The Kurdistan Region of Iraq has been facing security challenges for the past two years. However, on his speech, the last 1st of May, Prime Minister Barzani expressed that “war and terrorism have been pushed away and the Region has embarked on a new era, the post-ISIS era. How do you think this new era will transform the Kurdistan Region?
It was a difficult time for us in terms of security as the ISIS reached our borders. We are only 70 kilometers away from Mosul, but thanks to the great work of the Peshmerga and the assistance of the coalition forces we pushed the terrorists away from Kurdistan. As His Excellency the Prime Minister has expressed, Erbil and the Kurdistan Region is safe for everybody, and the international companies are coming again to the region, which is an evidence of the high-security conditions. It is a good opportunity for them also in the reconstruction of Mosul, as we are the perfect gateway to the areas liberated from ISIS to start rehabilitation.
President Masoud Barzani has recently announced that the referendum on independence is due to take place on September 25th. As Minister Falah mentioned in our meeting, it is a crucial step towards the creation of a new independent state. What would be the implications of an eventual independence for the Kurdistan Region?
The referendum is the right path to follow and another step towards independence. The final step entails a lot of preparation, but we have been for hundred years after the pressure of the Iraqi central government, as well as other countries, and now it is the time for us to carry out this referendum and to get ready for independence. It is our right; as a nation, we have the right to work in that direction, and even the Iraqi Constitution gives us that possibility. We have fought all these years for independence and I think there is not a single Kurdish person that does not want to be independent.
The Kurdistan Region is rich in oil and gas resources and the government has mostly invested on gas-fired power stations’ development. What are the main sources of electricity production in the Region at this moment?
There are three sectors in the electricity industry: generation, transmission, and distribution. Regarding the generation, it was a really brave and appropriate decision of the Prime Minister to give this sector to the private enterprises, which is something unique in the Iraqi history and has proven to be successful. In 2006 and 2007, the production in Kurdistan was 250 megawatts, while now, we are capable of generating around 6,000 megawatts thanks to the private production.
Unfortunately, due to the crisis of the last three years provoked by the fight against ISIS and the budget cut off by the government in Baghdad, we could not develop the following plan to strengthen the transmission and distribution infrastructure to supply the entire production. Therefore, we are producing only 2,700 megawatts out the 6,000 megawatt that we are able to, which is not enough to fulfill the current demand of around 5,000 megawatts. It means that we have a surplus of the generation that we are not using. We are in the process of improving the services to the population by boosting our capacity of electricity transmission in spite of the great challenges.
When it comes to distribution, the main challenge is to fix the supply loss of around 10% due to technical problems and 40% in non-technical issues, which is basically lack of bill collection. We are due to implement a smart meter technology developed by international companies that will ensure the payment of the consumed electricity at the same time that will ensure full supply to the citizens.
Prime Minister Barzani, explained last year that the Government had developed a strategy to work with the private sector to tackle the region’s frequent power shortages. Could you explain us the pillars of this strategy?
When the strategy was agreed in the Council of Ministers we brought an international consultant to advise us in transferring the distribution to the private sector. The mentioned smart meter solution is an advanced technology solution to our problems with bill collection and it is already emplaced in countries like the United Kingdom. We realized that as a government we were unable to implement this sort of measure, but the private sector easily can do it.
The subsidies of the government for electricity will be more effective, as they will complement the bill that the users will pay to the companies, because nowadays the fully subsidized policy is leading to a misuse of electric resources, increasing the overall demand.
Historically, the state has been the main supplier of electricity for a certain amount of hours a day depending on the season. However, in 2016 you started the mentioned privatization process. Which are the main private companies that entered the market and what is their role?
There are five stages in the privatization plan, and so far we have a few international companies on board producing their meters. On the other hand, the gas that we are using right now for electricity production comes from national companies, which is helping us to reduce the expenditure after the crisis.
At this very moment in Kurdistan, we have Mass Group, the largest electricity producer in the region, and Qaiwan Group, based in Slemani and
You mentioned the international companies, how are you going to attract the international private companies to invest in the Kurdistan Region's electricity sector?
We have a strong private sector that is really well connected to the international investors and they will be the link between them and the Region. I can assure that the government will provide the letter of credit and will involve the International Bank if it is necessary, but we are implementing the plan in the direction that the private sector can develop the market. The main role of the institutions is to establish the priority areas of action and needs and to monitor the proper implementation of the projects, the private enterprises will become the distribution center. On the other hand, we will also control the pricing, as we do not want to see ordinary people affected.
Deputy Minister Hoger, since you came back to Kurdistan after working for international companies in Kuwait, you have held high responsibility positions in the Program for Rehabilitation of the Electric Sector, the Council of Ministers and now as Deputy Prime Minister of Electricity. What do you feel most proud of in your career?
I am proud of my job with the international companies abroad, being at the UN for 13 years taking part in the electric sector rehabilitation programs made a difference. I am proud as well of working for my country and I encourage people to come to Kurdistan. After the defeat of ISIS, this is the best place for investment.
It is also very important to mention that our companies are going to provide energy to Mosul after the Prime Minister has given the green light for them to do so. Despite the lack of cooperation from Baghdad in the security crisis, we are showing that we want to be independent but, from the human point of view, the Iraqis are our brothers.
Business Review Readers include the most influential business leaders and decision makers in the world. As a conclusion to this interview, the final message that you would like to transmit to our readers?
We regret that we could not provide 24 hours of electricity to the population, but it has been a difficult time for Kurdistan. We have a plan to fix it and we are pushing to provide fully electric supply to the citizens. The investors are also part of this plan, and we want to welcome and assist them.