Iraq agrees to unfreeze $2.7B in gas, electricity debt to Iran

By Syed Zafar Mehdi

TEHRAN, Iran (AA) – Iraq has agreed to release $2.7 billion in Iranian funds frozen in the Arab country after Baghdad received a sanctions waiver from the United States, according to officials of the two countries.

Yahya Al-e Es’hagh, head of the Iran-Iraq Joint Chamber of Commerce, said Baghdad had released $2.7 billion in gas and electricity debt.

He said part of these assets in Iraq will be allocated to Iranian Hajj pilgrims in Iraq, and another part will be used on staples, as reported by Iranian media.

Al-e Es’hagh said the release of these funds will help in stabilizing the currency market and in the provision of basic commodities in the country.

Earlier, an Iraqi official said in statements cited by the local media that Foreign Minister Fuad Hussein received the clearance to release the funds during a meeting with US Secretary of State Antony Blinken.

The official said the funds will be transferred through the Commercial Bank of Iraq and will be used for Iranian pilgrims’ expenses and foodstuffs imported by Iran.

Iranian authorities say between $7 and $8 billion in funds are frozen in Iraq, which the Iraqi government has not been able to unfreeze due to US sanctions.

Despite its large oil and gas reserves, Iraq remains heavily dependent on Iran for its energy needs, with the neighboring country providing a third of Iraq’s gas and electricity supplies.

The non-payment of dues has forced Tehran to slash its gas and electricity supplies to Iraq several times in the past few years, leading to frequent outages in the Arab country.

In June last year, Iran received $1.6 billion in arrears from the Iraqi government for imports of natural gas after months of negotiations between the two countries.

South Korea also holds $7 billion of Iran’s funds related to imports of Iranian oil prior to May 2019.

Meanwhile, Iranian Oil Minister Javad Owji has announced 64 projects worth $14.5 billion are set to be operational while construction on $14.3 billion worth of projects will commence by the end of the year.

Owji said around 20 of these 64 projects belong to the petrochemical sector, pointing to the role of the National Iranian Oil Company (NIOC) in reviving the country’s energy sector.