Iraq

USAID: Iraq Reconstruction and Humanitarian Relief Weekly Update #39 (FY 2005)

Attachments

WATER AND SANITATION
MAJOR ACCOMPLISHMENTS TO DATE

By October 2003, rehabilitated electric power capacity to produce peak capacity greater than the pre-war level of 4,400 MW. Production reached 5,365 MW on August 18, 2004.

Since achieving record power production in summer '04, the Ministry of Electricity -- with assistance from USAID -- initiated the standard fall maintenance process which necessarily reduced the amount of power available for consumption. USAID worked with the MOE to conduct last fall's maintenance program.

Repairing thermal units, replacing turbines, rehabilitating the power distribution network, and installing and restoring generators.

USAID has added 978 MW of capacity through maintenance and rehabilitation work, and also repaired a 400 KV transmission line.

USAID and the Ministry of Electricity are working with partners to place an additional 598 MW in the national grid by December 2005 through maintenance, rehabilitation, and new generation projects.

USAID completed a project to convert two units that produce 80 MW each to operate on crude/heavy fuel oil instead of diesel which is in short supply.

USAID initiated a project to rehabilitate 13 existing substations and construct 24 new substations in Baghdad. These 37 substations will improve the distribution and reliability of electricity for more than two million Baghdad residents. USAID recently handed over work on 12 of these substations to the Ministry of Electricity.

USAID's goals include the emergency repair or rehabilitation of power generation facilities and electrical grids. Teams of engineers from the Ministry of Electricity, USAID and the U.S. Army Corps of Engineers have been working since May 2003 to restore the capacity of Iraq's power system.

HIGHLIGHTS THIS WEEK

At the Kirkuk substation, work on the V94 generator is being finalized. The Iraqi contractor is cur- rently finishing the installation of the fuel gas supply, air compressor and electrical switches. Work also continues on erecting the generator's permanent gantry crane is used for access and maintenance. The Kirkuk facility is located north of Baghdad at a major hub for the 132-kV and 400-kV grids. This area is near an existing natural gas pipeline, which was tapped to provide fuel to the new gas turbines which are being installed at the Kirkuk site. Gas turbines can be installed with a minimal amount of external infrastructure and are capable of burning a variety of fuels, including heavy oils. USAID's work at the site will ultimately bring two new generators online, adding 325 MW of electrical generation capacity to the electrical grid. The recently completed V64 unit has added 65 MW to the national grid. Initial startup and synchronization of the V64 was achieved on January 3. The V94 generator, which will add 260 MW, is expected to be complete in the third quarter of 2005. The overall project is now 83 percent finished.

ECONOMIC GOVERNANCE

MAJOR ACCOMPLISHMENTS TO DATE

Developed WTO Accession Roadmap in cooperation with Iraqi officials.

Provided technical assistance as well as information on contracting opportunities for Iraqi businesses and entrepreneurs through business centers.

Worked with the Ministry of Finance to introduce the new Iraqi dinar.

Created more than 77,000 public works jobs through the National Employment Program.

Provided technical assistance on accounting, budgeting and lending activities at Iraq's commercial banks. Trained 116 bankers from the Rafidain and Rasheed banks in six training courses.

Assisted in management of $21 million micro-credit program.

Improved statistical analysis, monetary policymaking, and bank supervision procedures at Iraq's Central Bank; offered a two-week banking course to Central Bank staff with the Federal Reserve Bank of New York.

Evaluated and updated commercial laws on private sector and foreign investment.

Assisted in developing the 5 percent reconstruction levy on imports; built capacity of customs officials to implement levy.

Developed a government-wide IT strategy to support the automation of planning, budgeting and reporting processes across ministries.

Provided technical support for the re-opening of the Iraq Stock Exchange after it was closed down for more than 15 months; 3.6 billion Iraqi dinars ($2.4 million USD) in shares were traded in the first day.

USAID supports economic reforms in Iraq which will strengthen the Central Bank and the Ministries of Finance, Trade, Commerce and Industry. Experts examine laws, regulations, and institutions for reform within Iraq. The projects USAID implements provide a framework for private sector trade, commerce, and investment throughout Iraq.

HIGHLIGHTS THIS WEEK

In a critical milestone for Iraqi debt renegotiation, the International Monetary Fund (IMF) accepted Iraq's Monetary Survey. This survey is the culmination of two months of work with Central Bank of Iraq Research and Statistics staff and will be used to support negotiations relating to the IMF Standby Facility for Iraq. The survey now includes data from all 26 banks under the direct supervision of the Central Bank of Iraq. The completion of the Monetary Survey is a Structural Indicative Benchmark of the EPCA. In September 2004, the IMF approved a $436 million Emergency Post Conflict As- sistance (EPCA) program for Iraq. The EPCA is the precursor to the Stand By Agreement (SBA).

USAID representatives completed a two-part course for tax officials from northern Iraq on providing training on the new Corporate Income Tax Return. The course was given in the Headquarters of the General Commission for Taxes in Baghdad. Attendees expressed their interest in additional training. USAID also conducted a two day presentation on tax policy and the legal aspects of the Value Added Tax (VAT) for the staff of the General Commission for Taxes. Attendees included deputy director generals, branch managers and department managers. The presentation was intended to educate the decision makers on the intricacies of introducing the VAT in Iraq.

Sixteen Ministry of Planning and Development staff completed an Advanced Capital Budgeting Workshop. The workshop exposed attendees to modern decision-making techniques, project identification principles, capital definitions and stakeholder involvement. The attendees found the workshop to be very useful, particularly given their lack of previous experience with this type of capital budgeting.

To harmonize banking standards throughout Iraq, USAID is working with bank officials to develop guidelines for credit policies and procedures for commercial banks on lending activities and credit files. The policies list the financial statements that should be collected from the borrower. The procedures detail statistics to be analyzed by the loan officer while reviewing a prospective borrower. These bank officials are also developing credit classification instructions for the banks and minimum loan loss provision require- ments, based on these classifications. The primary source material for these documents is the training and materials the bank officials received during the Credit Risk Workshop, held in Amman in April 2005.

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