From The Los Angeles Times, 12/25/05:
http://www.latimes.com/news/nationworld/world/la-fg-power25dec25,1,6080243.story?coll=la-headlines-world
U.S. Missteps Leave Iraqis in the Dark
A $4-billion project to restore electricity has foundered amid poor
decisions, from choosing natural gas turbines to underestimating
costs.
By T. Christian Miller, Times Staff Writer
KHOR ZUBAYR, Iraq --
When the United States fires up the last generator at this remote
power plant this week, it will mark the conclusion of one of the most
frustrating episodes in the effort to rebuild Iraq's infrastructure.
A pile of gray metal swarming with construction workers in the deserts
of southern Iraq, the Khor Zubayr generating station is the final
power plant being built under Washington's ill-fated $4-billion
attempt to restore Iraq's electrical supply to its prewar level.
The massive U.S. effort will leave behind this legacy: Iraqis will
actually have, on average, fewer hours per day of electricity in their
homes than they did before the U.S.-led invasion in March 2003.
"The money was not effective," Muhsin Shalash, Iraq's minister of
electricity, said in an interview.
"The contracting was wrong. The whole planning was wrong.... It's a
big problem."
U.S. officials have blamed insurgent attacks, unchecked demand and the
poor conditions of Iraq's power plants for hobbling the bid to restore
electricity.
But interviews with dozens of U.S. and Iraqi officials reveal that
poor decisions by the United States also played a significant role.
Perhaps most serious was the decision to expand a program begun under
Saddam Hussein to install dozens of natural-gas-fired electrical
generators, U.S. and Iraqi officials said.
Iraq has such gas in abundance, but it uses only a fraction of it.
The rest is burned off during oil production.
The U.S. spent hundreds of millions of dollars to purchase and install
natural-gas-fired generators in electricity plants throughout Iraq.
But pipelines needed to transport the gas weren't built because Iraq's
Oil Ministry, with U.S. encouragement, concentrated instead on
boosting oil production to bring in hard currency for the nation's
cash-starved economy.
In at least one case, the U.S. paid San Francisco-based Bechtel Corp.
$69 million for a natural-gas-fired plant that was never built,
according to State Department documents and U.S. officials.
All told, of 26 natural gas turbines installed at seven plants in Iraq
-- ranging in cost from a few million dollars to more than $40 million
-- only seven are burning natural gas, reconstruction officials said.
Faced with widespread power shortages, the U.S. Army Corps of
Engineers and the State Department decided to reconfigure many of the
generators to burn a different fuel, an expensive process that
decreased generation capacity and increased maintenance.
"You've got the wrong technology for the fuel we're burning, the wrong
technology being gas turbines," said Bill Thompson, generation manager
for the Project and Contracting Office, a Defense Department
reconstruction agency.
"But we're here and this is what we've got."
In many cases, the fuel in question has been heavy fuel oil, a tarry
byproduct of Iraq's primitive refineries that has wreaked havoc on the
natural gas generators.
One turbine installed by the U.S. at a cost of $40 million at the
Baiji power complex in north-central Iraq already needs replacement.
"My concept as a layman [is that] we basically wrecked the unit" that
needs replacing, said Dennis Karns, the Army Corps official heading
the power sector.
The U.S. simply canceled other plants.
It scrapped the Bechtel project, a planned power station near the
Mansuriya fields in northeastern Iraq, because it feared it would take
too long to build and cost too much, said officials with the U.S.
Agency for International Development.
Although the plant was never built, the U.S. paid Bechtel $69 million
for drawing up plans, setting up a construction camp and buying two
generators that were later installed elsewhere, USAID officials said.
Bechtel also received $160 million to cover security and other
unexpected costs in connection with other reconstruction projects.
"Starting about late 2004, we were finding out that security
constrained our ability to build all the things we wanted to," said
Heather Layman, a USAID spokeswoman.
A Bechtel official said the money was well spent since it paid for the
gas-fired generators now in use elsewhere and provided the Iraqis with
plant designs.
"Our position is it was a viable project," said the official, who
asked not to be identified for security reasons.
The decision to rely so heavily on natural-gas-fired generators is a
source of great frustration in the current Iraqi government.
Shalash, the electricity minister, said the U.S. and the interim Iraqi
government shared blame for not better understanding Iraq's power
infrastructure.
"It was a combination of lack of knowledge and -- people who were from
the outside who did not have experience," Shalash said.
"All they were doing is signing contracts, buying turbines and not
bringing electricity to people."
Another serious problem was the failure to charge private consumers
for electricity, which a U.S. advisor called one of the worst mistakes
of the U.S.-led occupation, according to a recent report by the U.S.
Institute of Peace, a congressionally funded think tank.
The virtually free power encouraged wealthy and middle-class Iraqis to
go on a spending spree after the invasion, buying refrigerators,
heaters and other goods.
As a result, demand for electricity surged far past supply.
When the U.S. finishes its building program, Iraq will be able to
produce about 5,500 megawatts on a sustained basis, about 1,000 more
than the country produced under Hussein's government.
But demand has soared to 9,000 megawatts during Iraq's sweltering
summers and chilly winters.
Thus, while the U.S. will have technically reached its goal of
restoring Iraq's power output to prewar levels, the average Iraqi will
have about 10 to 12 hours of power a day, less than under Hussein.
Those living in urban centers such as Baghdad, Basra and Mosul are
especially affected.
Karns, of the Army Corps of Engineers, said it would be "multiple
decades" before Iraqi homes had power 24 hours a day.
"In spite of all these problems, we have made a significant impact in
keeping the system stable," Karns said.
"They're in a much better starting position as they continue forward."
The lack of reliable electricity is one of the chief frustrations of
Iraqis.
Almost everyone quizzed about the pace of the reconstruction uttered
the phrase "maku kahrabaa"-- there's no electricity.
"Right now, our issue is electricity," said Raheem Abdul Sadr, a
shopkeeper who was selling brightly colored tricycles and backpacks
recently in Baghdad's Sadr City.
"We have no issues except electricity."
His friend shook his head and concurred: "Electricity, electricity,
electricity."
Unexpectedly high costs for security and maintenance and operational
problems also have plagued reconstruction.
By last fall, the Army Corps had run out of cash for several projects
being funded with Iraqi oil revenue -- money spent in addition to the
$4 billion in U.S. funding.
They handed the unfinished plants to the Iraqis, hoping they would
finish the work.
Instead, the Iraqis did nothing, their own budget hampered by the
insurgency, inefficient state spending, oil production shortfalls and
persistent corruption, U.S. officials said.
In January, corps officials decided to renew work on dozens of
generators that had been abandoned, this time with U.S. money, in a
plan called Project Phoenix.
The U.S. eventually paid Fluor-AMEC, a U.S.-British joint venture, $93
million to complete the work and add 700 megawatts of power to Iraq's
grid.
The delays, however, resulted in millions of angry Iraqis having to
sweat through the summer.
"We started it much too late," Thompson said.
Most of the power projects that were completed, U.S. officials said,
have been poorly operated by the Iraqis, who before the invasion
relied heavily on foreign contractors to run the plants.
By one U.S. estimate, Iraq would have an additional 1,000 megawatts of
power if all of its 19 plants, with 142 generators, were run
correctly.
To help remedy the problem, USAID sent scores of Iraqi engineers
abroad for training as part of a multimillion-dollar effort to create
"tiger teams" that would return and train other Iraqis.
Instead, the engineers were dispersed to different plants when they
returned and provided very little training, reconstruction officials
said.
"We put the tiger teams out there, but we never got anything out of
them," Karns said.
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