The United States has renewed a waiver for Iraq to continue importing Iranian electricity, a State Department official said on Sunday, but this time for a shorter period of 30 days, adding that Washington will reassess whether to renew again once a "credible government" is formed in Iraq.
Washington has repeatedly extended the exemption for Baghdad to use crucial Iranian energy supplies for its power grid, for periods of 90 to 120 days. The 30-day waiver is the shortest since Iraq started getting exemptions in 2018.
The United States has insisted that moving towards energy self-sufficiency in oil-rich Iraq is a condition for its exemption for importing Iranian energy. Iraqi Electricity Minister Luay al-Khatteeb said to replace Iranian gas and electricity, the country needs three to four uninterrupted years to develop the key projects that it is working on to increase the gas capability and provide the necessary feed stock for the gas to power stations.
Iraq has always been a customer of more than 80 percent of Iran's electricity exports. It was expected to invest 10 billion U.S. dollars in its oil and gas projects to end its dependency on Iran within four years. Nevertheless, none of the projects have made headway.
The country can import up to 1,200 megawatts of electricity per year and up to about 30 million cubic meters of natural gas per day during peak usage in the hot summer months when temperatures in the southern part of the country can soar up to 50 degrees Celsius.
Electricity supply was estimated at 19 gigawatts in 2019 and forecast to reach 20 GW in 2020, while power demand in peak time is around 25 GW, according to the minister.
The 30-day waiver is complicated by geopolitics as a third Iraqi prime minister-designate is yet to form a cabinet. Earlier this month, Iraq's president named intelligence chief Mustafa al-Kadhimi as prime minister-designate, the third person tapped to lead Iraq in just 10 weeks as it struggles to replace a government that fell last year after months of deadly protests.
Ties between Washington and Baghdad have been strained as the United States said it was disappointed that Iraqi forces have failed to protect the U.S. forces stationed in Iraq. They have come under multiple rocket attacks this year alone, for which the United States blames the Iran-backed militia.
U.S.-Iranian relations have been bitter since the Islamic Revolution toppled the U.S.-backed Shah of Iran in 1979 and ushered in an era of theocratic rule. Tensions flared up after President Donald Trump pulled out the 2015 Iran nuclear deal and reimposed U.S. sanctions that have crippled the Iranian economy.
Tensions worsened after a January 3 U.S. drone strike in Iraq killed Qassem Soleimani, the head of Iran's elite Quds Force. It also killed Abu Mahdi al-Muhandis, who founded Iraq's Shi'ite Kataib Hezbollah militia after the 2003 U.S.-led invasion.
The State Department official said the waiver granted by Secretary of State Mike Pompeo applied only to electricity and referred reporters to the Treasury Department for transactions related to Iranian natural gas imports.
(With input from agencies)