Iraq signs $257m loan deal with JPM, GE to upgrade power plants

Iraq signs $257m loan deal with JPM, GE to upgrade power plants

Shafaq News/ Iraq's Finance Minister, Dr. Taif Sami, signed a $257 million loan agreement with JP Morgan Chase and General Electric (GE) on Sunday to upgrade the country's power plants.

The loan will be used to fund the fifth phase of the annual maintenance program (PUP5/B), which will cover 11 power plants across Iraq.

The program, according to Iraqi officials, is expected to improve the efficiency of the plants and increase electricity production.

The electricity infrastructure in Iraq has suffered from inadequate maintenance since the 1980s.

Power outages are part of daily life in Iraq, but older generations can vividly recall a bygone era before the 1980s, when Iraq boasted one of the most developed energy sectors in the region.

The loan is guaranteed by the U.S. Export-Import Bank (EXIM).

The agreement is the latest in a series of loan deals that Iraq has signed with international lenders, including Siemens and TotalEnergies, over the past few months in a bid to raise funds to finance infrastructure projects and other economic development initiatives.

Following the eight-year-long war with Iran, the decline in oil revenue reduced the Iraqi government's spending on public services. The 1990 Gulf War, coupled with the sanctions that followed, devastated state infrastructure, particularly the electric grid and water networks. By the end of the 1990s, most Iraqis did not have consistent access to electricity or water

"This loan will help to close the gap between supply and demand for electricity in Iraq," Sami said at the signing ceremony. "It will also help to improve the quality of life for Iraqis."

Despite Iraq's natural wealth, decades of conflict and corruption have limited the country's infrastructure, prompting over-reliance on Iran for energy provisions. While previous Iraqi governments have struggled to attract foreign investments, Iraq's complex political system has proven resistant to crises, and the nation's current state of relative peace has catalyzed a shift.

Recently, the sector has focused on new gas-capture and power-generation efforts—including projects in the just-signed $27 billion deal with France’s TotalEnergies, which the Biden administration welcomed.

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