Baghdad said on Saturday it had not officially received the United States’ decision to rescind a waiver that had allowed Iraq to pay Iran for electricity.
The Trump administration rescinded the waiver on Saturday as part of President Donald Trump's "maximum pressure" campaign against Tehran, a State Department spokesperson said.
The decision to let Iraq's waiver lapse upon its expiration "ensures we do not allow Iran any degree of economic or financial relief," the spokesperson said, adding that Trump's campaign on Iran aims "to end its nuclear threat, curtail its ballistic missile program and stop it from supporting terrorist groups."
For Iraq, the end of the waiver "presents temporary operational challenges," said Farhad Alaaeldin, foreign affairs adviser to Prime Minister Mohammed Shia al-Sudani.
"The government is actively working on alternatives to sustain electricity supply and mitigate any potential disruptions," Alaaeldin told Reuters. "Strengthening energy security remains a national priority, and efforts to enhance domestic production, improve grid efficiency and invest in new technologies will continue at full pace."
Trump initially granted waivers to several buyers to meet consumer energy needs when he reimposed sanctions on Iran's energy exports in 2018, citing its nuclear program and what the US calls its meddling in the Middle East.
His administration and that of Joe Biden repeatedly renewed Iraq's waiver while urging Baghdad to reduce its dependence on Iranian electricity. The State Department spokesperson reiterated that call on Saturday.
"We urge the Iraqi government to eliminate its dependence on Iranian sources of energy as soon as possible," the spokesperson said. "Iran is an unreliable energy supplier."
The Iraqi government acknowledged that ending the import of gas from Iran without ready alternatives will lead to the collapse of the electricity grid during the hot summer season.
An Iraqi government spokesman said in a statement that "dialogue between Baghdad and Washington will continue as both sides realize the importance of Iraq as a main factor of stability in the region."
Iraq has been fully committed to the waiver and it had set a long-term strategy to achieve independence in the energy sector, he went on to say, while highlighting financial reform enacted by Baghdad and efforts to bolster transparency according to international standards.
The government is looking at the worst-case scenario in various fields, including energy, and has started to hold intense meetings to overcome any electrify crisis, he added.
Meanwhile, the parliamentary Oil and Gas Committee said Iraq will seek alternatives, including turning to the Gulf, to secure fuel for its power plants.
Another parliamentary committee has warned that the energy sector will collapse during the summer when temperatures soar.
Spokesman for the Oil and Gas Committee Ali Shaddad said on Sunday that the government will turn to the Gulf for gas.
The problem is that the electricity ministry had built power plants in Iraqi provinces that only operate on gas. The stations located in Basra operate on gas and oil, which has helped keep energy generation in the province stable, he revealed.
The prime minister himself is following up on the completion of a gas pipeline from Basra. The energy ministry has been working on the project for 30 days already and it will be completed within 120, he added.
Iraq produces 27,000 megawatts of electricity through plants that mostly operate on gas. Production occasionally drops to 17,000 megawatts. The total production does not meet the country’s daily needs, which is 40,000 megawatts.
Dr. Ihssan Shmary, professor of strategic and international studies at Baghdad University, told Asharq Al-Awsat that the US decision to rescind the waiver is a precursor to gradually start imposing sanctions on Iraq.
He said the sanctions will cover entities, institutions and even some figures.
The US decision effectively confirms that the administration does not distinguish between Iran and Iraq and it sees the former as a card to impose its maximum pressure policy on the latter, he stressed.
The decision has greater political rather than technical implications, especially since the next decisions may alter the balances of power in Iraq, he explained.
On the alternative to gas from Iran, he said efforts should be exerted to boost the electricity connection with Saudi Arabia. The Kingdom can also help develop Iraq’s energy sector and connect it to the Gulf, he said.
