US extends waiver to Iraq for Iranian gas imports

Iraqi official says Baghdad given another three months to buy fuel for power plants without risk of sanctions

Iraq suffers frequent power shortages because of poor infrastructure and a shortage of natural gas for power plants.

The United States has granted Iraq a three-month extension to a sanctions waiver allowing it to import Iranian gas, an Iraqi official said.

The move represents a welcome reprieve for a country that relies heavily on its neighbour for energy supplies.

Iraq buys gas and electricity from Iran to supply about a third of its power sector, worn down by years of conflict and poor maintenance and unable to meet the needs of the country's 40 million population.

The US blacklisted Iran's energy industry in late 2018 as it ramped up sanctions, but granted Baghdad a succession of temporary waivers, hoping Iraq would wean itself off Iranian energy by partnering with US firms.

The latest extension carries into the start of US president-elect Joe Biden's mandate, as the administration of President Donald Trump departs the White House on January 20.

The new exemption, which is longer than previous extensions, was granted after "long discussions", the official told AFP on condition of anonymity.

The reprieve, however, does not solve all of Baghdad's energy problems.

Tehran has demanded nearly $6 billion in unpaid gas bills from Baghdad and reduced supply to Iraq over the arrears. The Iraqi electricity ministry said the cuts placed Baghdad and other cities at risk of serious power shortages.

The issue was resolved during a visit to Baghdad by Iranian Energy Minister Reza Ardakanian, who met his Iraqi counterpart Majid Mahdi. "Meeting ended with resolving lingering issues and gas flow would be resumed to reach normal rates gradually," Mr Ardakanian said.

Iran's electricity minister also met with Iraqi Prime Minister Mustafa Al Kadhimi and conveyed the Iranian government's pledge to "urgently resume gas pumping which had been slashed recently after technical problems", the prime minister's office said.
While American exemptions allow Iraq to obtain supplies from its neighbour without risk of reprisals, they still prevent it from paying its Iranian bills in dollars – a currency that Iran, choked by sanctions, badly needs.