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slickk1on Jun 27, 2010 1:19pm
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Info on Kurdistan
Info on Kurdistan
June 27, 2010
Last week, more than 600 delegates from across the globe headed to London for a conference on investment opportunities in the Kurdistan region of Iraq.
As the rest of Iraq continues to be beset by political wrangling, terrorist attacks and violent protests bemoaning the lack of electricity, Kurdistan continues to look more and more like an independent state. |
Ranj Alaaldin |
This was the underlying message to be taken from the conference – that the business opportunities in Kurdistan are also opportunities to play a role in the building of a nation.
And where better to start than with oil, the foundation of any future independent Kurdish state. Ashti Hawrami, the Kurdistan regional government's experienced oil minister who continues to successfully pioneer Kurdistan's energy sector, despite formidable challenges from Baghdad and a failed smear campaign, gave a strong presentation that showed exactly what was at stake.
Before 2003, Kurdistan was importing oil from neighbouring countries at grossly inflated prices. Now, things have changed. Foreign companies have been awarded 37 contracts and the region has become a net exporter of oil. Oil exports are currently halted, but are expected to resume in the coming months.
Specifically, Kurdistan expects to export at least 100,000 barrels per day and this figure should rise to 200,000 by the end of the year. By 2014 Kurdistan should be exporting at least 1m barrels per day, which equates with a 50% increase in revenue not just for the Kurds but the whole of Iraq – a point that Hawrami was keen to stress.
Amid all the bad press that oil companies get, what does not get picked up on is the community-focused projects that they are able to implement in areas that desperately need them. In Kurdistan alone, one company has committed a non-refundable $2bn for social projects and local infrastructure, including the building of hospitals and roads.
An effective energy policy also leads to increased electricity. Before Hawrami's arrival in 2006, Kurdistan had an average of just two to four hours of electricity. It now has more than 18 hours in the major cities and an average of 12-18 hours throughout the region.
Kurdistan has also attracted more than $12bn-worth of non-oil investments from local and foreign investors over the last three-and-a-half years, mainly in housing, agriculture and banking. This is largely thanks to a liberal foreign investment law ratified in 2006, with incentives for foreign investors including ownership of land, a 10-year tax break and the repatriation of profits – terms more favourable than those offered by Baghdad.
Of course, Kurdistan still suffers from corruption and bureaucracy and it is still a region that operates against the backdrop of violent uncertainty and volatility. It is less than three hours away from Mosul, Iraq's most dangerous province. However, Karim Sinjari, who was head of the region's intelligence services for more than a decade before becoming interior minister, pointed out Kurdistan's insulation against terrorists who still attempt to penetrate the region's secure borders. There has been no terrorist incident since 2007.
Recent security threats have included Iranian and Turkish border shellings and incursions but these have been ongoing for a while now; they form part of a broader policy that neighbouring states have for Iraq's political and economic development. The border incidents were not even mentioned by speakers or investors. Having said this,www.ekurd.netKurdistan is still a part of Iraq and as long as uncertainty and instability prevails in Arab Iraq, that will almost definitely attach some degree of political and/or security risk to the prospect of investing in the region.
Moreover, investors yet to enter the market may also want to wait until disputes between Erbil and Baghdad are resolved, particularly where oil is concerned, lest they burn any bridges with the latter. This, however, is an issue that comes into play if one is more inclined to invest in Baghdad. As one investor remarked, it would involve waiting a long time. There seemed to be a general sense of urgency at the conference among investors who may be giving up hope on Baghdad and heading to the "other" Iraq.
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