Iraq; financing terms will play a key role in awarding foreign firms contracts - includes related article on the Baghdad International Fair

Business America, July 7, 1986

The Baghdad-Qaim railway line, linking Baghdad with the Syrian border, has been completed, and the Kirkuk-Baiji-Haditha line is still under construction. As soon as the foreign exchange situation allows, bids should be invited for two other major lines--one linking Baghdad with Basrah along the Tigris, and the other linking Baghdad, Kirkuk, Arbil and Mosul to each other, with a possible mountain spur to Sulaimaniyah. New design contracts for the Baghdad Metro have been held up, and it is doubtful that construction of this project will start during this decade.

An end to the war should boost development of maritime transport. When the war broke out in 1980, Iraq lost access to it Gulf ports. These have fallen into disuse and the maritime transport fleet has shrunk as old vessels that were sold have not been replaced. The oil tanker fleet also may be upgraded eventually and the planned river-transportation system has not been inaugurated because it relies on transporting goods to and from Iraq's now closed ports. The small general cargo shipping fleet that Iraq owned prior to the war has been sold.

With completion of the Arabsat satellite station, Iraq will be using four satellites (Intelsat Atlantic, Intelsat Pacific, and the U.S.S.R.'s Sputnik). Microwave and coaxial cable networks have been effected, and fiber-optics have been introduced. Almost all the telephone exchanges have been converted to digital, and the total number of lines in the country stands at about one million (compared to 340,000 in 1981). Future purchases will be restricted to upgrading equipment rather than the introduction of new communications links or exchanges.

Electric Power--Before the war, Iraq's electricity consumption was four to five years. This trend was interrupted by the war as a number of generating stations were damaged or shut down due to proximity to the Iranian border. By 1983 Iraqi electricity consumption growth started reverting to its pre-war pattern. In that year electricity consumption was 11.7 billion kWh, and output was 15.6 billion kWh. To meet this rising demand and also to meet commitments for electricity exports to Turkey and to a lesser extent Kuwait, Iraq continues to install new generating capacity. Hyundai Corp. (South Korea) is building the 1,200 MW Mussayib power station near Baghdad. Negotiations with the Soviet Union for the 1,200 MW Yusifiyah power staton are said to be in an advanced stage, and tenders have been invited for the 1,200 MW Anbar power station. The above is in addition to 1,350 MW of hydro-capacity in various stages of commissioning. While construction of new power generation projects is expected to slow down, a strong possibility exists that the government will press ahead with transmission and distribution projects to cut down "line losses' and to serve areas where soaring consumption has resulted in "brown-outs.'

Housing and Construction--This sector plays a major role in Iraq's economy. Although the supply of raw materials is much better than a few years ago, and the need for housing is greater than ever, the government has decided to "cool down' this sector of the economy for reasons of fiscal policy. The government is unlikely to launch soon any new major housing construction projects. Also, private-sector construction will continue at a much slower pace than prevailed early in the 1980s. Housing construction is unlikely to pick up until the government resumes its housing loans program. In the general construction sector, any resurgence is likely to be largely confined to projects involving national security in line with the necessity to plan for an indefinite continuation of the war with Iran. Such projects will usually not be offered to foreign contractors, but they will provide significant opportunities for equipment suppliers.