Energy crisis deepens: Iraqi industries struggle with power cuts and costs

Shafaq News/ Prolonged power outages caused by dwindling Iranian gas supplies and unstable electricity imports from Iran have brought industrial activities in Iraq’s Diyala province to a near standstill. The outages, which have reduced power availability, are disrupting livelihoods and forcing businesses to rely on costly diesel generators, further cutting into profits.

National-Level Energy Crisis

A 15-day maintenance shutdown of Iranian gas supplies starting on November 24 severely impacted Iraq’s electricity generation, cutting power output by 5,500 megawatts (MW) and leaving Baghdad, the central region, and the Middle Euphrates without adequate electricity.

Gas flows from Iran to Baghdad and central Iraq were completely halted during the maintenance period, with only 7 million cubic meters per day redirected to southern regions, far below the agreed supply of 25 million cubic meters per day.

"The gas supply is scheduled to be 25 million cubic meters daily, but only 7 million cubic meters are currently being supplied, redirected from Baghdad and central regions to the south," the Iraqi Electricity Ministry said in a statement.

Iraq relies on imports from Iran for 30-40% of its energy needs.

On December 6, Iranian gas supplies to power plants in central Iraq began to resume gradually following the completion of maintenance on gas transmission lines, a government source told Shafaq News.

Electricity availability is expected to improve in central areas, particularly Baghdad, Wasit, Diyala, parts of Al-Anbar, and other provinces, as gas flows return to normal levels. However, experts warn that Iraq’s dependence on Iranian gas remains a vulnerability in its energy sector, underscoring the need for domestic energy investments to reduce reliance on imports.

Impact on Local Industries

In the industrial zones of Baqubah and al-Khalis of Diyala Province, home to auto repair workshops and metalworking shops, operations have slowed to a crawl. Business owners report mounting losses as they struggle to meet customer demands with limited power.

"Electricity outages lasting for hours disrupt our work entirely," said Ahmed al-Tai, a car repair shop owner. "We are left with no choice but to do basic manual work and avoid taking on complex tasks requiring electrical equipment."

Metalworker Amir Abbas told Shafaq News, "Our work has become unprofitable. Welding and cutting tools need electricity, but with long outages, especially in the mornings, we’re forced to buy diesel for generators. Sometimes, I just have to go home without completing a single task."

Abbas explained that missing deadlines on projects, such as manufacturing doors, result in financial losses for both the business and its workers. "Electricity should not be cut off in industrial areas during working hours. We pay monthly expenses like rent and wages, but the lack of power, worsened by disruptions to Iranian supply lines, leaves us at a loss."

Hassan al-Abadi, an employee at a car washing and repair workshop, said power outages have slashed their business activity by more than 50%. "We are spending 140,000 to 150,000 Iraqi dinars per barrel of diesel for generators, but the high cost is unsustainable. Many businesses have been forced to downsize their staff due to declining profits."

Electricity Challenges Tied to Regional Politics

Economic expert Mohammed Haydar linked Iraq’s electricity woes to its reliance on imported gas and power from Iran, explaining, "The failure of successive governments to invest in local gas resources and reduce dependency on imports has taken a toll on industries and markets."

"Certain political factions benefit from continued imports of gas and electricity, which serves the interests of neighboring countries. Iraq urgently needs to focus on local production, especially with abundant gas fields in Mansuriya, Akkas, and the southern provinces. These resources could fuel domestic power plants and reduce dependency on imports," he pointed out.

Moreover, he called on the Iraqi government to prioritize strengthening the country’s electricity infrastructure. "Efforts must be made to stabilize the power grid, as this would have widespread benefits for industrial sectors, attracting investment, and reduce the financial losses borne by both the government and citizens."