Thread: Latest News - Iraqi Dinar Think Tank - Discussion

Economist calls for the Ministry of Finance to take immediate action to rescue to prevent the collapse of the banking sector civil

Expert called for the adoption of bank rescue measures immediately to prevent the collapse of private banks in Iraq, which may bring them back to square one and dissipate economic reform efforts exerted for years.

The expert, who asked not be named, told the independent press (Iba) that the existence of a banking system integrated is one of the most important pillars of the national economy and confidence in him and encouraged to deal with it, which is the gateway to the development of all economic sectors, and is the basis for handling cash between individuals, companies and institutions at home and as well as its dealings with the outside.

He also said the presence of a strong banking system in the country, encourage local and foreign investors to enter the investment market and give confidence to the national economy and guarantee in dealing with the State, whether with the public sector or private.

He noted that the support of the banking sector Ahli encouraged to handle competitive, which is looking for business and private sector in general, and any blow to the banking sector, Ahli lose confidence in the banking system as a whole and lead to a decline in dealing with the various agencies and the reluctance of investors to enter the investment market and even contracts tainted by type of uncertainty and loss of confidence.

The expert explained that the Economic Committee of the Council of Ministers and Central Bank of Iraq had a distinct position in their support to domestic banks through a decision of the Economic Commission of the Council of Ministers No. 188 on 6/4/2009, which allowed the ministries to deal with private banks without restriction or condition and also urged the finance companies Self-filing, opening bank accounts in private banks.

In addition to the book of the Iraqi Central Bank to the ministries and departments not associated with the Ministry of 09/12/2010 No. 9/3/711, which indicates that the central bank had the values ​​of private banks, urges the concerned authorities to deal with it, and Egged legal or financial reasons not to do to deal with them to get the various banking services to serve public interests.

The expert was surprised at the Ministry of Finance to issue instructions in 2009 to all ministries and departments not associated with a ministry that ran counter to the above decisions of the Economic Commission of the Council of Ministers and the central bank, prevented whereby all ministries, agencies and authorities from opening a bank account with the private banks out of hand and turn them into state banks (Iraq) under the pretext of maintaining public treasury funds of dispersion.

He said in light of the decision of the Ministry of Finance, it started the problem of liquidity crisis in banks, as happened to the Warka Bank were to withdraw all government deposits, and suddenly and immediately resulted in the withdrawal of 800 billion Iraqi dinars within three months.

He said the reason for the panic among the public, which led to the withdrawal of deposits by depositors companies, individuals and the reluctance of others to deal with the bank even declined to deal with him to the 5% and amounted to what has been withdrawn during the period amounted to 1600 billion dinars, the equivalent of one billion and five hundred million dollars.

The expert said that the Prime Minister instructed after the complaint made by the Warka Bank to conduct the necessary protection of private banks, and the Legal Committee in the House had written to the Ministry of Finance said the decision was contrary to Article 25.26 of the Iraqi Constitution, and that any prevention of such things must be issued by a law.

He was supposed then to cancel the Ministry of Finance its decision to prevent dealing with private banks, and supported again and requests from ministries and agencies concerned to support the banking system by dealing with private banks to encourage the establishment of new banks again, but this did not happen. The expert called on to a meeting between officials of the Ministry of Finance and the Central Bank and representatives of the advisory board of the Office of the Prime Minister with representatives of private banks in order to support the banks, and find ways to solve all its problems, to support the banking sector in Iraq, according to specific controls and clear.

For his part, student director of the Warka Bank Government and the Ministry of Finance and the Central Bank to find solutions to derail the bank from its crisis under the guidance of the Prime Minister with the support of private banks, and pursuant to the Legal Committee of the Council of Representatives to reject the decisions of the Ministry of Finance as contrary to the provisions of the Constitution and rejected the decisions of the Central Bank as contrary to the provisions of the Central Bank Law No. 56 of 2004. He's (IBA) could have collapsed bank collapse immediately, but the strength of its assets prevented, and in fact should commend this power possessed by the Bank Ahli Iraqis in such circumstances, where he remained steadfast request the support and assistance from government authorities and the central bank to rescue it from the problem that left the force.

He was the hope that The Ministry of Finance and the Central Bank of serious support to the bank as a national bank, but that did not happen. The economic analyst Sadeq stapes has said that the Iraqi government still believes that the incentive package offered to foreign investors at the beginning of contracts, enough to make it able to overcome obstacles to his work with Iraqi banks, and the latter do not have sufficient funds to cover bank guarantees later. The stapes to the Iraqi banking system imposed on foreign companies commitment to bank guarantees issued by banks, Iraqi banks exclusively, which is inconsistent with the capacity of Iraqi banks to secure these guarantees.

http://www.ipairaq.com/index.php?nam...onomy&id=41256

Government adviser: to postpone the discussion of the law of oil and gas to the next week
(Again!)

An adviser in the Iraqi government, Wednesday, the postponement of debate on the law of oil and gas to the next week. said Abdul-Hussein Al Jabri told the Kurdish news agency (Rn) that "the draft law of oil and gas will be referred to the Cabinet at its next Tuesday instead of this week because of the concern meetings of leaders of political blocs," and was to be discussed today in the Presidential Council of Ministers a draft law of oil and gas.

"The cabinet will present a draft law of oil and gas average by the Energy Commission, government, headed by Deputy Prime Minister for the energy Hussein al-Shahristani, to be discussed and then voted on and sent to the House of Representatives."

He added that "the Council of the Prime Minister sent a copy of a draft law of oil and gas to the Legal Committee of the Council of the Prime Minister to develop a comprehensive study on the law."

The Committee announced that state energy which is chaired by Deputy Prime Minister Hussain al-Shahristani on July 14 announced that it completed the amendments to the draft law of oil and gas and sent to the prime minister to make adjustments.

http://www.aknews.com/ar/aknews/2/253946/

Terrorists "Islamic State of Iraq" destroy 10 towers of Asia-Cell in Mosul

An official source in the Asia-Cell Telecom in a statement to "the news agency the future," today was towers the company in the province of Nineveh to terrorist operations.

and Aodj source that ten towers were destroyed completely during the week before the terrorist groups of the so-called " Islamic State of Iraq, "he said." face of Asia-Cell all the challenges of the terrorists and their criminal acts to continue its work in the service of the Iraqi people."

A source revealed that the terrorists tried to compromise the company's request for millions in ransom in order to stop their criminal acts, stressing that the company officials refused to blackmail and submission to the will of terrorists and criminals."

http://www.mustakbal.net/ArticleShow.aspx?ID=13486

Iraq Aims to Lift 2012 Investment Budget to $51bn

Iraq needs to boost its 2012 investment budget to as much as 60 trillion dinars ($51 billion) from a planned 40 trillion dinars, to allow funds for new projects, the Planning Minister, Ali al-Shukri (pictured), told Reuters in an interview on Monday.

“What is being put forth is 40 trillion Iraqi dinars (as the investment budget). We are now trying to increase it to a minimum of 55 or 60 trillion dinars.”

Finance Minister Rafie al-Esawi [Rafi Hiyad al-Issawi, Rafia al-Issawi] said in May the 2012 budget would allocate 40 trillion ($34 billion) for investment projects, with the rest of the proposed 115 trillion dinars budget allocated for government spending.

The proposed change would need to be approved by cabinet and parliament. Shukri said the Finance Ministry had sent the investment budget to the cabinet for discussion.

He said the suggested investment budget for 2012 was not enough to finance existing projects or launch new ones.

The 2011 budget, which was approved in February, allocated $25.7 billion for investment.

“We want to increase it in order to pay for the ongoing (projects) and to create new ones,” Shukri said. “Our goal is to increase the investment budget by 4-5 percent each year.”

http://www.iraq-businessnews.com/201...udget-to-51bn/

China’s Iraq Investment
By By Mu Chunshan. Originally published in The Diplomat.

The visit by Iraqi Prime Minister Nouri al-Maliki to China didn’t just fail to grab much international media attention – there was also little coverage in the Chinese media, too.

Most Chinese associate Iraq with Saddam Hussein and the US-led war that unseated him. Those with a deeper understanding of international affairs will also be aware of Iraq’s vast oil reserves. As of October 2010, Iraq had proven oil reserves of 143.1 billion barrels of oil – the world’s second largest. Its oil reserves are its strongest draw for foreign capital, and the development of Chinese-Iraqi relations means that China will have a significant stake in the country’s oil interests.

Already, China is working with Iraq on its oil and gas development. In 2008,PetroChina and another Chinese oil company, China ZhenHua Oil, signed a contract worth $3 billion with the Iraqi government for oil exploration rights for 23 years. This was the first major deal signed with foreign firms following the fall of Saddam Hussein in 2003. Drilling began last month, and is eventually expected to produce about 60,000 barrels of oil per day.

In 2009, PetroChina and a British firm obtained exploration rights to Iraq’s biggest oil field, which has oil reserves of about 17 billion barrels of oil, which is more than 10 percent of the country’s oil reserves.
But Maliki’s visit wasn’t just about oil.

On the second day of his visit, Maliki met with China’s business representatives, with only one media outlet – China’s official Xinhua News Agency – invited to cover the meeting.

The main issues discussed included Maliki’s hopes that more China companies will invest in Iraq, as well as the prospects for enhanced bilateral cooperation in energy, oil, transport, housing, telecommunication and agriculture.

After years of conflict, Iraq is now looking at reconstruction in the country, and the prime minister believes China can assist with infrastructure development. He hopes, for example, that China will follow the United States and South Korea in establishing a reconstruction fund, which will solidify China’s efforts in Iraq. So far, the Chinese government hasn’t launched any such initiative, although Chinese Premier Wen Jiabao has reiterated the Chinese government’s determination to assist in Iraq.

To some Chinese enterprises, the biggest challenge for bilateral cooperation is the ongoing question mark over safety in Iraq. According to a source in a state-owned construction firm, the company has a number of projects ongoing in Iraq, but is afraid to expand further amid safety concerns. The fact is that if a terrorist attack hits construction work, then it’s a nuisance, but it can be lived with. But if there are casualties, it will undoubtedly cause disquiet in China, and could hurt plans for future expansion.

On this note, Maliki also reportedly mentioned that the Iraqi government welcomed Chinese military aid, and that if Iraq buys Chinese military weapons and equipment, China should also offer some support

http://www.iraq-businessnews.com/201...-investment/2/

Taxes and tariffs law soon to be implemented in Iraq

Iraq’s ministerial council announced on Sunday that the law of taxes and tariffs that will include mainly imported goods and products which can be manufactured locally.

The products and goods that are directly consumed by the people will be exempted from tariffs, the ministerial council confirmed.

In a statement to Alsumarianews, ministerial council economic advisor Abdul Hussein Al Ankabi stressed that the law of taxes and tariffs is an important and essential law that will be implemented soon noting that the products which are increasingly consumed by citizens will be exempted from taxes and tariffs.

Goods that are highly subject to tariffs and taxes are products that can be manufactured locally but are not due to competition and prevalent imported goods. The taxes law is a corrective law that will help local products and industries, Al Ankabi said.

Iraq’s government announced on February 21 that it has decided to suspend the law of increasing taxes on imported goods which was expected to be implemented in March. The law was suspended until further notice.

At the end of January, the Iraqi government issued a decision to implement tariffs on imported goods starting February. The legal advisor of Prime Minister Nuri Al Maliki announced however that the government might not rush the decision implementation in fear of a price drop in local markets.

This decision requires legislation from Parliament, the adviser concluded.

http://www.alsumaria.tv/en/Iraq-News...d-in-Iraq.html

CBI down on Wednesday

The Central Bank of Iraq (CBI) has sold 145 million U.S. dollars in its auction to sell and buy foreign currencies on Wednesday, based on 1,170 dinars per dollar, compared to Tuesday's auction where sales reached 162 million dollars, according to the Bank’s daily bulletin.

“The total size of the demand on the U.S. dollar reached 162, 848,000, covered by the CBI at a rate of 1,170 dinars per dollar,” the bulletin reported.

The auction’s cash sales had reached 5, 490,000 dollars, at a rate of 1,183 dinars per dollar, including the Bank’s interest of 13 dinars per dollar, the bulletin stressed.

It said that the foreign transfers had reached 140, 652,000 dollars, also at a rate of 1,183 dinars per dollar, including the CBI’s interest of 13 dinars per dollar.

http://en.aswataliraq.info/Default1....&id=143982&l=1

$13bn Iraq-US Deal may be Cancelled due to Corruption

An arms deal under which Iraq would buy $13 billion in American weapons has been recommended for cancellation by the Iraqi parliament’s integrity committee, reports AKnews.

The deal has been criticized for involving extensive financial corruption.

A member of the committee, Aliya Nussaif, told AKnews that the parliament has passed a request by the committee to the legal committee with a view to legislating to cancel the Foreign Military Sales program (FMS) after “financial corruption” has been confirmed in the deal.

“Our request came after we saw details of the program which has been misappropriating large amounts of Iraqi money since the entry of the U.S. forces into Iraq,” Nussaif told AKnews.

“All Iraqi arms deals have been through this notorious program and which have provided eastern made weapons to Iraq,” Nussaif said.

Corruption is a major problem in the country. The corruption index for 2010 issued by Transparency International pointed that Iraq is among the world’s most corrupt countries.

The deal would have seen Iraq purchase F-16 fighters, Abrams tanks, and other heavy weaponry worth about US$13 billion.

http://www.iraq-businessnews.com/201...to-corruption/

Al-Ahdab Oil Contract has Many Flaws

Al-Ahdab Mousa Jiyad is an independent development consultant, scholar and Associate with Centre for Global Energy Studies (CGES). He was formerly a senior economist with the Iraq National Oil Company and Iraq’s Ministry of Oil, Chief Expert for the Council of Ministers, Director at the Ministry of Trade, and International Specialist with UN. He is now based in Norway.

A recent ceremony for Al-Ahdab oilfield commencement of commercial production was attended by former minister of oil Dr. Shahristani, now the deputy prime minister for energy affairs, and his successor, Mr. Abdul Karim al-Luaibi. This is significant development from more than one aspect:

1. The contract for this oilfield was converted from a production sharing contract-PSC concluded under former régime in 1997 into a service contract concluded in November 2008. Practically, the contract serves as a base, with modifications, for the “model” service contracts that followed for the three bid rounds concluded so far. Thus an end to the PSCs in Iraq’s upstream petroleum was consolidated;
2. It also signifies a needed achievement for the ministry and the Shahristani strategy of opening of the sector before the IOCs, as the ministry been heavily criticized for not delivering substantial results;
3. The early local resentments seems to be fading away and this field alone would secure three important privileges for the governorte/province of Wasit: more revenues through the known “petrodollars” allowances for every barrel of produced oil; the oil and gas produced from the oilfield will be used for generating power in the Zubeidiyah power station which is being set up by China, also in Wasit; and a place at the Federal Oil and Gas Council when this council is established under the proposed Federal Oil and Gas Law currently under consideration.

That said and though it is surely welcoming and encouraging news to see the development of this oilfield is coming on stream, however, AlAhdab contract with CNPC requires serious attention with highly justified revision.

I have since January 2010 reputedly exposed the weaknesses and problems with Al-Ahdab contract and how, in comparative sense, it works against the Iraqi interests. Credible information indicates that the negotiating team at that time was “instructed” from the office of the prime minister to accept these unfavourable terms.

To be specific, this contract has many flaws regarding the following variables, which has significant financial implications for the Iraqi interests:

The “signature bonus” was extremely insignificant amount (of only 3 million dollars) that is not commensurate with the corresponding signature bonus paid for the oilfields under the second bid round taking into consideration the envisaged Production Plateau Target-PPT, as measure of proportionality.

With original 115 thousands barrels per day-tbd PPT for AlAhdab, which is between 110 tbd for Najmah and 120 tbd for Qaiyarah oilfields, CNPC should pay 100 million dollars NOT 3 million dollars. Upgrading the PPT to 200 tbd as recent data indicates, the signature bonus should be even higher. This is the least to ask, considering that another Chinese oil company had paid $2.2 billion signature bonus for two exploration blocks only in Angola.

The payment “cap” for petroleum cost and remuneration fee was fixed at 100% of the “deemed revenues”. This implies that CNPC gets its investment and remuneration fees first, and unless there is surplus in the deemed revenues, Iraq would not get any revenues from the field. Therefore, the payment “cap” ought to be reduced to 50% of the “deemed revenues”.

Level of “commercial production”, which decides the commencement of payment could be specified at 25000bd (again somewhere between that for Najmah and for Qaiyarah oilfields as reference points) or proportionately higher if the 200 tbd PPT is adopted.

Unpaid dues carry “LIBOR+3” interest. Due to this Iraq paid in July 2010 some $250 million as its 25% share in the investment requirements to “avoid paying the interest”. So far the development cost mounts to $1.5 billion, meaning Iraq has already paid $375 million in cash.

These unmet payments should be interest free, similar to the provisions of the model contracts for rounds 1 and 2. Therefore, the “LIBOR+3” interest on these unpaid dues should be deleted from AlAhdab contract.

The overhead charges for AlAhdab is 2% compared with 1% for all other contracts. Hence this charges should be cut to that paid by other IOCs.

The corporate income tax of (15%) should be amended to become (35%) and the provisions relating to “stabilization” should also be amended to that effect to be in line with other service contracts.

The R-factor should also be adjusted to be in line with those applied for green- fields offered under the 2nd bid round. The remuneration fee will thus be reduced from the maximum of $6/b to a minimum of $1.2/b, instead of the current minimum of $3/b. The scale of R-factor would also be adjusted from 4 to 5 levels accordingly.

Unfortunately, the parliament had missed good opportunity few months ago to remedy these shortcomings, safeguard Iraqi interests and assert its authority and constitutional role, and thus continues in pacifying itself and accepting circumvention by the executive branch.

On 27 March 2011 the Parliament voted to abrogate a former law, of 1997, that ratified the Development and Production Contract and the Memorandum of Understanding related to AlAhdab oil field signed in Baghdad on 4 June 1997 between MoO and CNOC and CNI, represented by Alwaha Co. (China).

The parliament, in my view, should have insisted that AlAhdab Contract of 2008 must also be revised and if approved then ratified by law, and thus the parliament should have seen that contract before abrogating the old law. Thus, not only the parliament had missed excellent opportunity to set powerful legal precedence for having all other contracts enact by law, the parliament had in fact gave its consent to remain passive and be on the sidelines of effective authority regarding such oil contracts.


Ahmed Mousa Jiyad,
Iraq Development Consultancy and Research (I/DC&R)
Norway.

http://www.iraq-businessnews.com/201...ontract-still/

Basra’s Big Business: Fake Building Contractors Defaulting on Jobs

Changes in legislation have led to an explosion in building companies in Iraq’s economic hub, Basra. Some exist only on paper but get jobs worth millions. Some say it’s the fault of US-formulated laws. Others say its corruption and public budgets.

One of the most popular kinds of business in Basra city, the second most important economic hub in Iraq after Baghdad, is the building contract business.

According to the local Chamber of Commerce, the number of building contractors registered with them is now over 1,000. And there are thousands more waiting for registration, they said.

But the reason for the popularity of this kind of work is not the fact that there is so much reconstruction work required in the region as the result of the many military conflicts over the years. Rather, it’s because it is so easy to start your own building firm up.

In fact, most of these companies exist only on paper. They don’t have any assets, offices or staff. However they still manage to win contracts for reconstruction projects, sometimes worth millions of US dollars.

“There are companies which have no more than IQD2 million [around US$1,700] who have signed contracts with the Department of Defence to supply the army with equipment,” a local legal expert Tariq al-Aberseem told NIQASH. “Those contracts are worth millions of dollars.”

And then, when they eventually fail to deliver upon these contracts, the companies end up being blacklisted.

Before the 2003 US-led invasion of Iraq that toppled former Iraqi leader Saddam Hussein’s regime, the situation was different. Most of the reconstruction projects were undertaken by the Iraqi government, with wildly varying degrees of success.

However after 2003, the interim US-led government of Iraq, the Coalition Provisional Authority which was headed by American diplomat Paul Bremer, made some fairly radical changes to Iraqi economic laws. Bremer made changes to the existing companies’ law in Iraq – specifically Company Law No. 21 of 1997 – because, as he wrote at the time, his role involved “recognizing that some of the rules concerning company formation and investment under the prior regime no longer serve a relevant social or economic purpose, and that such rules hinder economic growth.”

Bremers’ amendments were supposed to liberalize the economy but, like some of the other fairly ill advised laws the American diplomat instituted, they had unintended consequences. Within a fairly short period, there were 925 construction companies registered in Basra and another 5,000 waiting for registration. The amendments allowed for the creation of companies that only existed on paper as well as increased the number of speculators.

The amendments allowed any Iraqi with a minimum of IQD1 million (around US$850) to register a company at federal level. The state of a firm’s financial assets is not among the conditions of registration and according to local legal experts, this is the aspect that is being regularly exploited.

“It is true that the law does not allow a company to implement projects with costs three times more than its capital. However, any company can temporarily increase its capital by utilising a temporary deposit from one of the local banks,” al-Aberseem told NIQASH. “Using the latter, the bank deposits the needed amount, charges a commission and then withdraws it from the company’s account later.”

“It’s trick that doesn’t cost much,” al-Aberseem explained. “And the company can do business even if it doesn’t have the needed capital or assets.”

And it seems, they can be awarded contracts for various reconstruction projects. However if the company then fails to deliver in the future, the firm and its directors are publicly blacklisted and barred from tendering for any other contracts for up to three years.

In April 2011, Iraq’s Ministry of Planning declared 433 companies from all around the country blacklisted because they had not completed projects according to contracts. In July 2011, another 243 companies were added to that list.

Some of the companies on the federal black list may be tendering for contracts in Basra but currently it is uncertain how many. On a state level, the Basra provincial council saw fit to declare only four local companies blacklisted.

The head of the state’s contracts department Walaa Abdul-Kareem Ubaid said that the firms had been blacklisted because they had not fulfilled contractual obligations in a number of projects, including resurfacing roads and sewage system maintenance.

However the small number of blacklisted companies in Basra raised doubts among observers. “The small number of blacklisted companies in Basra province should be an indicator that projects are being carried out properly,” Abbas al-Jourani, a leading figure in Basra’s Communist Party commented. “But this is not the case. Dozens of companies who were awarded contracts did not fulfil their obligations.”

And al-Aberseem suspects that officials in Basra are simply accepting incomplete, or insufficient, results. “Not one company has completed any of the projects in a proper manner,” he said.

Provincial council member Majida Kadhim, who sits on the committee for development and reconstruction in Basra agreed, telling NIQASH that the number of blacklisted firms should actually be higher. “Some were lucky,” she said, “because their names were not listed. This is because there is a rampant corruption in all areas.”

As an example, the deputy chairman of the Basra council had recently demanded that one firm involved in a sewage system project be blacklisted for incomplete work. It had not been blacklisted; the company was owned by a local MP, Abdul Hadi al-Hassani.

A source at the council spoke to NIQASH on condition of anonymity. He said that many project contracts were awarded to certain local companies directly, without going through any competitive tendering process. This was done under the pretext of streamlining the process and, as the source said, “it raised doubts about the presence of corruption and influence and nepotism.”

Al-Jourani, of the Communist party, verified this. He knew that, “politicians and officials usually register companies in the names of their wives, cousins or relatives. But the politician takes a certain commission [when a contract is awarded],” al-Jourani explained. “Because they are not registered as owners of the original companies, they can still start another company up and carry on.”

Meanwhile some company owners are blaming the local government for their potential blacklisting. Many of them relied on the official funds that are supposed to be paid to them once they have completed 10 percent of any project. However they maintain, there is often a delay in payment that makes it impossible for them to carry the project through to the next stage.

Umran al-Mayyahi, the owner of one such company, said that he had lost millions of dinars because of the delay in regional budgeting. “And I couldn’t finish the building of a school because of the delay in payments,” al-Mayyahi complained. “Politics and partisan conflicts are the reasons behind failed projects.”

According to local legal expert al-Aberseem, the reasons for the surfeit of companies and for their blacklisting were many and varied. “And we cannot blame it all on Bremer’s laws,” he said. “The misuse of power has also played an important role in creating failed and corrupt businesses.”

The solution, he felt, was to address the situation on both a legal and political level. “Firstly, the legislation should be revised and secondly, the government should try and put an end to this kind of financial corruption.”

Al-Aberseem also pointed out the existence of another list of companies in Basra: a “grey list” rather than a black one. “This list has the names of many more companies responsible for a number of losses, and for the unfulfilled dreams of the local people.

They should be held responsible and their names should be published and made known to the public,” the lawyer concluded

http://www.iraq-businessnews.com/201...lting-on-jobs/