Shafaq News- Baghdad

Iraq spends nearly 600 billion Iraqi dinars (about $397 million) each month on its electricity sector but recovers only around 1% of that amount through bill collection, the ECO Iraq Observatory said on Saturday.

In a statement, the observatory explained that the Ministry of Electricity’s monthly outlays —covering salaries, maintenance, and fuel purchases— are not matched by revenue, as electricity fee collections do not exceed one billion dinars per month.

The group described the imbalance as evidence of “serious weakness in the collection system and a lack of financial discipline,” arguing that the gap between expenditure and revenue continues to deepen Iraq’s budget deficit and place additional pressure on public finances.

Despite the scale of spending, actual electricity generation stands at about 28,000 megawatts, well below national demand, which reaches around 50,000 megawatts and climbs to 55,000 during peak summer months.

ECO Iraq urged the government to privatize the electricity sector or engage the private sector more effectively, saying structural reform is necessary to curb waste, improve operational efficiency, stabilize supply, and ensure fair fee collection.

Although Iraq ranks among the world’s largest oil producers, it continues to face chronic electricity shortages and remains reliant on energy imports to meet domestic demand.

The issue unfolds as the country operates for the second consecutive year under the “1/12 financial management rule,” a stopgap mechanism that allows monthly spending at one-twelfth of the previous year’s operational budget in the absence of an approved federal budget, limiting broader fiscal flexibility.

Read more: Iraq’s budget: How the1/12 rule reduced state finances to salary payments