BASRAH'S ELECTRICITY SUPPLY DECLINES BY ONE-THIRD

C O N F I D E N T I A L BASRAH 000141 SIPDIS SIPDIS E.O. 12958: DECL: 8/30/2016 TAGS: PGOV ECON ENRG EINV IZ SUBJECT: BASRAH'S ELECTRICITY SUPPLY DECLINES BY ONE-THIRD REF: BASRAH 88 CLASSIFIED BY: Ken Gross, Regional Coordinator, REO Basrah, Department of State. REASON: 1.4 (b) ¶1. (C) Summary. The head of the Electric Committee of the Basrah Provincial Council, Ghazy Smari Jaafar told poloff on August 24 that the electricity supply has fallen from three hours on, three hours off to two hours on, four hours off in recent weeks. He pointed to soaring August temperatures for the reason for the decline, which has driven up demand for power to run air conditioners. In order to address Basrah's long-term energy shortfalls, the councilman stated that, more than anything else, the Basrah government needs to gain control over revenues from its oil resources. End Summary. ¶2. (C) In an August 24 meeting Basrah Provincial Council's Electric Committee chief, Ghazy Smari, told poloff that electricity supply has dipped by a third in recent weeks with power being supplied two hours on, four hours off instead of the three hours on, three hours off that was available earlier in the summer. Ghazy said the reason for the decline is the high August temperatures (with daily temperatures well above 120 degrees Fahrenheit) and the corresponding increased demand for power to run air conditioners (see reftel). He predicted that as temperatures fall in September, power supplies would return to three hours on, three hours off. ¶3. (C) Ghazy informed poloff that Basrah province needs 1,150 megawatts (MW) a day to satisfy its demand, but only generates 840 MWs on the rare optimal day. He reported that about one-third of the production is sent northward to feed the national power grid, leaving Basrah with about 600 MWs a day, meeting only half of its needs. The councilman gave poloff a copy of the provincial electricity development strategy through 2009 that lays out plans to increase gradually electricity generation to 1,290 MWs, provided that a $1 billion power strategy is implemented. According to the document, Basrah would still have to cope with a 460 MW daily shortfall in its electricity needs even if the strategy is fully realized. ¶4. (C) Ghazy said his biggest concern was the question of funding the power upgrade strategy. He said the Ministry of Electricity in Baghdad has allocated only enough budgetary resources to keep the wheezing, antiquated power system functioning, with the exception being a one-time $30 million grant in May. He added that money is being spent to buy spare parts for the outdated power system and to construct five substations to convert voltage and transmit power from the high-tension wires to several Basrah neighborhoods. ¶5. (C) Ghazy declared that the creation of a federal system of government offered Basrah its best hope for solving continuing energy shortfalls. He complained that Baghdad takes all the revenues from Basrah's oil exports, which are approaching two million barrels a day. He asserted that if Basrah authorities could control even a fraction of the province's oil wealth, they would have enough money to support vital developmental plans. Ghazy did praise the national government for passing a foreign investment law that could attract foreign companies interested in building Iraq's electricity infrastructure, but added that security concerns still need to be addressed. ¶6. (C) Comment. Councilman Ghazy 's detailed descriptions of Basrah's energy shortages suggest that the electricity issue could figure prominently in the provincial elections expected in the first half of 2007. Middle class Basrah citizens who earn in the neighborhood of $300 a month report that they spend nearly half their income on fuel for private power generators needed to survive the roasting summer heat. They have told poloff that lack of electricity is the greatest source of public discontent in Basrah. End Comment. GROSS