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Cablegate: Jordan-Iraq Power Sector Cooperation: More Smoke

This record is a partial extract of the original cable. The full text of the original cable is not available.

291025Z Apr 04

UNCLAS SECTION 01 OF 02 AMMAN 003293

SIPDIS

SENSITIVE

PASS TO TDA FOR FOR CYBIL SIGLER/HENRY STEINGASS

E.O. 12958: N/A
TAGS: ENRG EINV JO IZ
SUBJECT: JORDAN-IRAQ POWER SECTOR COOPERATION: MORE SMOKE
THAN FIRE

REF: 02 AMMAN 7299

1. (SBU) SUMMARY: Over the past eight months, the Jordanian
Ministry of Energy (JMOE) and the Iraqi Ministry of
Electricity (IMOE) have engaged in a series of meetings on
power sector cooperation that has received substantial
publicity in the Jordanian press. The talks that have been
held have resulted in agreements to move forward on
cooperation in three concrete ways: the establishment of a
power sector coordination office in Amman, the training of
IMOE employees by JMOE and JMOE-owned entities, and the
linking of the Jordanian and Iraqi power grids. While the
first of these aims has been achieved, the other two remain
prospects for the fairly distant future. END SUMMARY.

-------------------
COORDINATION OFFICE
-------------------

2. The highly touted Iraq-Jordan coordination office, set up
by a bilateral MOU signed at the end of November 2003, is
based at the National Electric Power Company (NEPCO),
Jordan's state-owned electricity transmission monopoly.
(NOTE: The only section of Jordan's electricity industry that
Jordan has no plans to privatize, NEPCO should remain a
suitable vehicle from which the JMOE can drive Jordan-Iraq
power sector cooperation for the foreseeable future, and it
is accordingly the base for all of the JMOE's cooperation
initiatives.) The office, composed of four rooms at the end
of a wing of the NEPCO headquarters building, is permanently
staffed by two NEPCO employees, an engineer and a secretary,
and one or two IMOE officials, who rotate every two to three
weeks. The stated purpose of the office is to provide a
place where the IMOE can communicate effectively with the
outside world, with reliable phone and data links and in a
location where the IMOE can hold meetings with potential
investors and contractors who are not yet comfortable with
the ability to travel to Baghdad. For Jordan, there is the
added benefit of direct communication with the IMOE, which
allows NEPCO to stay abreast of - and forward to Jordanian
newspapers - tenders for power sector-related contracts in
Iraq, which the JMOE complains had previously been badly
circulated and easy to miss.

-----------------
TRAINING PROGRAMS
-----------------

3. A secondary purpose for the Iraqi-Jordanian coordination
office - so far hypothetical - is to facilitate Jordanian
training of IMOE employees. NEPCO has indicated its
willingness to provide such training at cost at its training
center in Zarqa. The Japanese International Cooperation
Agency (JICA) has indicated its willingness to cover 60% of
the training and lodging costs of the trainees as part of its
assistance committed to Iraq, and that the UNDP will cover
the remainder. NEPCO has also offered to instruct IMOE
employees in the operation of its electricity transmission
dispatching center, whose technology is substantially more
advanced than that of Iraq's existing dispatching centers and
closer to what Iraq will ikely be purchasing as it upgrades
its power grid. IMOE is currently planning to send 40
engineers to attend 10-day courses offered in these areas by
NEPCO during the months of May and June; JICA and UNDP will
cover the remainder.

---------------
POWER GRID LINK
---------------

4. The centerpiece of Jordanian-Iraqi power sector
cooperation, a several hundred million-dollar proposal to
connect the Iraqi and Jordanian power grids, is still in its
early stages. The GOJ has already approached the U.S. Trade
Development Authority to fund a feasibility study of the
entire 3-stage proposal, which envisions the installation of
a 400-kV line between the Risha substation in eastern Jordan
and the Al-Qaim substation in western Iraq, the upgrading of
the Risha substation, and the provision of backup capacity
through the installation of a 400-kV line between Risha and
another of Jordan's power stations. NEPCO personnel claim
that they have already secured financial backing from an
Iraqi private sector investor (NFI) for the first phase of
the project, for which a preliminary feasibility study had
already been completed prior to the war.

5. The linking of the Jordanian and Iraqi power grids would
help to complete the mutual interconnection of the nations in
the proposed six-nation power grid (reftel), a project whose
primary immediate utility appears to be political rather than
technical. However, technical shortcomings seem likely to
limit the effectiveness of a Jordan-Iraq power connection in
the short term. Even if a connection project were to move
ahead at a high rate of speed (unlikely given recent events
in Al-Anbar province), the initial phase of the project would
not be completed before late in the year. Even if it were
completed, weaknesses in the Iraqi power transmission system
and the unique frequency at which Iraqi stations generate
power would mean that the area of the Iraqi grid drawing from
exported Jordanian power would have to be isolated from the
rest of the Iraqi grid, cancelling in large part the
rationale for the project. In the long run, of course, these
obstacles will likely be worked out as the capacity of the
Iraqi grid is increased, and there will be some benefit both
to the Iraqis and to the Jordanians from the diversification
of their grids. But the benefit will be fairly marginal:
even when the project has been completed, and all obstacles
removed, NEPCO does not envision exporting more than 300 MW
of power to Iraq, of which 150 MW would come from Egypt. On
the other hand, the completion of the full three-stage
project will substantially strengthen Jordan's domestic power
grid.


6. (SBU) COMMENT: While significantly less substantial than
JMOE press releases might imply, power sector cooperation
between the Jordanians and Iraqis to date can serve as a
starting point for initiatives that benefit both the
Jordanian and Iraqi power sectors in the years ahead. It is
also one of very few Iraqi-Jordanian bilateral cooperation
programs driven by Iraqi ministerial personnel, and
presumably therefore implies a substantial degree of buy-in
from the Iraqis that should make future cooperation fairly
secure.
GNEHM

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