VZCZCXRO0878
RR RUEHBC RUEHDA RUEHDE RUEHIHL RUEHKUK
DE RUEHGB #1695/01 1561130
ZNR UUUUU ZZH
R 041130Z JUN 08
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 7659
INFO RUCNRAQ/IRAQ COLLECTIVE
RHEBAAA/USDOE WASHDC

UNCLAS SECTION 01 OF 02 BAGHDAD 001695 
 
SIPDIS 
 
STATE FOR NEA/I AND EEB 
USDOE FOR PERSON 
 
E.O. 12958: N/A 
TAGS: ECON ENRG IZ PGOV
SUBJECT: MAINTENANCE PROGRAM YIELDS ROBUST ELECTRICITY 
GAINS IN 2008 -- BUT WHAT HAPPENS IN 2009? 
 
 ¶1. (SBU)  SUMMARY: Iraqi electricity output in the first 
four months of 2008 outstripped output for the same period of 
¶2007.  A year-to-year comparison for the January - April 
period shows that overall, the ME experienced a system-wide 
increase in electricity output of 20 percent per month.  Only 
8 percent of the increase is attributable to new gas turbine 
plants coming on-line.  The balance stems from a seven-month 
old USG-funded program for operations, maintenance and 
sustainment (OMS) that squeezes more production out of 
existing generation assets.  Generation plants operating 
within the OMS program have increased production by 30 
percent per month in the comparative four month period. 
However, the OMS program will begin to cease operations on 
September 9, unless the GOI (specifically the Ministry of 
Electricity) acts now to pick up the costs of the program. 
END SUMMARY. 
 
¶2. (SBU)  To reverse the absence of a "culture of 
maintenance" in the power sector, the U.S. Mission's Iraq 
Transition Assistance Office (ITAO), together with the U.S. 
Army Corps of Engineers, Gulf Region Division (GRD) 
established the OMS program to introduce modern inspection, 
operations and maintenance protocols at six of the ME's major 
power plants.  Since becoming fully operational, this program 
has increased plant production output by 30 percent per 
month, and plant availability (which measures the days per 
month a plant operates) and reliability (which measures the 
hours per day a plant operates) by nearly 20 percent per 
month. The cost of this improved capacity is less than 20 
percent than the cost of the equivalent amount of electricity 
gained by constructing new generation plants. 
 
¶3. (SBU)  This program, however, is in use at only about 45 
percent of the ME's current generation plants and the 
contracts that implement it will expire on September 9, 2008. 
 The significant gains of this program argue in favor of the 
GOI retaining the existing program and expanding it to the 
rest of the ME's generation stations.  Yet the ME has taken 
no steps either to retain the current contract with its own 
funds or to replace it with an equivalent alternative, 
despite strong Embassy encouragement.  Without this program 
the progress made to date will be lost within months, and the 
potential for further gains by extending the program to the 
remaining plants will remain unrealized or at best be much 
delayed. 
 
------------ 
HOW IT WORKS 
------------ 
 
¶4.  (SBU)  The current 80 million USD OMS program distributes 
42 ex-pat engineers and technicians and 60 local national 
staff among the six major Iraqi power plants.  They work 
shoulder-to-shoulder with ME plant operators and other 
employees, teaching them best practices in inspection, 
operations and maintenance.  The goals of the program are to 
(1) increase production levels and enhance reliability of the 
ME's existing generation assets by employing modern 
inspection, operation and maintenance processes and 
procedures and (2) transfer that knowledge to the Iraqi plant 
employees. To date, the contractor (Parsons Brinkerhoff) has 
provided over 5000 work-hours of on-the-job-training (OJT) to 
ME employees. 
 
¶5.  (SBU)  The program also offers extensive classroom 
hands-on training at a newly-constructed training facility at 
the Baghdad South power plant.  The OMS team currently 
delivers approximately 2000 man-hours of OJT and classroom 
training each month.  Over the course of the past year, ME 
personnel have increasingly participated in the training. In 
the next month or so, the installation of a remote monitoring 
system will allow around-the-clock, real time computer 
monitoring of most of the ME's gas turbine fleet of 
generators and will permit data collection from 12 of the 
ME's generation sites. 
 
 
------------------ 
MEASURABLE RESULTS 
------------------ 
 
¶7.  (SBU)  Iraq's national power generation network is 
supplied from three domestic sources: hydro-electric 
generation, which, because of the regional drought, has 
declined from 16 percent of the system's total in 2007 to 9 
percent in 2008; thermal steam boiler generation, which in 
2008 accounts for roughly 44 percent of the system total; and 
gas turbine generation, which makes up the remaining 47 
 
BAGHDAD 00001695  002 OF 002 
 
 
percent. 
 
¶8.  (SBU)  The OMS program has targeted only the steam 
thermal and gas turbine plants and has been fairly evenly 
distributed between the two technologies.  Among the 6 power 
plants that participate in the program, there are nine 
generation stations: five gas turbine stations and four 
thermal stations.  Together these units generate 3,050 MW of 
running capacity. 
 
¶9.  (SBU)  A way to measure the OMS program's value is to 
compare its production results to the output levels of plants 
that operate without benefit of the program by generation 
technology.  In total, the OMS plants have increased average 
output by 30 percent on a month-to-month basis for the first 
four months of 2008 over the comparable period in 2007.  In 
that same time frame, plants not employing the OMS program 
have increased output 10.5 percent per month; most of that 
increase is attributable to new gas turbine generation coming 
on line. 
 
¶10.  (SBU)  Among the steam thermal plants, OMS program 
plants experienced a month-to-month average 26.5 percent 
increase in the first four months of 2008 over 2007.  The 
ME's non-OMS thermal plants only increased output by a 
monthly average for the period of 2.25 percent.  Comparative 
results among the gas turbines was less dramatic, but still 
favored the plants operating under the OMS protocols.  OMS 
gas turbine plant increased production output of 32 percent 
per month for the period, while non-OMS gas turbine plant 
increased output a monthly average of 20.5 percent.  Apart 
from output increases, the OMS program also improved the 
availability and reliability of generation plant - which 
means the OMS plants have experienced fewer outages - by an 
average of 17 percent over the four-month period. 
 
------- 
COMMENT 
------- 
¶11.  (SBU)  The program's current contract expires on 
September 9, 2008.  There is a six-month option to extend, 
but no USG funds to apply to it.  We have pressed the ME to 
explore extending and expanding this program, but as yet, the 
ME has taken no steps to do so. Following a June 1 meeting 
with CG Petraeus, however, the ME agreed for the first time 
to receive a detailed briefing on various possible options, 
which we will provide. 
 
 
¶12. (SBU)  Clearly, the OMS program has proved a measurable 
success.  Our recommendation to the GOI is that, at minimum, 
it retain the current program and ideally, expand it to the 
rest of the ME's network.  After just a few short months the 
OMS program is adding an additional 500,000 MWHrs per month 
to the grid at an all-in cost of approximately $160 per MWHr. 
 By contrast, a new power plant would take years to construct 
at a ballpark cost of some $1000 per MWHr, excluding fuel and 
other operating costs.  For now, the OMS program is essential 
to keep electricity numbers up, and to extend the useful life 
of these generation plants.  We believe a GOI decision to 
expand the OMS program to the other half of the ME's 
generation base would extract more electricity from existing 
resources quickly and cheaply to further enhance supply.  New 
generating plants need to be constructed as soon as possible, 
but the GOI needs the gains from this OMS program in the 
interim.  These gains will dissipate in a relatively short 
time if the current OMS contract expires and there have been 
no GOI arrangements made to extend or replace it with an 
equivalent alternative. 
BUTENIS