Baghdad to pay Iran energy debts ‘soon'

ERBIL, Kurdistan Region — Iraq’s Minister of Finance Ali Allawi has said Baghdad will “soon” pay debts owed to Tehran for gas and electricity imports following a meeting with Iran’s Minister of Cooperation, Labor and Social Welfare in Tehran,  Iranian state media reported on Sunday.

In a meeting with Mohammad Shariatmadari, Allawi “stressed” that Iraq’s debt to Iran for the imports will be paid “soon”, state media said. 

Earlier this month, Hamid Husseini, a member of the administrative board of the Iranian-Iraqi Chamber of Commerce, told semi-official news agency ILNA that Iraq was making excuses for not repaying money it owes the neighboring country “under various pretexts.” 

Iraq was able to pay electricity debt to Iran in Iraqi dinars, but still has not paid Iran's natural gas dues despite being exempt from the United States sanctions in dealing with Iran, he said. 

"Follow-ups are underway to release this money, but nothing special has happened yet,” Hosseini added. 

In December, Iran substantially reduced its natural gas exports to Iraq, threatening to plunge parts of the country into darkness as the National Iranian Gas Company announced that the Iraqi government owes it five billion dollars in gas supplies, in addition to a billion dollars for the delay in paying its debts repayment.

On March 31, the United States agreed to further extend Iraq's exemption from the ban on purchasing Iranian gas, according to AFP. This exemption will allow the Iraqi government to buy and import gas for a further 4 months from Iran.

The US does not allow Iraq to pay Iranian dues in US dollars, but western and Iraqi sources said that Iraqi officials had obtained a green light from the United States to release the money owed to Iran in exchange for gas imports through a Swiss bank account.  

Rudaw English has contacted representatives for Iraq’s Ministry of Finance, the Baghdad Chamber of Commerce, and the office of Iraq Prime Minister Mustafa al-Kadhimi, but all refused to comment on the funds.

Iran said late last year Iraq had paid off a "considerable part" of its more than $6 billion energy debt to Tehran.

The countries had also agreed that the funds could be tapped into through the exchange of goods, as well as used to secure coronavirus vaccines.