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                             PUBLIC-PRIVATE PARTNERSHIPS BRIEFS

       Iraq: Electricity Distribution




Overview
Iraq’s electricity distribution network is overloaded and in need of significant
investment to be able to meet current and future demand. The system is also
negatively impacted by the absence of effective metering, billing systems, and
customer management systems, which leads to significant technical and non-
technical losses.

To support an effort to improve the system, the Public-Private Infrastructure
Advisory Facility (PPIAF) analyzed the current overall performance of Iraq’s
distribution sector against international benchmarks and developed a roadmap
for reform and improved distribution sector performance.


   This series showcases how the World Bank Group supports the development
   and implementation of public-private partnerships. This support comes in the
   form of public sector loans, private sector finance, sector and transaction advice,
   guarantees, and output-based aid.




                                                     PUBLIC-PRIVATE PARTNERSHIPS - APRIL 2015
Background                                                                                 preference for private sector participation in, and
                                                                                           eventual privatization of, its electricity distribution
Although Iraq has made progress in restoring and
                                                                                           sector.
increasing oil production capacity through service
agreements with international oil companies, its                                           This approach took into account necessary policy,
energy sector continues to face serious issues. These                                      laws, and regulations, institutional structure and
issues include chronic shortages of electricity supply                                     capacity, systems and infrastructure, and estimated
and an inability to supply natural gas as fuel for power                                   the size and timing of investments required to support
generation, alongside increasing levels of associated                                      the reform process. It also provided a medium/long
gas flaring. A decade of conflict and sanctions have                                       term roadmap for private sector participation into the
left Iraq’s institutions weakened and have resulted in                                     reform process.
under-investment in and deterioration of the energy
infrastructure.                                                                            Outcomes
The situation is made worse by the absence of effective                                    Ongoing results include:
metering, billing systems, and customer management
                                                                                           •	 PPIAF’s delivery of an electricity distribution
systems. These shortcomings result in significant
                                                                                              sector assessment report and benchmarking.
technical and non-technical losses on the distribution
side, resulting in a situation where only one-third of                                     •	 Recommendations on how to improve sector
the power dispatched by generators is ultimately paid                                         performance, including specific reforms in the
for by customers. The sector also faces significant                                           institutional structure, legal, and regulatory
financial, economic, legal, regulatory, and institutional                                     environment, and other performance
challenges, including lack of capacity. These challenges                                      improvements.
are hampering effective strategic management of the                                        •	 Development of a reform roadmap, including
sector as well as planning, development, and operation                                        recommendations for the role of the private sector,
of its physical infrastructure.                                                               which involved a stakeholder consultation process.
Inadequate electricity services and infrastructure
impede private sector development and negatively
affect employment and economic growth; for example,
power shortages are estimated to cost the Iraqi
economy around $43 billion per year. These shortages
are creating hardship and undermining government
credibility.

World Bank Group Role
PPIAF’s work analyzed best practices and lessons
learned in distribution sector reform in other
countries; provided international expertise and
knowledge on sector reform; and designed a reform
roadmap, capacity development activities, and an
investment program to support reform that will be
implemented by Iraq’s Ministry of Electricity. PPIAF
also identified the private sector’s role in the reform
process, as the Government of Iraq has expressed a



Photos: Front: William John Gauthier/Creative Commons - creativecommons.org/licenses/by-nd/2.5/deed.en.




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