Our study determined that the electricity sector in southern Iraq is facing a crisis driven by a combination of security threats, mismanagement, policy incoherence, lack of strategic planning, and politically sensitive subsidies.
Addressing these challenges requires a multi-faceted approach, including governance reforms, investment in infrastructure, security stabilization efforts, and the gradual restructuring of the subsidy framework. Without decisive action, the gap between electricity supply and demand will continue to widen, further destabilizing the region’s economic and social fabric
— Iraq —
conflict. crisis. reform.
Power Struggles: Overcoming Iraq’s Electricity Crisis Amid Conflict and Mismanagement
"Energy security is not just about keeping the lights on; it’s about ensuring the stability of nations." – Fatih Birol, Executive Director of the International Energy Agency
Challenge
The electricity sector in southern Iraq faced significant structural and operational challenges, exacerbated by geopolitical instability and economic mismanagement. The primary objective of this study is to identify the key factors contributing to the widening gap between electricity supply and demand, as well as the institutional and regulatory disruptions caused by international sanctions and military interventions. The challenges our team identified were
- Security and Political Instability: Southern Iraq’s electricity sector has been severely impacted by ongoing violence, insurgency, and political instability. Attacks on power infrastructure, theft of equipment, and the difficulty in maintaining or expanding facilities have hindered the sector's ability to function efficiently. Moreover, the region's unstable security environment has deterred foreign investment, limiting opportunities for much-needed infrastructure rehabilitation.
- Decades of Poor Management: The state-owned electricity enterprises have suffered from decades of mismanagement, resulting in inefficient operations, financial misallocation, and bureaucratic inefficiencies. Corruption, lack of accountability, and ineffective leadership have contributed to the sector's failure to meet growing energy demands.
- Lack of Coherent and Consistent Sector Policies: A major obstacle to reform is the absence of a unified and consistent policy framework for the electricity sector. Policy changes have been erratic and reactive, rather than proactive and strategic. The lack of clear regulatory guidelines has created uncertainty, making it difficult to implement sustainable reforms.
- Absence of Sectoral Planning and Future Forecasting: The failure to conduct comprehensive planning and forecasting has resulted in chronic shortages and an inability to anticipate future energy needs. Without long-term strategies to expand capacity, upgrade infrastructure, or integrate alternative energy sources, the electricity sector remains vulnerable to disruptions.
- Political Challenges Surrounding Electricity Subsidies: Electricity tariffs in Iraq are heavily subsidized, creating a financial burden on the government while distorting market incentives. These subsidies have led to excessive consumption, resource misallocation, and a reluctance to adopt energy-efficient technologies. However, any attempt to remove or adjust subsidies is met with strong political resistance due to public reliance on cheap electricity.