refined fuel supply shortfall

8/14/2019 Refined Fuel Supply Shortfall

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Aresearch Paper By

Kaaed A.Ali

Supervised by

Dr.Jennifer Bremer

AssociateProfessor

& UnitDirector of

MPPA Program

The American University in CairoSchool of EconomyManagement DepartmentMaster of Public Policy and Administration unit

2008

Refined Fuel SupplyShortfall & ItsEffects on the Iraqi


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Content

Page

Introduction1. Executive description of the GoI and MoO . . .. . . . . . . . . . . . . . . 4

2. Brief description of the fuel supply shortfall, itscauses,

and its effects . .. . . . . . . . . . . . . . . . . . . 4

Causes behind fuel supply shortfall in Iraq1. Governmental malfunctioning . . . . . . . . . . . . .. . . . . . . . . . . . . . 7

"The absence of a real governmental central plan tointegratethe work of all ministries."

2. Governmental monopoly . . . . . . . . . .. . . . . . . . . . . . . . . . . 7

3. Corruption . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 8

"andreligious militias' control to make money."4. Unstable Security Situation . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 8

"And terrorists' sabotages that affect fueltransportation"5. Shortage of Electricity Supply to the Refineries . . .. . . . . . . . . . . . . . . . 9

Effects of this shortfall

1. Fuel supply shortfall's effects on the economicactivities and financial situation of householders

in Iraqi:

Expensive transportation that affects trading

activities . . . . . . . 11 Increasing manufacturing costs and low

productivity . . . . . . . . 12of most private and public industrial enterprises

Fuel black market that offers nonproductivejobs for . . . . . . . 13millions of Iraqis

Householders' financial balances. . . . . . . . . . 14

2. Fuel supply shortfall's effects on public services :

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Power plant low productivity. . . . . . . . . . . . . . . 15

Interrupted health services. . . . . . . . . . . . . . . 17

Interrupted educational institutions

. . . . . . . . . . . . . . . 18

Conclusion and recommendation

1. Summary. . . . . . . . . . . . . . . 20

2. Recommendations. . . . . . . . . . . . . . . 20

REFERENCES . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 22

Introduction

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1. Executive description of the GoI and MoO:

Iraq has an elected government of 32 ministries since May2006 and these ministries are classified (according to PM NouriAl-Maliki) into many categories like security, services, economy,foreign affairs, etc. In their seeking to distribute power among all,political parties who formed the government made agreement toration ministries' portfolios among themselvesI. Forming a newgovernment by this method insured that many ministries have

been held by insufficient ministers which became obvious aftertwo years of bad performance in the different sectors of the GoIespecially public services sector.

In Iraq, the government monopolizes this service, whichmeans that private sector is not allowed to produce and importlight (refined) fuel types. Through its enterprises, the MoO'sproduce, import, export, and distribute different types of lightfuel like gasoline, kerosene, diesel, LPG (Liquid Purified Gas forcooking & heating, etc.) II

Iraqi governmental entities, like every organization andpersonal in Iraq, depend on two sources to meet their needs forpower. The first is the power produced and delivered by theMinistry of Electricity through the national grid, which haswitnessed a severe shortage through the last two decades. Thesecond is the locally installed diesel generators where people andorganization buy and install their own generators inside their ownproperties and operate them to produce power. The second

I Wikipedia website and official announcement through local media reportsII

Although private sector was recently allowed to participate in distributingactivities, itsrole still too small to be considered.

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source required a continuous supply of some certain fuel types(diesel or gasoline).

2. Brief description of the fuel supply shortfall, itscauses, and its effects.

Before I describe the problem of fuel supply shortfall, I think itis important to mention that the service of fuel supply has verylow demand elasticity because people badly need it for transport,heating, cooking; moreover, many public service providers needit to generate other public services like power plants, water andsewage systems, health facilities, educational institutions. In thesame time, and because it is related to the provision of almost allpublic services, fuel supply service has many positiveexternalities. Therefore, fuel supply shortfall causes a long list ofnegative effects.

The MoO has four major refineries (Daura, Beiji-1, Beiji-2, andBasrah) and several minor "topping" plants with total designedcapacity of 597 500 bb/d III. These refineries have been workingwithin the range (25 75)% of their designed capacity for manyyears now because of many reasons like power supply shortage,corruption, terrorists' sabotage, aging equipments, and the lackof feedstock IV. Therefore, the MoO's refineries have beenproducing about 300 000 bb/d recently. On the other hand,estimated national demand for refined fuels used to be much

over that produced amounts. For 2005, local demand averagedaround an equivalent amount to 570 000 bb/d of crude oil whichmeant that the MoO production's shortfall was about 50% of theneede amounts V. To cover this shortfall and meet that demand,the GoI allocated $5 billion from its budget of the fiscal year2005-06 to import refined oil products from some neighboringcountries (Iran, Kuwait, and Turkey)VI. When the samegovernment submitted its budget for the fiscal year 2006-07 tothe Iraqi assembly of representatives for approval, this assemblyrejected fuel importing allocation because they though it was ahuge load on the national budget and also because of the

corruption that wasted major parts of it according to thespokesman of the assembly. The outcome of that situation waseven worst shortfall in refined fuel supply in Iraq.

Given that every public and private organization and everyperson in Iraq depend on both the national grid and their owngenerators to meet their need for power, refined fuel shortfallhas affected all the sectors of the life in Iraq, especially in thecapital city "Baghdad." The power rationing of the national power

III Oil & Gas JournalIV

U.S. Energy Information Administration Country Analysis Brief of IraqV Dr. Ali Al-Alak the former General Inspector of the MoO Jan.05 May 06VI Local media reports

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grid in Baghdad used to average between (8 hours on 16 hoursoff) and 6 (hours on 18 hours off) VII. Thus, people have tooperate their own generators for 8 to 10 hours per day at least,and to do so, they need substantial amounts of fuel. Many publicorganizations can't afford to buy fuel from the black market as

the MoO doesn't provide them with sufficient amounts; therefore,they decrease their working hours which affects the services theyare providing. Another bad effect of that shortfall is thattransportation became so expensive that many small andmedium businesses were forced to close which negativelyaffected the general economical situation in Iraq. In short, thisfuel supply shortfall has many negative effects on the Iraqi scenetoday especially in the public services and the economical growthof the country as we will see in section allocated for the effects.

VII USG - Energy Information Administration Country Analysis Brief of Iraq

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Causes behind

fuel supplyshortfall in Iraq

1. Governmental malfunctioning"The absence of a real governmental central plan to integrate

the work of allministries."

During the period I had spent in the office of the DPM Dr.Salam Al-Zoba'i as an advisor for power affairs (March October2007), I found that the GoI had no central plan to integrate plansof all ministries together. Such plan was necessary to emphasizethe national priorities, to avoid conflicts and mismatchingbetween different projects, and to achieve many desired goalsthat would make any government to adopt a central nationalplan. For instance, during the execution of its investments planfor the year 2007, the municipality of Baghdad had to stop andredesign many of its projects because an already existent electric

underground nets and some allocated locations for the ministryof transportation's project. Another example was a power plant

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extension that cost the MoE millions of dollars. By the time thosenew generating unites (of the extension) had been ready tooperate, they discovered that the MoO wasn't able to provide therequired amounts of fuel and the Iraqi constitution does not allowany ministry, rather than the MoO, to import fuel to cover its

need. The result was very expensive idle generating units in oneof the most important power plant in Baghdad. Why such amismatch happened? Because there wasn't any governmentalprocedure that makes ministries check with each other tointegrate their efforts. There are many other examples that showthe bad management of the GoI. Some of the inevitable results,beside many others, were an electric power supply shortfall, avery bad municipality services, an inclined security situation, anda refined fuel supply shortfall.

2. Governmental monopoly

The overall governmental monopoly is an inherited situationfrom the previous socialist regime. However, present and futuregovernments of Iraq shouldn't keep it this way because privatesector can play even greater role than the one that governmentswould play in some case. In some other cases, a partnershipbetween the government and the private sector would be thecuring solution. Until today, there are no serious attempts by thesucceeding GoI's to promote the private sector to play that

desired role in fuel supply. If we consider; therefore, the demandand supply rules, we will find that preventing the private sectorfrom interring that market means reducing the supply whichmeans prices should rise because fuel supply has a very lowdemand elasticity. If, hypothetically, prices are not a problem, theshortfall itself still a hard problem because, in Iraq, there are nosubstitutions for the fuel to get efficient transportation, heating,and power generating.

3.Corruption"And religious militias' control for making money"

Corruption that participated in creating fuel supply shortfallappeared in many forms VIII. One of them was the corruptedMoO's officials who were responsible for the main depositaries offuel. They used to receive bribes from trucking companies forproviding them with forged papers to certify that they had

delivered the supposed amounts of fuel while the real deliveredVIIIThe annual report of the Inspector General of the MoO, Ali Al-Alak May 06.

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oil, heavy black fuel, and residual fuel between refineries and oilwellsXI.

5. Shortage of power supply to the refineries:

Refineries, like any other industries, need electricity tooperate. The national power supply shortage, thus, extremelyaffects refineries' operation although the Ministry of Electricitykeeps claiming that it gives the highest priority, in providingelectricity, to the oil sector. Iraqis used to witness a decline infuel supply directly after any overall shutdown in the nationalpower grid. They also used to see both ministers of oil andelectricity accusing each other of malfunctioning andincorporation.

Power shortage stands, from a technical perspective, as causeand result of fuel supply shortage in the same time. However,

XI Reports of Energy Fusion Cell-GRD, Corp. Engineers. US Army

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Effects of thisshortfall

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It is easy to imagine the effects of fuel supply shortfall on anyeconomy in the world, but those effects in Iraq are harder andlarger than in any other country because fuel in Iraq stands as asubstitute for electricity beside being used, as in other countries,for heating, manufacturing, and transportation. Officials from the

Iraqi Ministry of Trade have estimated that Iraq has imported 20million generators in different sizes for the private market sincethe year 1991XII, and that the sizes of those private generatorsranged from1 KW to 2 MW, which created a huge demand onrefined fuel types.

Nobody in Iraq denies that this shortfall does have negativeeffects, but no one, not even the government, has an idea aboutthe real size of this problem. In this section, I will present andanalyze data from the statistics of the Central Bank of Iraq,reports of the Ministry of Electricity, IRMO-US Embassy inBaghdad, and some official announcements of other ministries toprove the negative effects of refined fuel shortfall on manysectors of Iraqis lives.XIII

1. Fuel supply shortfall's effects on the economicactivities and

financial situations of householders in Iraq

The Iraqi economy has been witnessing crisis after crisis since1980 - wars, illogical governmental policies, fluctuated oil prices,terrorism and security situations, migration of millions, andpower shortage. Any of those can stand as a cause and as aneffect in the same time. It is a cause-effects chain; therefore, it isdifficult to distinguish the negative effects of fuel supply shortfallseparately. However, there are many direct and circumstantialevidences to connect this shortfall to some economic failure inIraq.

Expensive transportation that affects trading activities

Transportation is a very important ring in the trading "chain".Once this part is affected, the whole chain will be affected;therefore, all economical organizations in the world considertransportation as a sensitive indicator for trade prosperity.

XII Local media reportsXIII IRMO is the formal Iraq Reconstruction & Monitoring Office- USEmbassy in

Baghdad. Now, it has become ITAO, Iraq Transition AdministrationOffice.

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Trading transportation in Iraq depend a great deal on a specifictype of fuel Diesel or what is called gas oil fuel, and to a smallerextent on Benzene or what is called Gasoline fuel. As described inmany other places in this paper, when the succeedinggovernments of Iraq failed to provide the required amounts of

fuel, especially Diesel and Benzene, they had created a newblack market where people could go and get the much they needin prices as many times as the official ones. Moreover, thepresent GoI has raised the official prices of all types of refinedfuel to cut down some of fuel smuggling incentives (according tothe governmental announcements.) Eventually, many tradingand transportation companies were forced to freeze theiractivities or declare their bankrupt because people couldn'tafford the additional costs due to fuel prices increase. Forexample, The Iraqi Jordanian for Land Transportation Co. hasdeclared its bankrupt in April 20th 2008 after four years ofstruggling because of fuel supply shortfall, decreased tradingactivities between Iraq and Jordan, and the security situation ingeneral.

Increasing manufacturing costs and low productivityof most private andpublic industrial enterprises

More than any other sector of the Iraqi economy,

manufacturing and industrial sectors have been severely affectedby fuel supply shortage. One of the negative effects was theincreasing manufacturing costs that overloaded prices of all Iraqiproducts. Fewer costumers, today, can afford buying thoseproducts than before. Price indexes of foodstuffs, furniture, andmiscellaneous commodities have dramatically increased throughthe period 2004 08XIV. Some products, like fabrics and clothing,became more expensive than similar imported products in a veryweird situation that pushed many factories to shut down. InTuesday Dec. 11th 2007, the Iraqi Union of Industries held a mediaconference and announced that %70 of the 36 thousands Iraqiprivate industrial projects have been shut down due to fuelsupply shortfall, security, power shortage, and the lack for theelementary material that government enterprises used to providelike raw metals, some special chemicals, electronic components,etcXV. It was stated in that conference that fuel types arenecessary for industrial projects to produce power for factories(when there is no power in the national grid), feed boilers toproduce steam, and be used in some other chemical processes.One of their suggestions for the GoI to rehabilitate private

XIV Reports of the Central Bank of Iraq for the years 2005, 06, and 07.XV Local and international Medias.

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sector's participation in the Iraqi economy was to allocatesubstantial amounts of different types of fuel for those projects.

Although the present GoI usually denies what ever refers toits failure, its official statistics, in Table 1, show a slight part of

the sad truth which is the increasing dependence on oil revenues.The complete truth, according many other official andnongovernmental organizations, is that the Iraqi economy iscompletely depending (% 90 100) on oil revenues andinternational aids and that manufacturing and industrialactivities' participation in the GDP has shrunk to less than 5%.XVI

Table - 1XVII

2002 2003 2004 2005 2006 2007

GDP ($ million) 40344.9 26990.2 37500 42194.2 52948.3 79750

% From oil sector 55.6 63 63.9 64.1 66.7% From other

sectors44.4 37 36.1 35.9 33.3

Similarly, most of the public manufacturing and industrialenterprises that belong to the Ministry of Industries are idle formany reasons and fuel supply shortfall is one of them. Accordingto the official website of the Iraqi Ministry of Industries, only 33out of its 58 industrial state enterprises are working, and theones who are working operate within 30 to 80 percent of their

capacities.

Fuel black market that offers nonproductive jobs for

thousands of Iraqis

Since the day fuel supply shortfall had been created, car linesin fuel stations in Iraq became huge. In crisis times, people hadto wait for 24 hours before they got their vehicles' tanks filledXVIII. Moreover, there were harder crises when fuel stations had toclose because they didn't have any fuel to distribute. Many

people couldn't wait too long, so they were ready to buy the timeby paying extra money which provided a good incentive to createrefined fuel black market.

That business has been offering nonproductive jobs forthousands of Iraqis. Inevitably, as those people were makinggood money from dealing refined fuel types, they didn't have toconsider other jobs that might produce public values and

XVI Beside 5 8 % for other economic activities like agriculture, construction,power generating,

services, transportation & distributingXVII Reports of the Central Bank of Iraq for the years 2005, 06, and 07.XVIII Personal observation experiment.

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services. On the other hand, Baghdad municipality, the Ministryof Transportation, and many other public service providers weresuffering from labor shortage.

People who work in fuel black market and other black markets

are not registered as employed working force because there areno records for such businesses. Therefore, calculation and data ofunemployment and income per capita levels that should be doneby the government become more complicated and ambiguous.Such a situation add extra confusion to the planning of thealready confused GoI.

Householders' financial balances

While the national average income per capita per year hasn'tchanged that much since 2003 when this problem has started,the price indexXIX of the refined fuel types has increased by morethan %3500 since that time XX. The prices of most goods andservices have increased as a normal result of the continuinginflation; however, all of those increases were, for some extent,relatively acceptable as there always was an increase in the

average income per capita. But what income increase can coverthat explosion in fuel prices? I have took the year 2003 as areference point and put the increase percentages of price indexesof refined fuel and food for the period 2003-2007 along with theincrease percentages of average income per capita per year onone plot (Figure -1). It's obvious from that figure that refinedfuels' prices explosion has cost the Iraqi householders a lot oftheir buying abilities which has been reflected on theirexpenditure in other fields like education and health (as we willsee in coming parts of this section.) The food index here is just asample for indexes of other human needs like transportation,

house Renting, various service, clothing, smoking, and alcoholwhose indexes behaved very much similar to the food index.

The reports of the Central Bank of Iraq suggested that theseincreases of fuel price index were mainly caused by the continuoussupply shortfall that made householders go to the black marketand raise the demand as well as prices. The GoI has stopped

XIX Prices index : A measuring scale used to indicate householders' variousexpenditures in points

instead of real currencies.XX

"The Annual Reports of the Economical Indicator of Iraq The Central Bank ofIraq - the General

Directorate for Statistics and Researches

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subsidizing fuel supply and increased the formal fuel prices toabout %70 of its old prices to destroy smugglers incentives inthe first place; nevertheless, the major part of this priceexplosion was caused by the supply shortfall not by thegovernmental reformed policy towards subsidies.

The inevitable result of this situation is an exhaustedhouseholder's financial balance, overloaded with the heavyexpenses of fuel types for heating, cooking, and transporting. Inother words, the remaining part of householder's balance, afterdedicating major parts for fuel, can't cover other expensesmentioned before.

Incoome, Fuel Prices, and Food prices increase percentage

0

500

1000

1500

2000

2500

3000

3500

4000

2002 2003 2004 2005 2006 2007 2008

Incr

easePercentage

Increas percentage of

income/capita/year

Increase percentage of

fuel prices index

Increase percentage of

food prices index

Figure - 1

2. Fuel supply shortfall's effects on public services

Although fuel supply shortage has affected almost all thesectors of the public services, I have chosen only three sectors power supply, health, and education services because thesesectors have been the most affected ones.

Power plant low productivity

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Electric power supply is one of the most important publicservices; therefore, any government in the modern world has tomake sure that its citizens are enjoying sufficient amounts of thisservice. In a country of such extreme weather like IraqXXI,electricity becomes even more essential; the different GoI's;

however, have failed to sufficiently provide this service. One ofthe main reasons behind the low productivity of the MoE's powerplants is the shortfall of fuel supply that these power plants needto produce electricity XXII. I have joined some power data from thereports of IRMO into multi-shaped chart (Figure 2) to show towhat extent fuel shortage has participated in creating powershortage. The gray bars represent the average supply eachmonth which, obviously, are a way below the rigid blue line whichrepresents the estimated average demands. The coloredcontinuation bars represent why power supply is always belowdemands for that period. Substantial parts of that coloredcontinuation bars refer to the power shortage due to fuel supplyshortage. The same data is available in table form below forthose who find chart form is difficult to understand.

Figure - 2

power measures in Iraq for one year

38003756370536403530380038504040410039504000

4120

7868

7115

6500

6912

6720

6879

66507110

7880

8453

89508945

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Sept

.200

6Oct

.

Nov.

Dec.

Jan.

2007

Feb.

March

Apr.

May

June Ju

lyAu

g.

MW.h

off due to planned &

unplanned maintenance

off due to fuel

shortage

off due to w ater

shortage in dams

Average Supply

Actual (designed -

disrepaired) capacities

Estimated

demand average

Table - 2

XXI Iraq weather: dry and very hot (55 C, 131 F) in summer ; rainy and very

cooled (- 10 C, 14

F)in winter

XXII Dr. Karim Wahid the Minister of Electricity in many announcements since 2006

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MW.houre

Sept.

2006

Oct. Nov. Dec.Jan.200

7Feb. March Apr. May June July Aug.

Estimateddemandaverage

7868

7115

6500

6720

6912

6879 6650 7110 7880 8453 8950 8945

Actual(designed -disrepaired)capacities

9020

9020

9020

9020

9260

9260 9260 9260 9260 9460 9460 9460

AverageSupply

4120

4000

3950

4100

4040

3850 3800 3530 3640 3705 3756 3800

off due towater

shortage indams

2020

2100

2153

2046

2101

2108 2078 2069 1887 2142 2203 2220

off due to fuelshortage

680 685 680 700 665 658 688 705 720 720 680 650

off due toplanned &unplanned

maintenance

2200

2235

2237

2174

2454

2644 2694 2956 3013 2893 2821 2790

Interrupted health services

Asdescribed earlier in the introduction of this paper, publicand private health service facilities have completely depended,since the year 1992, on two power sources the national gridand their own generators. Before April 2003, this situation wasn'ta problem because fuel was available and cheap, so those health

facilities hospitals, clinks, mortuaries, etc were able tocontinue serving people even when there was no power in thenational grid. A while after April 2003, those facilities couldntwork properly due to power severe shortage; no power in thenational grid and no fuel to operate local generators. Every onein Iraq has noticed the sharp reduction in health services qualitysince then, and many Iraqi health officials have thrown part ofthe responsibility of that reduction on the low availability ofpower and fuel.XXIII

Iraq used to occupy a leading position in the UN - WHO'sranking lists of health services of Middle East countriesXXIV.Whereas this was before 2003, today Iraq holds a retardedposition in those lists because most of its public and privatehospitals can't provide even the minimum required services, noteven for emergency cases, after 05:00 PM because they savethe scarce amount of fuel they get to operate their owngenerators during the day when their services are most required.

XXIII Many local and international media reports.XXIV "Health in Iraq" , A report by Dr. Ala'Din Alwan - the former

minister of health inIraq.

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Many other fuel supply-related malfunctions pulled Iraq's positiondown in those lists. Some of them were:

- Mortuary's freezers low reliability.Without power or fuel, those places have become merely

warm storing places for bodies of diseased people where theybecome biodegradable after few hours from being there.

- Potable water and sewage systems low reliability.Governmental failure in this field, particularly, is considered tobe the most dangerous symptom of the phenomenon of fuelsupply shortfall. According the GoI, pumping stations of thosesystems are designed to operate on the power of dieselgenerators when there is no power in the national grid, whichis the case almost all the time. Both terrorists' sabotage thatdestroyed power nets that connect pumping stations and fuelsupply shortfall have caused water and sewage systems tofail. Potable water doesn't reach many places in the capitalcity, Baghdad while it reaches other places with a very lowpressure. Many times, during the period 2005 08, theMinistry of Health asked the people to boil the water providedthrough the national water system before use it for drinkingand cooking because it wasnt sufficiently treated beforepumping. Many times during the same period, WHO'srepresentative office in Iraq declared the possibility of Cholerawide infection because the low quality of potable water

provided through the national water system.

- First Aid and Ambulance services low reliability.First aiders have used to charge people a lot of money for thefuel that they consumed to get to them in their places. If thefamily of the person who needs a medical treatment can'tafford that amount of money, it is very difficult for them to geta first aid and an ambulance to get the patient person tohospital.

Interrupted educational institutions

Although it is difficult to distinguish between the effects of fuelsupply shortfall and those of other negative factors, manyofficials, from both Iraqi Ministries of Education and HigherEducation stated that education services had been severelyaffected by fuel supply shortfall. Indoor conditions of theeducational institution in Iraq are very difficult without power,which affect both students and instructors' performance; most of

computer and experiment laboratories are idle which extremelyreduces students' chances to get useful knowledge.

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Conclusion

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1. Summery

Refined fuel supply shortfall is on of the main characteristics ofthe "after 2003" era. There were many factors behind creatingthis phenomenon - governmental monopoly, the lack forgovernmental central plan, corruption, terrorism, and powershortage. This phenomenon gives observers and interestedpeople of governments performance an important lessons aboutthe danger and importance of the following concepts:

A. The proper balance between centralization anddecentralization.Extreme approach toward one of them would create either

dictatorship, orgovernmental malfunction and ineffective performance.

B. Corrupted officials covered and protected by governingpolitical parties.

No political party in the world would accept to accuse one ofits members of

corruption unless they want to get rid of him for otherreasons, and it did not

happen in Iraq. Therefore, monitoring system controlled by

independent

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officials is an essential tool for any government toaccomplish its mandates

towards its citizens.

C. Private sector participation.

For governments, It's just like letting someone do their jobs forsome income.Moreover, private sector performance is better thangovernments' performance in many fields.

D. The destructive disease, the "Terrorism."Terrorists follow a very dangerous rule nothing is forbiddenuntil they reach their goals. They would kill, destroy, andsabotage anything and anyone in order to get what they want.

In Iraq, fuel supply shortfall has severely affected every daydetails of the people lives; it has affected their financialsituations, the way they used to get things done, their health andeducation services, etc.

2. Recommendations

Allow private sector to inter refined fuel market in Iraq asproducers, importers, and distributors. This would createcompetition that might drive providers to provide all the

needed amounts of fuel types and in the best available prices.This would also give the GoI the space for efficient dealingwith this problem.

Installing power plants inside refineries' locations to produceand exclusively provide them with power. This would raiselocal production of refined fuel types a great deal.

Creating special protection contracts with the Arabian tribes

to protect oil pipelines within their lands and zones of controlfrom being sabotaged by terrorists. Such contracts have beenexperienced by a former Iraqi Government to protect highvoltage towers and it efficiently worked.

Re-functioning the previous "Ministerial Power Committee"and authorizing it to create and implement integrating plansand strategies and enforce them against ministries'resistance.

Because corruption is so pervasive in the GoI, it is

recommended to refer this issue to the "Iraqi IntelligenceServices" to avoid the intervention of political parties. Until

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today, this governmental department is independent frompolitical parties which gives it the required reliability to dealwith powerful corrupted people.

References

1. The Central Bank of Iraq / the Annual economic reports 200207.

2. USG - Energy Information Administration Country AnalysisBrief of Iraq.

3. US Embassy in Baghdad IRMO daily reports (IRMO : IraqReconstruct-ion Management Office).

4. Local and international media reports.5. Personal observation.

6. Health in Iraq , an official report by Dr. Ala'Din Alwan theMinister of

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Health 2005-06.7. The Iraqi Ministry of Planning and Developing Cooperation

C.S.O.8. official announcements.9. The annual report of the Inspector General of the MoO, Ali Al-

Alak May 06.10.Oil & Gas Journal An international specialist journal.11.Energy Fusion Cell-GRD, Corp. Engineers. US Army

refined fuel supply shortfall

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