Tuesday, 11 December 2018 14:58

European Union and World Bank support Iraq’s Energy Sector Reforms

Baghdad, December 10, 2018 – In the framework of the financing agreement signed yesterday by the Government of Iraq (GoI) and the European Union (EU) committing €14 million (US$15.8 equivalent) to support the government's efforts to ensure increased and more reliable energy access for the Iraqi population, the EU and the World Bank Group (WBG) have signed today a €12.85 million (US$14.5 equivalent) implementation agreement to provide the needed technical assistance.

The initiative complements the ongoing and upcoming World Bank interventions in support of the GoI's energy sector reforms, including those embedded in the budget support operations series (Development Policy Financing programs – DPFs), the Reimbursable Advisory Services (RAS) for structuring the Gas Value Chain and Gas Marketing in Iraq, and the support to subsidy reforms funded by the ESMAP’s Energy Subsidy Reform Technical Assistance Facility (ESRAF).

Supporting Iraq's private sector enabling energy sector reforms is a priority development objective in the country both for the EU and the WBG. In a country where the energy sector accounts for more than 90% of central government revenues, addressing energy sector challenges is an essential and complementary action to any public finances related reforms, an area in which the European Union and the World Bank are also partnering in Iraq[1]. The country is also the world's 3rd largest exporter of oil and its untapped natural gas reserves are the 12th largest in the world, yet it is forced to import fuel to meet its domestic energy demand, which imposes significant economic and fiscal strain on public finances. Equally important, Iraqi citizens are regularly faced with power shortages and have to resort to more expensive and pollutant sources of energy.

Efficiency in the management of public resources and delivery of services are critical to the achievement of public policy objectives, especially for a resource-rich upper-middle income country like Iraq, as well as fundamental to restore the trust and social contract between Iraqi citizen's and the country's institutions, especially in a post-conflict era of stabilisation and reconstruction.

"As pledged in the Kuwait Conference, the European Union is committed to help Iraq's reconstruction efforts and economic and political reforms to secure a better future for its citizens,” said Pierre Amilhat, European Commission's Director for Asia, Central Asia, Middle East/Gulf and Pacific. “Our partnership with the World Bank in Iraq has been very productive in support of government reforms to improve public finances and public service delivery. The focus of the project we are signing today will be on increasing efficiency and fiscal sustainability of the electricity sector, reducing gas flaring, and improving the sector specific environment for private sector participation and investment".

"The World Bank is working closely with the government of Iraq and development partners on recovery and reconstruction to help provide a stable, sustainable future for Iraqi people, and the energy sector is a critical component of these efforts.,” said Saroj Kumar Jha, World Bank Mashreq Regional Director. “Addressing energy sector challenges is at the heart of efforts to improve the management of precious public funds, and to deliver reliable energy services, which will benefit families as well as businesses and industries across Iraq.”

This action addresses some of the key challenges facing Iraq's energy sector, namely reduced electricity sector efficiency and fiscal sustainability, excessive gas flaring, reduced domestic gas allocations for power generation and use of expensive imported fuels and, most importantly, virtual absence of private sector participation and investments in the sector, by supporting GoI's efforts to enhance availability and affordability of energy in a sustainable and environmentally respectful manner through diagnostic studies, assessments and advisory services.

Contacts:
In Baghdad: This email address is being protected from spambots. You need JavaScript enabled to view it.
In Washington: Ashraf Al-Saeed, 1-202-473-1187, This email address is being protected from spambots. You need JavaScript enabled to view it.
In Baghdad: Reem Hadi Suwaed, 964-7827861943, This email address is being protected from spambots. You need JavaScript enabled to view it.
In Beirut: Zeina El Khalil, 961-1-962-954, This email address is being protected from spambots. You need JavaScript enabled to view it.

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