- The Washington Times - Friday, September 29, 2006

ASSOCIATED PRESS

Iraq’s most important moneymaker — its oil industry — lost $16 billion in potential foreign sales over two years to insurgent attacks, criminals and bad equipment, a secret U.S. audit stated.

The Baghdad government “must take bold action” to protect its oil and electrical facilities, an unclassified summary of the classified audit on Iraq’s energy sector concluded.

“Iraq cannot prosper without uninterrupted export of oil and the reliable delivery of electricity,” Stuart W. Bowen, special inspector general for Iraq reconstruction, said in the summary released yesterday.

In another report, Mr. Bowen said sewage drips through the ceilings of a newly constructed building at the Baghdad Police College because of poor construction and the use of inferior plumbing materials.

Mr. Bowen released both reports as he prepared to testify before the House Government Reform Committee, which has been looking into waste and fraud in billions of dollars worth of Iraq reconstruction projects.

In addition to the estimated $16 billion loss of potential oil export revenue between January 2004 and March 2006, Mr. Bowen said Iraq also is paying billions of dollars to import refined petroleum products it needs.

The United States has invested some $320.3 million to help Iraq’s security forces better protect its oil and electricity infrastructure. And it has developed an array of plans to help the three Iraq ministries that share responsibility — Ministry of Defense, Ministry of Oil and Ministry of Electricity.

But Baghdad didn’t have a permanent government in place until recently and some ministries showed “limited initiative,” leaving Iraq with “much to do” to put the U.S. plans into action, the summary stated.

Mr. Bowen said that even if attacks ceased, criminal activity and aging and poorly maintained infrastructure would still hamper oil exports and electricity production.

The full energy report remains classified, as do U.S. figures on the number of attacks to the sector. Though the unclassified summary was released yesterday, the classified report was completed in July.

The Bush administration predicted three years ago that Iraq would finance its own reconstruction using oil revenue. Iraq, a founding member of the Organization of Petroleum Exporting Countries, has the world’s third-highest proven reserves.

But oil production slipped after the invasion and the country has struggled to resume production to prewar levels of 2.5 million to 3 million barrels a day. As of last May, production stood at about 1.9 million barrels a day, according to the U.S. Energy Information Administration.

It is estimated that in 2005, oil exports earned the country $26 billion.

In the report on Baghdad’s police academy, Mr. Bowen said his inspectors found “construction deficiencies of such magnitude” they require prompt attention.

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