Kurdistan Region of Iraq: Interview with Mr. Azad Mustafa

Mr. Azad Mustafa

Vice Chairman (Mass Group Holding)

Mr. Azad Mustafa

Prime Minister Barzani announced last year the plans of the government to fully privatize the electricity sector of the Kurdistan Region in order to solve the problems of production and distribution. How do you think this policy can solve the electricity shortage in the Region?

This will be a very successful policy that will put as at the same level that all the other countries, where the electricity sector is already a private market industry. We still have problems in Kurdistan. Ours is basically a distribution problem; nowadays Mass Group produces 4.000 megawatts, but even if we raised this production up to 8.000, if there are not arrangements to ensure the bill collection from the customers, the distribution problems will never be solved. Right now we only collect around 10% of the billing, however, if we make it a private sector, the companies will be able to establish a proper system of control.

We have to think on how to reduce the costs of electricity production. In the Kurdistan Region we are rich in natural gas. Right now, we produce electricity out of diesel, which is very expensive. My idea to improve production is to use natural gas for the production of electricity. It will reduce the ultimate price for the government and the consumers. For this the Kurdistan Region should increase the production of natural gas.

In addition, we have to improve the distribution channels to the customers to make them more efficient, as well as teaching the people on how to use electricity. We are aware that the current financial situation among the population is not good, we need to support the people, but at the same time, we need to promote an efficient use of electricity among the population.

How and when can the Kurdistan Region make a reality the transition from oil-produced electricity to natural gas produced electricity?

We are already moving forward with the projects to produce electricity with natural gas. We have established conversations with another companies I think that within two years we can change the production model. Regarding, Dana Gas can double the production, as the company is ready for that. They have carried out the study and two years is more than enough.

The Deputy Minister of Electricity Hoger Shalli, explained yesterday in our interview that the Kurdistan Region produces at this moment 6.500 megawatts. Mass Group Holding, with its four power stations, generates 4.000 megawatts, which represents more than 60% of the Region’s total production. How have you achieved such position in the market, what is the history behind this success?

Our full production capacity is indeed 4.000 megawatts. However, at this moment we are producing 2.000 due to oil restrictions plus 350 with hydropower. We are the company that in 2007 produced 450 megawatts, and regarding Mass Group, Prime Minister Nechirvan Barzani supported us with loans and technical issues. He supported us to be the main producers of electricity in the Kurdistan Region. We built our first park in Erbil and he encouraged us to build a second one in Sulemaini, and then a third one in Duhok.

We increased our production according to the development of the city to meet the electricity demand in the region. As Mass Group, before we started our production, there were only two hours of electricity supply for the population. As a Kurdish company, we are leaders in this area, we made an investment to contribute to the population. In this first step we brought an investment of 250 million USD into the region. In 2007, the situation was not that good and it was very difficult to bring such amount of money. As Kurdish people we try to serve our nation and our people and support the government.

According to the Deputy Minister Hoger Shalli, there are two main electricity supply problems in Kurdistan: the distribution, as he literally stated, “distribution is the main problem, even if we produce enough electricity, we don’t have an effective distribution infrastructure”, and the second one is bill collection. How can Mass Group ensure proper distribution and efficient bill collection?

Regarding distribution, it entails cost and time. When we speak about the needs it is different; each year there is development in the city and the needs will increase, therefore is a project that needs permanent and constant development. Right now the distribution is a government responsibility, but if they transfer this responsibility to the private sector the companies will design a plan for the future that thanks to their knowhow will improve the situation.

The Executive Director of the Mass Group Holding Haji Azad, revealed last April that you are going to supply energy to the recently liberated city of Mosul, an operation that was confirmed yesterday by the Deputy Minister of Electricity in our interview. At the same time, Mass Group is starting to operate the new power station in Baghdad. What are the guidelines of this strategy of expansion over Iraq?

Regarding Kurdistan, we provide electricity to the three largest cities, Erbil, Sulemani and Duhok, in addition to Kirkuk. Currently we have twelve turbines on hold because the government is unable to supply fuel. However, the Baghdad came to us to ask for help in the supply for Mosul. We agreed to do so, but in order to be able we need the blockade of fuel supply comes to an end so we can bring electricity to Mosul. We will do it for Kurdistan and for our people.

Mr. Azad, Mass Group Holding is a story of business success; you are one of the leaders that have built up the company of reference in the Kurdistan’s energy sector and one of the most successful enterprises in the all of Iraq and. What do you feel most proud of in your career?

Kurdistan used to have only two hours per day of electricity supply, and we made it to 24 hours. I’m proud that we could deliver light to all the villages and small towns in addition of the big cities. It makes me happy when you approach Kurdistan by plane that you can see the lights and that the territory is all the time illuminated. Regarding our cement factory; before we start producing cement the price per tone was 130 USD, currently it went down to 55 to 60 USD. We have reduced 50% the price of the tone. Obviously, the base material for every construction is cement, which means a contribution to the industry and the economy of Kurdistan. The same happened with the steel; before we produced it the average price of the tone was 900 USD, while now is 450 to 400 USD. In Iraqi history there has been a lot of wars, which produces industrial and material wastes. We were able to collect all those wastes and produce a new product out of them.

We have done a steam turbines project in Erbil. Combine cycle is the turbines working from steam. We take the heat of the electricity plants to heat the water and produce a steam that turns the turbines producing electricity, and it is a great achievement for environment preservation.