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Iran will use part of the proceeds from its electricity and natural gas exports to Iraq to buy COVID-19 vaccines from Europe, Iranian state media reported on Wednesday, quoting Energy Minister Reza Ardakanian.
Earlier this week, Iran cut its energy exports to its neighbor Iraq, saying that Baghdad owes it some US$6 billion in arrears for the electricity and natural gas supply.
Major Iraqi power plants are dependent on Iranian natural gas supply, and Iraq also imports electricity from Iran, as Baghdad’s power generation is not enough to ensure domestic supply. In recent years, Iraq has even received waivers from the United States to continue importing natural gas and electricity from Iran, despite the U.S. sanctions on Iran’s energy industry and exports.
On Monday, the National Iranian Gas Company (NIGC) said, as carried by Iran’s oil ministry’s news service Shana, that “The Iraqi Ministry of Electricity owes more than $5 billion in gas bills to the National Iranian Gas Company, of which $3 billion remains blocked and inaccessible in the Iraqi TBI Bank, and more than $2 billion is overdue debt and remains unpaid by the Iraqi Ministry of Electricity. In addition, the Iraqi side owes more than $1 billion to the National Iranian Gas Company for contractual offenses under the agreement.”
Iraq has cleared some of its debt for importing electricity and natural gas from Iran, Ardekanian said, adding that Iran would buy vaccines and essential goods with the money.
A bank account in euros will soon be opened in Iraq, which would allow Baghdad to repay its dues for the energy it receives from Iran, without using transactions in U.S. dollars, Ardekanian said on Wednesday, cited by the Islamic Republic News Agency (IRNA).
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.