Iraq Launches First Phase of Bijayi Gas-Fired Power Station Modernization

Iraq Launches Major Power Grid Expansion as Energy Crisis Drives Infrastructure Revival

Iraq has begun construction on a strategic 1,014-megawatt gas-fired power plant in Salah al-Din province, marking the latest phase in the country's ambitious effort to rebuild its electricity infrastructure after decades of conflict and underinvestment. The Baiji Gas Power Plant Phase II represents more than just additional capacity—it signals Iraq's commitment to energy independence and economic stabilization through strategic partnerships with German and Chinese firms.

A Strategic Energy Partnership Takes Shape

Prime Minister Mohammed Shia al-Sudani launched the project's executive phase on Saturday, emphasizing that energy development forms "the foundation of any comprehensive development plan." The initiative brings together German energy giant Siemens and China State Construction Engineering Corporation (CSCEC) in a consortium that reflects Iraq's pragmatic approach to international partnerships.

The project will rehabilitate six gas-fired generation units, with the first two units expected to come online within 27 months. This timeline, while ambitious for Iraq's standards, aligns with international best practices for similar power plant developments.

Beyond Generation: Grid Infrastructure Overhaul

The Baiji project extends far beyond power generation, incorporating a comprehensive grid modernization component that addresses Iraq's chronic transmission bottlenecks. The development includes six new 400-kilovolt transmission lines to strengthen the national grid, plus 16 additional 132-kilovolt lines specifically serving Salah al-Din province.

This dual focus on generation and transmission reflects lessons learned from Iraq's past energy investments, where new power plants often failed to deliver their full potential due to inadequate grid infrastructure.

Market Implications and Regional Context

The project positions Iraq within a broader Middle Eastern energy transformation trend. While neighboring countries like the UAE and Saudi Arabia pivot toward renewable energy and hydrogen production, Iraq remains focused on maximizing its natural gas resources—a pragmatic approach given its substantial proven reserves and immediate energy security needs.

For international investors, the Siemens-CSCEC partnership demonstrates Iraq's improving ability to attract major multinational corporations despite ongoing security and regulatory challenges. The German-Chinese collaboration also reflects the evolving geopolitical landscape, where Western and Eastern companies increasingly work together in emerging markets.

Long-term Energy Security Strategy

The government's commitment to funding "all production, transmission, and distribution sectors" suggests a comprehensive approach to addressing Iraq's chronic power shortages, which have sparked regular protests and hindered economic development. The Baiji plant's location in Salah al-Din province—a region that suffered extensive infrastructure damage during the conflict with ISIS—carries symbolic significance for national reconstruction efforts.

This infrastructure investment comes at a critical time as Iraq seeks to reduce its dependence on Iranian electricity imports while building the energy foundation necessary for economic diversification beyond oil exports. The project's success could serve as a template for similar developments across Iraq's other provinces, potentially accelerating the country's broader infrastructure modernization program.