cargos on LR2 vessels, are not stalled; before we started, that size of ship had never been seen in the river. The company was built on the motto of “doing difficult jobs in difficult places” and now, more than ever, that is true.’

“We thank all our local and expatriate staff, and the Iraq Government, for their steadfast support and cooperation. We realize that it is not easy to be away from homes and families in these challenging times, but together we will continue to ensure that the Iraqi people get what they need to overcome these daily challenges. We hope and pray that SKA as a company and Iraq as a nation will emerge stronger at the end of all this.

Shehad Khudairi from the Khudairi Group reports:

We are looking into various options such as online ordering and delivery (via Miswag). At the moment, Iraq is essentially shut down, so we are trying to find ways to continue to do business.

“We are communicating internally a lot more and trying to keep morale high in a very uncertain time, via video messages. Additionally, we are trying to keep the employees as safe as possible with our HSE team. Each branch has to report daily on every single touch point of the offices.

“The HSE team is most useful to our business to ensure the safety of our employees. Additionally, being flexible on how we work and our personnel are key to ensuring we are able to ride this out.

Raed Hanna of Mutual Finance, tells of how technology and online communications via Skype and Hangouts are enabling new ways to communicate for them with video conferences and virtual meetings.

Finally, Phil Malem of Serco Middle East says:

Patients in hospitals rely on us now more than ever. We are preparing for peaks in demand and implementing infection screening and control measures across the healthcare facilities we work in.

“Citizens still need to get from A to B and our frontline staff are committed to keeping vital infrastructure operating. Our business continuity planning and workforce management ensures that sickness leaves of absence do not affect the operational efficiency or experience of those using a service.

“Residents should feel like everything possible is being done to protect them and where we operate in real estate or the higher education space, disinfection is a key priority. Escalating cleaning and sanitisation programmes is increasing confidence within the communities across the facilities we support.

“Across all sectors we operate in, it is our responsibility to ensure all staff are educated and trained on good hygiene practice and understand how they can do their bit to limit the spread of this disease. Increased sanitisation programmes across company provided accommodation and transportation have been introduced. Staff health is being monitored daily with various programmes, including temperature checking, which provides an early warning of the onset of any fever related conditions.

The upshot of all this is that challenging times bring out the best of best management practice:

Do the right things and look after and care for your people, as they are your most valuable asset. Find new ways to adapt and communicate with them, deploy new technology, and ensure your communications are working harder to support clients and staff alike.

While times are challenging, it could be a time to upskill, build in resilience and make your business even more productive for the long term. The future will be different.

(Source: Ashley Goodall, IBBC)

Ambassador Stephen Hickey addresses IBBC members via videoconference

Over 50 Iraq Britain Business Council (IBBC) members yesterday participated in a video conference call with Ambassador Stephen Hickey, from his office in the UK Baghdad Embassy.

The Ambassador updated members on the current situation in Iraq, covering four key areas of interest: COVID 19 response and challenges, The Political landscape and implications for Government , the Economy and impact of oil prices, and Security and how this is impacting on coalition activity in the region.

The Ambassador took questions from a number of members concerned about decision making within Government at this time of uncertainty, the role and support of UKEF regarding on going projects, the role of the dollar and local currencies, the likely nature of a new Government, and the general outlook for Iraq.

Feedback from the Conference suggests videoconferencing will become a regular feature of IBBC activity and reporting, due to the high volume of attendees, and IBBC expect to set up regular calls with Ministers, institutions and officials to engage with members directly and as a group.

(Source: IBBC)

Newly trained women in Ninewa produce face masks to combat spread of COVID-19 in Iraq

In January 2020, UNDP and Kurdistan Human Rights Watch (KHRW) collaborated to train sixty women on sewing and tailoring in Ninewa over the course of a ten-day workshop.

At the time, these women could not have foreseen how their newly developed skills would contribute to combatting the deadly coronavirus disease (COVID-19) pandemic currently sweeping the globe.

As of 25 March 2020, the World Health Organization has tracked over 400, 000 cases of COVID-19 with over 18, 000 confirmed deaths. The pandemic has affected 197 countries, areas, and territories, including Iraq.

When a pharmaceutical company contracted by the Ninewa Department of Health was tasked with producing five million disposable face masks in response to the spread of COVID-19, thirty of the recently trained women were employed to use their skills to produce the masks.

After briefings on the health standards and nature of the environment required for mask production, the seamstresses began creating thousands of masks daily in controlled conditions.

Working swiftly to produce this vital personal protection equipment despite the curfew in Ninewa Governorate, these skilled women are directly contributing to the mitigation of COVID-19 in Iraq.

Aseel, 45, says:

“We have produced thousands of pieces and the major portion is delivered to the Ninewa Health Department. Some other organizations are also receiving face masks from us and they distribute those free of cost in communities and camps.”

 

 

Not only has the sewing and tailoring skills training empowered sixty women with new abilities, it has also instilled within them hope for their futures. Sustainable development projects such as these are at the forefront of UNDP Iraq’s priorities.

Nora, 37, says:

“I am working on developing myself in the sewing profession and in the future, I would like to create a workplace for sewing or a small factory.”

The organization and facilitation of skills development workshops with Kurdistan Human Rights Watch is part of a project spearheaded by UNDP Iraq under the Social Cohesion Programme, which aims to improve the enabling environment for peace and social cohesion in all areas of Iraq.

(Source: UNDP)

By Aymen Al-Faisal, for the Al-Bayan Center for Planning and Studies. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

The Implications of the Coronavirus on the Overall Situation in Iraq

With the spread of the coronavirus globally, many countries around the world face several challenges in the absence of any looming solutions so far.

Economies are the most affected by this virus that led to restrict the movement and the freedom of travel between countries, limit the transport of goods by sea and land, and raise spending on precautionary measures to limit the virus spread.

Since the discovery of the virus in January, the stock market has not declined only in China, but it has impacted the Asian and the American markets as well.

Click here to read the full article.

By Omar al-Jaffal for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Coronavirus damages Iraqi economy with fall in tourism, oil prices

As of March 23, Iraq had registered 266 novel coronavirus cases, with 23 deaths. Although Iraq is much better off than many other countries, the fast-growing number of cases – 33 new infections and three more deaths in a 24-hour period – indicate that Iraq soon may face a very difficult situation.

Also, measures the government has taken to fight the virus have damaged the economy; these steps have included imposing a curfew, closing roads between cities and canceling all religious tourism.

This is not mention the oil price drop.

Click here to read the full story.

By Mustafa Saadoun for Al Monitor. Any opinions expressed here are those of the author and do not necessarily reflect the views of Iraq Business News.

Is another economic crisis looming in Iraq, with dropping oil prices?

Political and security crises in Iraq have been escalating, and the coronavirus outbreak has recently been added to the list.

Meanwhile, news about the dropping oil prices has added fuel to the fire, and Iraqis are all at risk.

According to Mazhar Mohammad Saleh, economic affairs adviser to the Iraqi government, 93% of Iraq’s budget relies on oil exports.

On March 14, Saleh said, “Iraq has lost half of its financial revenues, with oil prices dropping to $30 [per barrel].”

Click here to read the full article.

By Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund. This article was originally published by the LSE Middle East Centre.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

Iraq’s Power Conundrum: How to Secure Reliable Electricity While Achieving Energy Independence

Iraq remains in a bind regarding how to secure energy independence within its geopolitical constraints – most pertinently the American sanctions on Iran. The US is continuing to maintain pressure on Baghdad by extending ‘final’ waivers on the purchase of Iranian gas for only another 30 days, as part of its new tougher stance.

Iraq, in response, could produce credible plans to eliminate its dependence on Iranian imports, which it accelerated with the approval in January of the fifth round of gas exploration contracts. However, achieving this would not end the need for Iranian imports, nor would it secure any kind of energy independence. More importantly, it will not change the shortages in the provision of electricity, which have served as a lightning rod for public anger over the failings of the post-2003 system.

Appreciating the dependence on Iran for the provision of electricity means delving into the extraordinary mess that is Iraq’s power grid, consisting of the power plants that generate electricity; transmission system that transport this electricity to population centres; and distribution networks which then distribute this electricity to end users. Decades of conflict have damaged most parts of the grid and, coupled with poor maintenance of the parts that escaped damage, this has rendered the grid impotent.

Rebuilding the grid post-2003 was hampered by the rolling dysfunction of successive governments, in which significant capital expenditures were neutralised by mismanagement, lack of coordination between ministries, and the county’s corrosive corruption. The public’s frustration over this impotence extends beyond the inadequate provisioning of electricity throughout the year, as the summer’s intense heat creates a particularly acute need for electricity, exposing the grid’s shortcomings.

These start at the generating stage with the gap between nameplate capacity, i.e. the maximum sustainable power output under ideal conditions, and actual output. While a gap always exists between these two, in 2018 the nameplate capacity was 30.3 gigawatts (GW), while effective capacity through the year was a mere 11.9 GW. A primary reason for this gap is the lack of appropriate fuel supply, in this case gas, which leads to substitutions by fuels such as crude or heavy fuel oil with the result that plants run at less than 60% of capacity – in 2018 only 62% of operating gas-powered plants actually used gas. Other reasons include poor maintenance and lack of cooling in high ambient heat. Moreover, up to 20% nameplate capacity in 2018 was non-operational.

In turn, this increases the gap between demand and supply – in 2018 average demand was 17.7 GW vs. effective generated power of 11.9 GW. But this gap is only part of the story, as the electricity generated to meet demand does not mean that it was actually delivered to end users. The total electricity generated in 2018 was 105.4 terawatt-hours (TWh), but only 43.7 TWh reached end users for a loss of 58.5%. Most of these losses take place at the distribution stage, with technical losses stemming from age, conflict damage, poor maintenance accounting for two thirds, and non-technical losses, mostly electricity theft, accounting for a third. Technical losses are natural, however they occur at an extremely high rate in Iraq, as do non-technical losses. Stolen electricity – still consumed but not billed – is estimated at 17 TWh, and so the electricity delivered would rise to 61 TWh, equating to a loss of 42.2%. This dynamic can be seen below.

Figure 1: Comparison between electricity demand and supply, 2010-18

The increase in losses from 2014 onwards can be attributed to the ISIS conflict, which damaged 20% of the transmission system and 5.0 GW of generating capacity. 2019 saw meaningful improvement as effective capacity increased from 11.9 GW to 14.3 GW, and crucially during the summer months peak generation was 19.3 GW vs. peak demand of 27.5 GW. This gap of 8.2 GW has narrowed from 2018’s 10.0 GW gap when peak supply was 16.5 GW vs. peak demand of 26.5 GW.

Electricity generated from Iranian electricity and gas imports accounted for 20.7% of that generated throughout 2019, and probably a much higher percentage during the peak summer months. These contributions from electricity imports from 2010 and gas imports from 2017 can be seen below.

Figure 2: Iranian contribution to Iraq’s energy requirements between 2010-19

The importance of Iranian electricity imports as a percentage of the total have steadily decreased, even though they increased in absolute levels; nevertheless, the decline in summer of 2018 was large enough to ignite the demonstrations in Basra. Imports in 2019 returned to the trend line and averaged 1.1 GW for the year. Plans for other regional imports include 0.5 GW to be imported from Kuwait by the end of 2020, rising to 1.9 GW over subsequent years, including planned imports from Jordan and Turkey.

Iranian gas imports were 7.0 billion cubic meters (BCM) in 2019, up from 4.1 BCM in 2018, and accounted for 31% of total gas consumed – up from 24% in 2018. Plans for increased domestic production include increasing captured flared gas to 16-19 BCM by end of 2021 from 12 BCM in 2019. Additionally, the fifth round of gas contracts call for replacing Iranian imports in three years, i.e. generating 7.0-10.0 BCM over that period from the current 3.5 BCM.

Assuming that the government executes these plans, in three years’ time this would replace the current electricity produced by Iranian imports. But demand is set to increase by 20% from current levels, meaning that the current the gap between supply and demand would increase by up to 20%. Moreover, planned capacity additions require additional fuel, which under existing plans is earmarked to replace imported gas. However, maintaining Iranian imports would significantly decrease their importance in power generation from the current 20.7%, and in the process Iraq would add meaningful capacity to address demand.

The goal posts are moving much faster than Iraq’s ability to approach them, and as such the US’s insistence on eliminating Iranian imports, far from achieving energy independence for Iraq, would instead exacerbate its energy vulnerabilities. Compounding these vulnerabilities is the massive investment spending needed to expand the grid’s capacity, currently unaddressed in the government’s structurally unbalanced budget, but which is ever more critical following the collapse of oil prices.

Iraq’s pathway out of this predicament, even at much higher oil prices, involves electricity tariff reform and the removal of energy subsidies, both the source of monumental waste and substantial market distortions. However, this requires a popular buy-in and for the increasingly alienated population to renew their belief in the post-2003 system’s legitimacy. It is here where the international community can help Iraq achieve energy independence.

Sources

The figures and charts used in the article are the author’s estimates, and are based on data from the Ministry of Electricity’s annual reports and conference presentations, the IEA, BP, MEES, Oxford Energy, and publicly available news sources. However, all errors and omissions are the author’s own.

The data used in the article exclude electricity demand and generation in the Kurdistan Region of Iraq (KRI). However, figures for locally produced and consumed gas include the KRI, and as such the Iranian-origin percentages of total gas consumed would be somewhat higher than the 31% and 24% used if the KRI was excluded.

Disclaimer: Ahmed Tabaqchali’s comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.