Legal Guide to Investing in Power Generation in Iraq

October 20, 2016

LEGAL GUIDE BACKGROUND

In an effort to promote foreign investment in Iraq, the Commercial Law Development Program (CLDP), along with other key partners, has been developing material to guide potential investors. In 2015, the CLDP published the Legal Guide to Investment in Iraq, a bilingual Arabic-English guide to general investment practices in Iraq. It outlined relevant Iraqi legislation with an emphasis on the recently enacted National Investment Law, delineated critical investment procedures for key economic growth sectors, and provided a model investment contract.

The present Legal Guide to Investment in Power Generation in Iraq (“Legal Guide”) follows those efforts by focusing on a sector that is in particular demand by the people of Iraq and accordingly can benefit from private sector involvement. Specifically, Iraq has suffered, in the past decade, from a chronic power shortage, which has not been alleviated from traditional public sector development and operations. Given the significant gap between supply and demand for power, as well as the Iraqi government’s commitment to this sector, investment in power generation offers considerable opportunities for investors willing to assume associated risks.

As outlined below, this Legal Guide is intended to provide a general introduction and up-to-date overview of certain aspects of the structuring and legal regime for investment in power generation in Iraq. Of special note, the specific nature and location of a project, as well as changes to the Iraqi legal regime, may affect the information included herein. In particular, there may be different regulations and requirements in the Kurdistan region of Iraq which are not covered by this Legal Guide.

 

  • Chapter I outlines how both the private sector and the government should approach power projects together. In addition, this chapter lists the factors that create an investor friendly environment and provides case studies of how other countries in the region have approached investment in the power sector.
  • Chapter II delves into Iraq power sector’s and legal landscape. It describes the power sectors’ supply and demand, as well as relevant government agencies, financial institutions that are active in the country, legislation ranging from land rights to tax laws and dispute resolution mechanisms.
  • Chapter III introduces power project financing and describes typical project finance structures, as well as various ways to structure these types of transactions given the Iraq context.
  • Chapter IV describes what elements of a power project influence its bankability, as well as considerations for both the seller and the buyer in the negotiation of a Power Purchase Agreement (PPA).
  • Chapter V continues to build on PPA bankability by outlining common risks in financing a power project and providing mitigation measures both generally and specifically in Iraq.

The Legal Guidebook is available here in both PDF and EPUB format.

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This Legal Guide would not have been possible without the effort and contributions of the contributing authors and numerous other people, including U.S. and Iraqi government officials, international and Iraqi lawyers and the private sector. Special thanks go to each and every one of the authors and their respective teams that contributed to this Legal Guide, as well as the many other people who provide input and advice. We are especially grateful for the advice of Dr. Rashad Khalf Hashim of the Iraqi National Investment Commission, as well as the hard work and efforts of Omar El-Khattabi, Valentina Castillo, Jad Taha, McKay Harline, Bourn Collier, Danuta Rychlicka, Chloe Rossen and the rest of the team at Mayer Brown, Rasha Nadeem (General Counsel) at Bayt Al Hikma (BHC Law Firm), Paul Rafla, Mohamed Badissy, and Mohammed Loraoui at CLDP. We would also like to recognize the funding of the US Department of State – Near East Affairs/Iraq for their guidance and support throughout the process of drafting this Legal Guide. The authors also wish to note that certain sections of this Legal Guide are drawn from the Legal Guide to Investment in Iraq and Understanding Power Purchase Agreements, each developed by the CLDP in conjunction with other contributors.

The following is the list of authors who contributed to the handbook:

Hamada Dara Zahawi
Managing Editor
Attorney-Advisor (International)
U.S. Department of Commerce
United States

Ahmed Dawood, Esq.
Managing Partner
BHC FIRM LLC
Iraq

Mohammed Shaikley
Director
AMEA Power
Iraq/UAE

Tom Eldert
Partner
Mayer Brown LLP
United States

Alex Evans
Assistant General Counsel
The Overseas Private Investment Corporation (OPIC)
1100 New York Avenue NW
Washington DC 20527
United States

Sameh Mobarak
Senior Counsel
The World Bank.
1818 H Street, NW
Washington, DC 20433

**This Legal Guide is issued under the Creative Commons Attribution Non- Commercial Share Alike 4.0 International License (CC BY NO SA), which allows anyone to copy, excerpt, rework, translate and reuse the text for any non-commercial purpose without seeking permission from the authors, so long as the resulting work is also issued under a Creative Commons License.

Upcoming Programs

December 16, 2019 - December 17, 2019

On December 16-17, CLDP will held a two-day workshop on power project procurement. The workshop sought to improve the planning of bids from prep to closing through a discussion on international best practice relating to the request for proposals (RfPs), standardization of documents, designing a competitive bid round, evaluations and identifying gaps in the current legal framework. 

December 19, 2019 - December 20, 2019

On December 19-20, CLDP, in collaboration with Ethiopia’s Ministry of Finance and the Public-Private Partnership (PPP) Directorate, will hold a two-day workshop on PPP fundamentals. The workshop will highlight PPP process, structure economics, project financing, and revenue flow.

CLDP in Action

October 23, 2019 - October 24, 2019

On October 23-24 in Tunis, Tunisia, CLDP held a workshop to identify potential changes to Tunisian law that would encourage increased cross-border eCommerce transactions for both exports and imports. Over 40 representatives from several government ministries, the private sector, and the NGO community discussed potential amendments to Tunisia’s eCommerce law, customs procedures, central bank currency and payment rules, and other matters.  The participants offered sets of informal recommendations for further action.

ECommerce in Tunisia has not reached its full potential, although there are black market eCommerce websites. Legal changes could help Tunisian SMEs and individuals reach new markets, while also providing opportunities for US sellers.

Read More about Tunisia: CLDP Holds Cross-Border eCommerce Workshop