Electricity: The Failure of the US Government in Iraq

In yesterday's news, there were some numbers on current electricity production in Iraq.

"Despite the setbacks with the power plant, Bowen said Iraq's electricity supply still rose to 4,230 megawatts, compared with 3,900 megawatts during the previous quarter and 3,800 before that. But that is still below the prewar level of 4,500 megawatts, he said."
A focus of the problem is the Al-Doura (also spelled Dora) power plant, which produces 320 megawatts primarily for Baghdad.

In a story from July 20th on Boston.com:
"Bechtel National won a $1 billion contract to rehabilitate the electricity sector in Iraq and began work on Doura in August 2003. The two turbines, Unit 5 and Unit 6, were refurbished in June 2005, at a cost of $90.8 million, and Iraq's Ministry of Electricity took control of the plant. Worried that the staff at the plant would be unable to maintain the turbines, US officials spent $81 million more on "coaching, mentoring and on-the-job training" for 239 staff members at the Ministry of Electricity."
In addition:
"More than a year after the Doura Power Station was handed over to Iraq's Ministry of Electricity, neither of the two steam turbines that the United States paid $190 million to repair is operational, according to the report, released Wednesday evening."
So pretty much, we spent $81MM to "train" the Iraqis and within a year the two turbines failed.

$81MM / 239 = $338,912.13 per employee.

Now I don't want to say that Bechtel skimmed money, but frankly I'm a little skeptical considering the cost of attendance at Harvard is only $50,950 per year including room/board/tuition/etc. It seems like we could have flown every one of those employees to the United States, given them a year of extremely intense training at one of our many fine technical colleges, then put them in a year of training in our power plants and wound up MASSIVELY ahead. Even if we only did it with 50 employees, it would be a big start.

Why is electricity so important?

From a simplistic economics perspective, you need four factors for production:
  • Land
  • Labor
  • Enterprise
  • Capital

    So say I want to make widgets in Iraq. Can I get the land? Sure. How about labor? No problem (60% unemployment.) Enterprise - that's me. Capital is where we run into a tid bit of a snag.

    Modern factories use a wonderful invention we like to call "ELECTRICITY" to drive the machines. From air compressors to conveyer belts to 10 ton presses, the vast majority require electricity at some point to operate.

    When your supply of electricty is tenous at best (3-6 hours a day), how do you apply labor to your capital to produce goods? Do you just tell the workers they won't get any money while the power is out and they stand about the factory floor in the sweltering heat and darkness?

    Electricity is the key to the whole Iraqi puzzle. Without it, there will never be serious production of goods in Iraq. Oil alone is not enough. 60% unemployment is like a bad joke and I would venture to say that it's the cause of many of the problems.

    Possible Solutions

    Electricity production isn't magic. What you need is some form of energy, a power plant, and lines to deliver it to consumers. Iraq has SOME electricity. It's just not produced in a reliable fashion. So what can be done? Here are some steps I'd take immediately.

    1) Decrease demand: Dramatically raise the price of electricity. Cut off areas that don't need it immediately. FLOOD Iraq with the new energy efficient light bulbs. 100 million of them would go a long way, and I'm pretty damned sure we could buy and deliver them for less than $3 a piece. Even if 95% were sold off and only 5 million were installed, 5MM bulbs at 20 watts instead of 60 watts = 40 watts x 5MM = 200 megawatts savings or 62.5% of the entire production of the Dora plant.

    2) Increase supply: Electricty can be transmitted over long distances (up to 4,000 miles per wiki). If we can't build and maintain a plant inside Iraq, why don't we build one OUTSIDE Iraq? Kuwait City is only 344 miles from Baghdad. Iraq also shares a long border with another of our allies - Saudi Arabia. If the environment is unacceptable - let's just put one across the border. Supposedly a 1,000 megawatt coal plant only costs $1.5 billion. We could build three just outside Iraq for only $4.5 billion and increase total electrical production to 7,230 megawatts - a 71% increase! With big money and heavy political pressure, I imagine we could get these plants built in a matter of 2 years or less.

    3) Education Education Education: If there is one HUGE advantage the United States has over the rest of the world, it's having the best universities on the planet. Let's take advantage of that. Let's try rotating 50 engineers from every plant to our universities for a year of training. It'll be good for the Iraqis, it'll be good for our goals in Iraq. Give them each a degree or certificate of some sort. Then rotate them through American power plants for another year. Send the Iraqi managers to business school. Why not? It only costs $150k - that's CHEAP compared to what Bechtel spent on it's failed education attempts. Why are we trying to reinvent the wheel inside a war zone when we have wonderful wheels at home?

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