The United States has granted Iraq another four-month exemption from its sanctions that will allow Baghdad to continue to import Iranian electricity and natural gas, Iraqi media reported on Wednesday.
Meanwhile, S&P Global Market Intelligence cited a State Department spokesman as saying on Wednesday, "The waiver ensures that Iraq is able to meet its short-term energy needs while it takes steps to reduce its dependence on Iranian energy imports."
This is the fifth waiver Washington has granted Iraq since it re-imposed the second batch of sanctions on Iran last November after Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA) in May 2018.
"We regularly engage with the Iraqi government to support measures that improve Iraq's energy independence," S&P Global Market Intelligence quoted the unnamed State Department Spokesperson, as saying.
Earlier, Washington had asked Baghdad to show evidence that it was reducing its imports of Iranian gas and power to meet its electricity demand. It had also urged Iraq to establish contracts with U.S. companies.
Gas imports from Iran generate as much as 45 percent of Iraq's 14,000 megawatts of electricity consumed daily. Iran transmits another 1,000 megawatts directly.
Based on the official data, Iran exported last year nearly 4.8 billion cubic meters of natural gas and five terawatts of electricity to its neighboring Arab country, earning $2 billion.
Tehran and Baghdad have a contract for exporting more than eighteen billion cubic meters of Iranian natural gas every year to Iraq.
Nevertheless, the latest data provided by the National Iranian Gas Company show that only one-third of that amount is exported to Iraq each year.
Iraq's natural gas imports from Iran also dropped 26% last year compared with 2017.
Meanwhile, Iraq says that it needs at least two years to replace the electricity it imports from Iran.
Baghdad imports one-third of its electricity demand from neighboring countries, while the natural gas imported from Iran is mainly used for fueling its power stations.
Iraq suffers chronic electricity disruptions and long outages. Years of mismanagement, financial corruption and crumbling distribution networks have contributed to a defective power grid and dependency on imported energy from Iran.
Baghdad has recently been the scene of widespread protests against the Iraqi government, partly because of these chronic shortages and inadequate public services.