Cablegate: Meetings with Iraq Electricity Minister

VZCZCXYZ0034
PP RUEHWEB

DE RUEHC #0688 3621708
ZNR UUUUU ZZH
P 281649Z DEC 07
FM SECSTATE WASHDC
TO AMEMBASSY BAGHDAD PRIORITY 0000

UNCLAS STATE 170688

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EAID ECON IZ PREL
SUBJECT: MEETINGS WITH IRAQ ELECTRICITY MINISTER

1. (SBU) Summary: On December 11, the Iraq Minister of
Electricity, Dr. Karim W. Hasan, held separate meetings
with USAID and Department of State. At USAID he set out
priorities for assistance and asked that these be defined
in a USG-GOI bilateral agreement. At State he emphasized
his desire to encourage U.S. companies to bid on Iraqi
electricity sector projects. He also noted the
deteriorating fuel situation and the need for new
generating projects that would come on line after current
projects are completed. End summary.

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USAID Meeting
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2. (SBU) Dr. Karim met with Deputy Assistant
Administrator James Bever and other USAID officials. He
seeks a bilateral agreement between GOI and USG that would
define USAID's future role in Iraq. He listed four
priorities for USAID assistance:

-- A joint plan for the energy sector that would
integrate planning for electricity and oil;
-- Privatization and regulation;
-- A new power law (this was linked to a goal of
making Iraq the wheeling hub for the Middle East); and,
-- Capacity building.

3. He cited training as an example of an activity that Iraq
was capable of undertaking on its own. He did not discuss
where the line should be drawn between capacity building
and training. (Comment: The inclusion of capacity
building in his priorities may have owed more to tact than
to the importance he attaches to it. Capacity building is
USAID's current focus and the meeting was attended by
representatives of the company responsible for that
program.)

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Department of State Meeting
---------------------------

4. (U) Participation of U.S. companies: Dr. Karim met with
NEA DAS Lawrence Butler and other State Department officials.

He noted the controversy over the contracts his ministry
has signed with Chinese and Iranian companies. No U.S.
company bid on these contracts, and a major purpose of his
current trip is to encourage U.S. companies to bid on
future contracts. Ambassador Butler promised to support
this effort.

5. (U) Some companies reportedly have criticized the
Ministry
of Electricity for failing to provide sufficient
information on its project proposals. Dr. Karim rejected
the criticism; detailed technical project information is
available on the ministry's web site, he said.

6. (U) Need for fuel and additional generation capacity: He
discussed the need for fuel and for additional generating
capacity. The Ministry of Oil has provided less fuel this
year than last. Dr. Karim rejected complaints from the
Ministry of Oil that it did not receive adequate supplies
of electricity and therefore needed to build its own
dedicated electrical generation capacity. Refineries are
served by dedicated lines and are given priority over
hospitals, Karim said.

7. (U) Dr. Karim has worked to remove any obstacle from the
import of diesel fuel from Kuwait, including trips to that
country to meet with Kuwait officials. He stated that he
did not know what additional actions he could take, and he
asked for USG assistance in facilitating the imports.
(Comment: The day following the meeting, Iraq received a
shipment of diesel fuel from Kuwait, but this subject will
continue to be of interest to the USG.)

8. (U) Dr. Karim stated that projects now under construction
will provide an
additional 3,000 MW of new generating capacity by
mid-2009. New generating projects are needed beyond that
time, especially large thermal units that can use any kind
of fuel. The lack of environmental regulation allows such
units to be constructed more quickly in Iraq than in the
U.S.

9. (U) Ministry of Electricity : Dr. Karim stated that his
ministry is
overstaffed. There are 100,000 employees; only 30,000 are
needed. He cited this not as a problem but as a
contribution to addressing the problem of unemployment.

10. (U) Dr. Karim confirmed that Ministry of Electricity
operations and maintenance has improved and that this
improvement has been a big factor is allowing it to supply
electricity on a sustained basis at a new higher level.
(Comment: The improvement in operations and maintenance
has been a joint USG-GOI effort. USG has conducted
extensive training in operations and maintenance for
Ministry of Electricity personnel; on GOI's side, the
Ministry's personnel have assimilated the training, and
the Ministry has provided sufficient resources for them to
carry the lessons into practice.)
RICE

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