IRAQI ELECTRICITY MINISTER VISITS KUWAIT SEEKING

C O N F I D E N T I A L SECTION 01 OF 02 KUWAIT 000838 SIPDIS NOFORN SIPDIS BAGHDAD FOR ECONOMIC SECTION AND TOKOLA; NEA/ARP FOR JACKSON E.O. 12958: DECL: 05/28/2017 TAGS: PREL ENRG EPET EAID KU IZ SUBJECT: IRAQI ELECTRICITY MINISTER VISITS KUWAIT SEEKING FUEL FOR POWER PLANTS Classified By: Ambassador Richard LeBaron for reasons 1.4 (b) and (d). ¶1. (C/NF) Summary: Iraqi Minister of Electricity Dr. Karim Wahid Al-Hasan visited Kuwait 28 May to seek Kuwaiti support for the purchase of an additional 1.5 to 2 million liters per day of diesel fuel to support power generation in Iraq as new generating capacity comes online this summer. At the request of Embassy Baghdad, he met with Ambassador LeBaron and later in the day with the Kuwait Oil Minister and with the Kuwait Petroleum Corporation (KPC). The Ambassador offered his support and explained that based on Post's previous conversations with KPC, it appeared that the fuel was available for sale from KPC to the Electricity Ministry through SOMO (Iraq's State Oil Marketing Organization). On 29 May, the Minister told Econoff that his meeting with the Oil Minister and KPC had been successful. KPC agreed to sell the additional fuel to SOMO as soon as the necessary contractual arrangements can be finalized. Dr. Karim said he would work with SOMO to make these arrangements on the Iraqi side and would contact Embassy Kuwait directly if any further assistance were required on the Kuwaiti side. During his brief visit, Dr. Karim also met with the Kuwaiti Minister of Electricity and Water and gave an interview to the Kuwaiti newspaper Al-Seyassah. End Summary. ¶2. (C/NF) On 28 May, Iraqi Minister of Electricity Dr. Karim Wahid Al-Hasan met with the Ambassador before meeting with Kuwaiti Oil Minister Shaykh Ali Jarrah Al-Sabah and representatives from KPC later that evening. Dr. Karim requested the Ambassador's assistance in getting KPC to agree to sell an additional 1.5 to 2 million liters per day of diesel fuel to Iraq for use in power generation. The Minister said that with all the additional generating capacity due to come online this summer, overall power generation in Iraq could reach as high as 6000 MW, if he could obtain adequate fuel supplies. Dr. Karim said SOMO claimed it was not receiving enough fuel from KPC and other suppliers to provide the Electricity Ministry with additional fuel for power generation, even though the Ministry has already paid SOMO $150 million for this fuel. The Minister said the $150 million is still sitting in the Oil Ministry,s account and he did not know whether SOMO had actually ordered this additional fuel from KPC. In his meeting with the Oil Minister and KPC officials, Dr. Karim said he hoped to determine whether KPC would be willing and able to provide the additional fuel he requires. ¶3. (C/NF) The Ambassador explained that Econoff had met with KPC Managing Director for International Marketing Jamal Al-Nouri on May 15, following an initial inquiry from Embassy Baghdad regarding this matter. Al-Nouri told Econoff that KPC has never had a business relationship with the Iraqi Ministry of Electricity, only SOMO, with which it currently has a good working relationship. Under the existing contract, KPC provides fuel in the contractually-agreed quantity to SOMO-contracted trucking companies in Kuwait, which are then responsible for transporting the fuel to its destination in Iraq. Al-Nouri said SOMO had been making its payments to KPC on time and suggested that if SOMO were to ask for more fuel for Iraqi power generation, KPC would have no problem selling it to them. However, he said, no such order had been received by KPC. Al-Nouri indicated that KPC was not interested in establishing a direct business relationship with the Iraqi Electricity Ministry and would prefer to continue dealing only with SOMO. The Ambassador offered the Minister his support and asked him to let the Embassy know about the results of his meeting with the Oil Minister and KPC. ¶4. (C/NF) Dr. Karim told Econoff by phone from Amman on 29 May that the meeting with the Oil Minister had been successful. He said KPC agreed to his proposal to supply an additional 1.5 to 2 million liters per day of diesel to SOMO as soon as the necessary contractual arrangements can finalized. The Minister said he will now close the loop with SOMO, work out the contractual details, and ensure that SOMO obtains additional tanker-truck capacity. He said he would contact Embassy Kuwait directly if it appeared that any further assistance was required on the Kuwaiti side. ¶5. (U) During his visit to Kuwait, the Minister also met separately with Kuwaiti Minister of Electricity and Water Mohammad Abdullah Hadi Al-Olaim and gave an interview to the local Arabic-language daily Al-Seyassah. In the interview he explained that Iraq was seeking fuel from Kuwait for power generation and expressed his thanks for Kuwait's continued KUWAIT 00000838 002 OF 002 support to the Iraqi people. He said he had spoken with his Kuwaiti counterpart about future cooperation and about power links being constructed between countries in the region. On Iraq's energy plan, he said the plan includes the installation of an additional 2000 MW of generating capacity by 2010. When asked about the impact of the security situation on the power sector, he said, "Security used to be our fourth priority after money, fuel, and manpower, but now it has jumped to first place." He said up to "30 per cent (of the personnel working for the Ministry) have been killed, 30 per cent injured, and 30 per cent kidnapped." He added that his Director-General had recently been assassinated. When asked about his political affiliation, he responded "I am an Iraqi serving the Iraqi people.... The Ministry of Electricity has nothing to do with political blocs. It aims to serve the people and construct the infrastructure." ********************************************* * For more reporting from Embassy Kuwait, visit: http://www.state.sgov.gov/p/nea/kuwait/?cable s Visit Kuwait's Classified Website: http://www.state.sgov.gov/p/nea/kuwait/ ********************************************* * LeBaron