Shafaq News – Baghdad

Iraqi Prime Minister Mohammed Shia al-Sudani on Wednesday launched construction of the 1,400-megawatt al-Yusufiyah thermal power plant, a long-stalled project.

According to the premier’s media office, the investment-based framework has reduced project costs by about 43% compared with previous contract structures. Al-Yusufiyah plant, first initiated in 1990, is being relaunched as part of a broader shift away from state-funded contracts toward private-capital partnerships.

Al-Sudani said securing reliable power is critical for Iraq’s housing and infrastructure drive, adding that the government’s 20-year expansion plan aims to add 57,000 megawatts to the national grid through projects with Siemens Energy, GE, and new renewable-energy investments. The new model, he added, is designed to correct failures in earlier contracts and ease pressure on the public budget.

Iraq continues to face chronic electricity shortages, with summer generation dropping from about 29,000 megawatts to nearly 14,000 during peak demand. The system’s fragility is compounded by fuel constraints, particularly fluctuations in Iranian gas supplies that feed a large share of Iraq’s power stations.

Baghdad imports around 50 million standard cubic feet per day of Iranian gas, a volume essential to grid stability. Although Tehran recently said exports are continuing without restrictions, Iraq is accelerating diversification efforts after the expiration of US sanctions waivers in March.

A key part of that strategy is a $450 million floating LNG terminal at Khor al-Zubair in Basra, developed by US-based Excelerate Energy. Scheduled to begin operations in 2026, the terminal will initially import 250 million cubic feet of gas per day, rising to 500 million as capacity expands.

Read more: The end of a waiver: Iraq's struggle for energy independence