On January 13, 2009 the Inspector General for Iraq Reconstruction (SIGIR) released an audit of a $1.2 billion contract to fix and rehabilitate oil and gas infrastructure in southern Iraq by the U.S. company KBR. Like previous reports, it found that costs went over budget, there was little oversight, and that while some improvements were made, overall, the projects potential was unfulfilled. What was most important for the future of the country however, was the finding that Iraq was either unwilling or incapable of maintaining many of these U.S. funded reconstruction projects.
Much of Iraqs oil infrastructure is dated, and needs massive investment to continue production.
The industry suffered years of sanctions, and then looting immediately
after the invasion. SIGIR found major damage at several facilities
costing millions of dollars from the theft and vandalism in 2003. KBR
did improve the facilities it worked on, but the SIGIR thought that it
might be futile because of the attitude of the Iraqi government. U.S.
officials are worried about Baghdads commitment to reconstruction as
it appears they dont care about finishing some of the U.S. projects,
maintaining them, or even using some.
For example, KBR worked on
a $146.7 million project to improve gas plants in southern Iraq. It
bought rotors for gas compressors at one, but didnt have time to
install them. They were left in a nearby warehouse when KBR was done,
but the Iraqis have yet to install them. The plant is producing below
benchmarks as a result, and SIGIR believes that the U.S. money was
wasted because Baghdad doesnt have plans to finish it.
case was in June 2004 when KBR was given a contract to fix the loading
arms at Al Basra Oil Terminal. SIGIR found that the company ended its
work early at the request of Baghdad in January 2005. In April 2006 a
U.S. contractor told the state-run South Oil Company that they had to
maintain the loading arms by oiling them, but the Iraqis never did. The
contractor witnessed Iraqis using the rusted equipment in ways that
might break the arms. KBR and other companies repeatedly told South Oil
that they had to do preventive maintenance, but nothing was done. The
government didnt seem to want the project in the first place, and
after the work was finished, showed little interest in keeping it up.
There have been similar reports before. In November 2008, Reuters reported
on Al Qods, a new U.S.-funded power plant opening in Baghdad that cost
$170 million and would service 180,000 households in central Iraq.
Right next to Al-Qods was another energy facility that was abandoned by
the Iraqis. The $20 million turbines in the plant broke because the
Iraqis couldnt operate them. The government may never repair them.
is of major concern since the U.S. has spent billions on Iraq, but it
is an open question about how much of it was effective. In total, the U.S. has spent almost $18 billion on reconstruction.
On September 30, 2008 the last amount of money was appropriated. All
the way back in 2005 however, the SIGIR warned that the Iraqi
government was not ready to take over many of these projects, and had
even rejected responsibility for some of them. The U.S. often turned
over projects to the local government whether they wanted them or not.
Sometimes the Americans had to continue to operate them because there
was no one else willing to. Others remain idle and unfinished because
of Iraqi neglect. Baghdad has also been unable to spend most of its
capital budget that goes into infrastructure. The war has caused a
brain drain of Iraqi professionals and skilled workers leaving the
country, leading to a talent deficit to operate and fix facilities.
Iraqis also seem to have created a culture of just getting by in
industry after years of sanctions. That has led simple preventative
measures such as oiling equipment to be ignored. Thats not to say that
the U.S. has not contributed to Iraqs rebuilding, but the amount that
was wasted on large projects Iraqis either didnt want or couldnt
maintain appears staggering.
For more on reconstruction and development see:
Maysan Province Remains Underdeveloped
Special Inspector General for Iraq Reconstructions Quarterly October Report
Special Inspector General for Iraq Reconstruction July Reports Major Findings
Iraq Outspends U.S. on Reconstruction
Pincus, Walter, Report Details Iraq Contract Failures, Washington Post, 1/14/09
Radio Free Europe/Radio Liberty, Iraqi Official: Oil Infrastructure Needs Major Upgrade, 1/15/09
Ryan, Missy and Qusay, Aws, Iraqis Measure Progress with Flip of Switch, Reuters, 11/14/08
Inspector General for Iraq Reconstruction, Cost, Outcome, and
Oversight of Iraq Oil Reconstruction Contract with Kellogg Brown &
Root Services, Inc., 1/13/09
- Quarterly Report to the United States Congress, 10/30/08