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U.S. Missteps Leave Iraqis in the Dark

A $4-billion project to restore electricity has foundered amid poor decisions, from choosing natural gas turbines to underestimating costs.

December 25, 2005|T. Christian Miller | Times Staff Writer

KHOR ZUBAYR, Iraq — When the United States fires up the last generator at this remote power plant this week, it will mark the conclusion of one of the most frustrating episodes in the effort to rebuild Iraq's infrastructure.

A pile of gray metal swarming with construction workers in the deserts of southern Iraq, the Khor Zubayr generating station is the final power plant being built under Washington's ill-fated $4-billion attempt to restore Iraq's electrical supply to its prewar level.

The massive U.S. effort will leave behind this legacy: Iraqis will actually have, on average, fewer hours per day of electricity in their homes than they did before the U.S.-led invasion in March 2003.

"The money was not effective," Muhsin Shalash, Iraq's minister of electricity, said in an interview. "The contracting was wrong. The whole planning was wrong.... It's a big problem."

U.S. officials have blamed insurgent attacks, unchecked demand and the poor conditions of Iraq's power plants for hobbling the bid to restore electricity. But interviews with dozens of U.S. and Iraqi officials reveal that poor decisions by the United States also played a significant role.

Perhaps most serious was the decision to expand a program begun under Saddam Hussein to install dozens of natural-gas-fired electrical generators, U.S. and Iraqi officials said. Iraq has such gas in abundance, but it uses only a fraction of it. The rest is burned off during oil production.

The U.S. spent hundreds of millions of dollars to purchase and install natural-gas-fired generators in electricity plants throughout Iraq. But pipelines needed to transport the gas weren't built because Iraq's Oil Ministry, with U.S. encouragement, concentrated instead on boosting oil production to bring in hard currency for the nation's cash-starved economy.

In at least one case, the U.S. paid San Francisco-based Bechtel Corp. $69 million for a natural-gas-fired plant that was never built, according to State Department documents and U.S. officials.

All told, of 26 natural gas turbines installed at seven plants in Iraq -- ranging in cost from a few million dollars to more than $40 million -- only seven are burning natural gas, reconstruction officials said.

Faced with widespread power shortages, the U.S. Army Corps of Engineers and the State Department decided to reconfigure many of the generators to burn a different fuel, an expensive process that decreased generation capacity and increased maintenance.

"You've got the wrong technology for the fuel we're burning, the wrong technology being gas turbines," said Bill Thompson, generation manager for the Project and Contracting Office, a Defense Department reconstruction agency. "But we're here and this is what we've got."

In many cases, the fuel in question has been heavy fuel oil, a tarry byproduct of Iraq's primitive refineries that has wreaked havoc on the natural gas generators. One turbine installed by the U.S. at a cost of $40 million at the Baiji power complex in north-central Iraq already needs replacement.

"My concept as a layman [is that] we basically wrecked the unit" that needs replacing, said Dennis Karns, the Army Corps official heading the power sector.

The U.S. simply canceled other plants. It scrapped the Bechtel project, a planned power station near the Mansuriya fields in northeastern Iraq, because it feared it would take too long to build and cost too much, said officials with the U.S. Agency for International Development.

Although the plant was never built, the U.S. paid Bechtel $69 million for drawing up plans, setting up a construction camp and buying two generators that were later installed elsewhere, USAID officials said. Bechtel also received $160 million to cover security and other unexpected costs in connection with other reconstruction projects.

"Starting about late 2004, we were finding out that security constrained our ability to build all the things we wanted to," said Heather Layman, a USAID spokeswoman.

A Bechtel official said the money was well spent since it paid for the gas-fired generators now in use elsewhere and provided the Iraqis with plant designs.

"Our position is it was a viable project," said the official, who asked not to be identified for security reasons.

The decision to rely so heavily on natural-gas-fired generators is a source of great frustration in the current Iraqi government. Shalash, the electricity minister, said the U.S. and the interim Iraqi government shared blame for not better understanding Iraq's power infrastructure.

"It was a combination of lack of knowledge and ... people who were from the outside who did not have experience," Shalash said. "All they were doing is signing contracts, buying turbines and not bringing electricity to people."

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