Iraq Far From U.S. Goals for Energy

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By Dana Hedgpeth
Washington Post Staff Writer
Sunday, September 2, 2007

Iraq's crucial oil and electricity sectors still need roughly $50 billion to meet demand, analysts and officials say, even after the United States has poured more than $6 billion into them over more than four years.

Since the U.S. invasion of Iraq in 2003, the Bush administration has focused much of its $44.5 billion reconstruction plan on oil and electricity. Now, with the U.S.-led reconstruction phase nearing its close, Iraq will need to spend $27 billion more for its electrical system and $20 billion to $30 billion for oil infrastructure, according to estimates the Government Accountability Office collected from Iraqi and U.S. officials.

Even with the funding, the GAO notes that it could take until 2015 for Iraq to produce 6 million barrels of oil a day and have enough electricity to meet demand. A commanding general of the Army Corps of Engineers says it could have enough electricity sooner -- 2010 to 2013.

"The U.S. money was intended to get those industries started on recovery," said Stuart W. Bowen Jr., the U.S. special inspector general for Iraq reconstruction, who is charged with finding waste, fraud and abuse in the multibillion-dollar effort. "We were working with a dilapidated, run-down system. It still has a long, long way to go."

A former top-level Pentagon official who was involved in rebuilding the oil and electricity sectors put it more bluntly. "People said the money was to rebuild the country, but it was just a down payment," said the official, who spoke on condition of anonymity because he still works for the government. "The money was never enough to handle all that was there. It was merely a Band-Aid."

If the problems aren't fixed, it will be difficult to establish a strong economy and improve the standards of living, and could cause people to lose confidence in the government.

Oil and electricity are two of Iraq's most important industries, each depending heavily on the other. Iraq imports about $2.6 billion worth of petroleum products a year. Oil exports account for 90 percent of the Iraqi government's revenue, but oil production is crippled without enough electricity for refineries and pipelines. Electricity, in turn, cannot be generated without the fuel that powers most of Iraq's power plants.

U.S. officials say they found the country's infrastructure in worse shape than they expected, hit hard by the Persian Gulf War of 1990-91 and a decade of economic sanctions. Oil wells hadn't been cleaned. Power plants had antiquated equipment and no parts available for repairs. One U.S. auditor said he spent a day with 22 Iraqi electrical engineers who proudly showed him how they jury-rigged a generator using the sawed-off bottom of a Pepsi can.

The Americans put $4.6 billion into more than 2,600 projects to repair electricity-generation facilities, transmission lines and distribution networks. They put $1.75 billion into improving the country's oil infrastructure.

Another huge problem: Armed groups regularly attack oil and electricity facilities.

Analysts say Iraq needs to invest money to improve its infrastructure for pumping and processing oil, upgrade and maintain equipment, and train workers at power plants and refineries. One U.S. adviser said, "They need more of everything."

"Our piece was to jump-start the infrastructure here," Brig. Gen. Michael J. Walsh, commanding general of the Army Corps of Engineers' Gulf Region Division, said in a telephone interview from Baghdad. "Everything we've been doing in the last four years was just enough to start it. Now the Iraqi government needs to continue."


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