Iraq defaults on $1.6 billion gas payments to Iran
A gas field in Iran. Tehran Times image.
Baghdad (IraqiNews.com) – The Iraqi Ministry of Electricity announced on Wednesday that the government failed to pay the financial obligations to Iran for the gas supplies, according to a statement issued by the Ministry of Electricity.
The statement mentioned that the decrease in gas supplies caused reduction in the electrical power needed for the country amid hot summer season where drought is excessive.
Iraq government had announced earlier that it agreed with Tehran to pay 1.6 billion US dollars starting from June 1, to guarantee stable flow of gas during the four months of summer.
The oil-rich country suffers from an electricity crisis, and it worsens during summer where temperatures reach 52 degrees Celsius.
Iraq, where infrastructure deteriorated because of wars, depends on Iran to secure around 33 percent of its requirements of gas.
The statement of the Ministry of Electricity mentioned that Iran reduced five million cubic meters of the gas it exports, resulting in reduction of hours of electric power supply in Iraq.
With expectations that the temperature will reach 48 degrees Celsius by the end of the week, there will be an increased need for air conditioners and electricity.
Although Iran demanded the Iraqi government to fulfill its financial obligations, but Iraq could not approve the 2022 budget as the political parties are not yet able to reach an agreement to form a government and elect a president.
The Iraqi parliament failed to approve a bill that provides emergency support to pay emergency obligations including the gas dues.
The amount is for arrears for 2020 which Iraq has not yet paid because of the complicated mechanism the Iraqi authorities are forced to follow to benefit from an exemption from the US sanctions imposed on Iran.
Iraq is not allowed to provide cash payments to Iran, and money paid must be used to finance the imports of food and medicine.
The summer of 2021 was difficult for Iraqis as the country witnessed frequent power outages and protests especially in the southern part of the country.