Iraq, Iran Sign Power Deal

Iraq's electricity ministry and Iran's oil ministry signed the five-year agreement for 25 million cubic meters a day, Iraqi electricity ministry spokesman Mussab al-Mudaris said. The gas will be used to feed two power stations in Baghdad's northern suburbs Sadr City and Al-Quds, but could also be fed into the grid to supply other power plants to combat the country's chronic power shortages.

The gas, which will be supplied under international prices for five years, will be fed via pipeline through the Diyala province that borders Iraq and will take 18 months to construct, Mr. Mudaris said.

Last year, Iraqi Prime Minister Nouri al-Maliki sacked Electricity Minister Wahid Kareen following a wave of demonstrations in Baghdad and other southern regions over the power shortages.

Iraq's aging power stations generate less than half the country's actual demand. The situation is particularly acute in the searingly hot Iraqi summers when the country's national grid can only provide a few hours of power each day.

The agreement, which requires official ratification by the Iraqi cabinet and parliament, also illustrates the closer ties that have developed between Iran and Iraq under the Shiite-led government of Mr. Maliki.

Iraq and Iran fought a war in the 1980s in which nearly a million people were killed. Many of Iraq's Shiite leaders that were persecuted by Saddam Hussein's regime sought asylum in Iran. They have since returned after the fall of Hussein in 2003 and some now hold key government posts and maintain close ties with Iran.

Iraq plans to complete the construction of the new power station in Sadr City and the extension of the Al-Quds plant next year. The plants will have a capacity of up to 2.5 gigawatts, Mr. Mudaris said.