By Anas al-Bar | 2025-04-29

Iraq took a decisive step toward energy independence by signing its largest-ever power generation agreement with two US companies in a move observers are calling a strategic pivot away from its long-standing reliance on Iranian gas.

The agreement, signed April 9 under Prime Minister Mohammed Shia al-Sudani's supervision, will enable US energy giant GE Vernova to construct combined-cycle gas power plants, according to a government statement.

These will be capable of producing 24,000 megawatts of electricity, it said.

In a parallel agreement, UGTRenewable Group will develop a 3,000-megawatt solar power project and build 1,000km of high-voltage transmission lines.

The massive infrastructure initiative, which includes provisions for external financing through major global banks, comes as Iraq struggles with chronic power shortages.

During scorching summers, temperatures can reach 50 degrees Celsius, forcing millions to endure prolonged blackouts despite the country's vast oil and gas reserves, AFP reported.

The agreements arrive at a pivotal moment, as the United States recently declined to renew sanctions waivers that had allowed Iraq to purchase electricity from Iran.

The value of Iraq's annual gas imports from Iran has hovered between $4 and $5 billion, according to Reuters -- revenues that have helped bankroll Tehran's network of regional proxies.

By cutting off this revenue stream, Baghdad is limiting Tehran's ability to maintain its proxy network, which includes militias like Harakat al-Nujaba and Kataib Hizbullah.

Strategy expert Tariq al-Shammari told Al-Fassel the new agreements represent a crucial break from Iran's influence.

"The Iranians have always used this issue to drain the Iraqis' wealth and destroy their economy," he said.

"They have been exploiting the electricity crisis as a bargaining chip and blackmail to burden the country with debt and dominate it."

Iranian regime's agenda

Billions of dollars in natural gas revenues paid to the Iranian regime have provided it "a huge resource that fuels its policies and malicious agenda," al-Shammari said.

"Iran spends this money on building and developing its weapons arsenal and supporting its network of proxies in Iraq and the region to sow chaos and terrorism."

"It has never been a reliable or friendly partner to Iraq, nor has it shown interest in building balanced relations that respect sovereignty and good neighborliness," he added.

"The Iraqi government has drawn up plans to guarantee its energy independence and meet the population's demand for stable, uninterrupted electricity," Farhad Alaaldin, the prime minister's advisor on foreign affairs, told AFP.

Iraqi electricity minister Ziad Ali Fadhil described the deal as "a pivotal step toward ending the chronic electricity crisis that has plagued the Iraqi people for decades."

The deal will serve to strengthen economic and technical relations between Iraq and the United States, he said.

Iraq currently produces just 16,000 megawatts but needs 55,000 megawatts during peak hours to avoid power cuts.

The energy ministry aims to exceed 27,000 megawatts this summer, according to Al-Arabiya.