Iraq lowers its external debt to $1.5B

Iraq lowers its external debt to $1.5B

Shafaq News / On Teusday, the Iraqi Cabinet decided to reduce the country's external debt by $1.5 billion, alongside a series of service-related and energy-related decisions.

Iraqi Prime Minister Mohammed Shia Al-Sudani’s media office stated that the PM chaired the fourteenth regular session, during which the general situation in the country was discussed. Several vital economic and service-related files were also reviewed, along with deliberations on the agenda items and decisions and recommendations taken regarding them.

“The Cabinet approved the reduction of the external public debt and the organization of the borrowing process, in accordance with the recommendation of the Ministerial Economic Council 24207 for the year 2024, which includes the approval of the recommendation of the Diwani Order Committee 23942 concerning external debts.”

The recommendation included:

1. The Ministry of Planning to study projects canceled from loans to explore the possibility of including them in funding sources from the general federal budget.

2. The Ministry of Finance to audit any financial obligations that may result from canceling these projects with the lending agencies upon implementing the decision.

3. Canceling outstanding loans amounting to $1.05 billion and completing vital projects from government funding sources.

4. Cancelling loan requests amounting to $5.8 billion for the Basra desalination and suspended train projects, financing the first project from the Regional Development Budget, and financing the second project by offering it for investment.

5. Reducing the current external public debt from $10.5 billion to $8.9 billion.

6. Redirecting World Bank loans for delayed projects and other surpluses towards implementing the vital railway connection project (Faw – Rabia - Feshkhabor).

7. Contracting with a global financial consultant for auditing and managing external debts in the future.

The council has approved the following:

1. Increasing the reserve amount and total cost for the construction project of 29 schools of various capacities, using prefabricated construction method, including four schools in Thi Qar, seven in Maysan, five in Karbala, three in Al-Muthanna, six in Al-Diwaniyah, and four in Najaf.

2. Increasing the total cost for the project of rainwater conveyance lines (46SL) and (47SL) pump stations, on the left side of Mosul, listed since 2012.

3. Increasing the total cost for implementing the second phase of developing the university corniche in Kut City.

4. Increasing the total cost for furnishing component in the rehabilitation project of the National Center for Administrative and Technological Development (B and 2A buildings), listed since 2021.

5. Increasing the total cost for constructing the Presidency Building of the University of Fallujah, listed since 2010.

6. Increasing the total cost for the project of Al-Rashid District Sewers, listed since 2012, including increasing the reserve amount for the component (preparing a study and designs for the sewage project of a treatment plant with rain and main/subsidiary sewer networks and pump stations) in Al-Rashid City, Baghdad Governorate, with preparation, implementation, operation, and maintenance of the first phase.

In the context of supporting the agricultural sector, farmers, and local products, the Cabinet approved the continued receipt of the entire local wheat crop from farmers (within and outside the approved plan) for the current season.

In the energy sector, based on the Federal General Budget Law and facilitating instructions for its implementation, the Cabinet approved the recommendations of the Sovereign Guarantees Committee meeting held on March 24, 2024, regarding the (Bin Omar Gas Investment) project, as follows:

1. Amending Cabinet Resolution No. 23693 of 2023 to clarify that the amount of guarantee specified therein represents a debt guarantee, not a payment guarantee, as it reflects the loan payment guarantee amount with the accrued interests according to the economic model of the Bin Omar Gas project, not a payment guarantee.

2. Issuing a sovereign guarantee (debt guarantee) with interests to the lending banks totaling $3,246,000,000, with interests, for a duration not exceeding 11 years for the Bin Omar Gas project, after the Ministry of Oil/South Gas Company amends the contract by organizing a contract annex to specify the scope of the government guarantee.

3. Exempting the aforementioned guarantee from the provisions of Article (17) of the aforementioned instructions.

4. Exempting the Al-Halfaia Gas Company from Cabinet Resolution No. 219 of 2020, as it is a company without previous accounts and was established for the purpose of establishing the Bin Omar Gas project, provided that the company submits financial statements for the previous two years audited by one of the reputable audit firms to the Ministry of Finance, after the Al-Halfaia Gas Company submits evidence that it is a subsidiary of this company.

The Cabinet also approved exempting KEPPT Company from qualification standards and exempting it from the implementation instructions for government contracts (No. 2 of 2014), and exclusively inviting the company to invest in the Ajeel Field, on the condition that the company commits to including in its consortium one of the companies qualified with oil licenses and provide a commitment to that effect.

The Cabinet approved the recommendations of the Sovereign Guarantees Committee regarding the Al-Khairat Steam Power Station, as follows:

1. Granting a debt guarantee for the first phase only (1400 MW) to Harlow Company for the Al-Khairat Thermal Power Station project, with a validity period of 15 years, including four years from the station's construction period, with an amount of $3 billion, according to the following conditions:

- The Ministry of Electricity will sign a contract annex with Harlow Company, including transferring ownership of the Al-Khairat Thermal Power Station to the Ministry of Electricity after the expiration of the 25-year power purchase agreement (BOOT).

- Granting payment guarantee for purchasing power after the expiration of the 15-year debt guarantee, according to the amount of energy to be purchased for the remaining period of the purchase agreement.

- Amending the guarantee to cover the first and second phases (2800 MW) if the completion percentage of the first phase reaches 70%, including transferring ownership of the first and second phases to the Ministry of Electricity after the expiration of the power purchase agreement for the phases.

2. Harlow Company to pay $10 million for issuing the guarantee for the Al-Khairat Thermal Power Station project, with the financial closure date of the project being December 31, 2024.

3. The guarantee shall not be effective unless the conditions mentioned above by the Ministry of Electricity are fulfilled and presented to the Cabinet for approval to issue the guarantee.

4. Taking into account the requirements stated in Cabinet Resolutions (476 and 477) of 2021 and the recommendation of the Ministerial Energy Council No. 162 of 2021.

Based on the directives of the Prime Minister to implement the government's approach to supporting the private sector, the Cabinet approved the following:

1. Amending the prices of products (naphtha, natural gasoline, and condensates) to include unifying the percentage of price reduction to be 50% of the international bulletin price for products processed for dyeing plants, and 60% of the international bulletin price for products processed for refining, with support for investment projects licensed under the Investment Law (No. 13 of 2006) as equivalent to the support granted for licensed projects under the Industrial Investment Law (No. 20 of 1998).

2. Approving the amendment of the price of liquefied petroleum gas (LPG) to include a price of 415,000 dinars per ton for products processed for battery recycling and similar industrial cases, and a price of 330,000 dinars per ton for products processed for modern brick factories, with a review of the mentioned prices after one year.

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