Erbil, Kurdistan Region, Iraq (cabinet.gov.krd) – In a statement for the Kurdistan Regional Government website, KRG Spokesperson Safeen Dizayee responded to the statements of Iraqi Prime Minister Mr. Haider al-Abadi during his Tuesday, January 2nd, press conference.

Below is the text of the statement:

Prime Minister Haider Al-Abadi during his press conference on Tuesday, held after the meeting of the Iraqi Federal Government Council of Ministers, mentioned a number of topics related to the production rate and sales of the Kurdistan Region’s oil, salaries, and other issues related to the Kurdistan Region.

There have been many national and international calls for the start of dialogue to resolve outstanding issues between the Kurdistan Regional Government and the Federal Government of Iraq. During the past week, we noted positive indicators and an improved atmosphere from Baghdad to begin dialogue, as well as the visit of a delegation from the federal govenment to the Kurdistan Region.

Prime Minister al-Abadi, however, in his press conference and in a language that does not serve to promote a positive environment, presented a range of inaccurate information about a number of issues pertaining to the Kurdistan Region.

We believe that serious dialogue is the right way to find solutions for all outstanding issues, not through media statements that have been going on for almost three months without producing any benefit. Prime Minister al-Abadi, for the second time, has addressed the production, sale, and export of oil from the Kurdistan Region with inaccurate numbers. Therefore, we find it necessary to make some points clear:

1. After the Iraqi Government cut the budget of the Kurdistan Region in early 2014, the Kurdistan Regional Government began exporting oil and since that date until today,  Kurdistan Region oil exports helped ensure payment of salaries of regional employees.

2. Salaries paid without cuts during the years 2014 and 2015 came from oil sales and domestic revenues, and then in 2016 and 2017 the system of saving salary amounts began. The amount of 12,077,764,000,000 Iraqi dinars for salaries were all paid from these revenues.

3. Prime Minister al-Abadi said that in October 2017, the Kurdistan Region exported on average 450,000 barrels per day, while everyone knows that after the events of October 16th 2017 the oilfields of Avana and Bai Hassan, which together produced 250 thousand barrels per day, fell under the control of the Iraqi Government and the North Oil Company.  As a consequence, the revenues of the Kurdistan Region were decreased by half.

4. After 16 October 2017 until the end of 2017, total oil exports from the Kurdistan Region averaged 265,970 barrels per day, which was not sold at the Brent price. Thus, revenue did not reach 2 trillion dinars, as claimed by Prime Minister al-Abadi.

5. The KRG Ministry of Natural Resources has issued monthly reports of oil sales and revenues from 2014 until the end of 2016. Since the beginning of 2017, a worldclass financial services company, Deloitte & Touche, assumed full audit of the process of oil sales and soon will produce a report for the first half of 2017. The numbers that Prime Minister al-Abadi pointed out have not been checked and, therefore, they are questionable as since 2016 onward Iraq’s membership in the Extractive Industries Transparency Initiative (EITI) has been suspended due to noncompliance with EITI transparency conditions and measures.

6. Total monthly cost of the KRG payroll is more than 850 billion Iraqi dinars. Even after the implementation of the forced salary saving system, the cost has come to around 600 billion Iraqi dinars. However, Prime Minister al-Abadi said that the total KRG payroll amount is only 300 billion Iraqi dinars. Monthly revenue of oil sales for the Kurdistan Region for the fourth quarter of 2017 is estimated around 544 billion Iraqi dinars according to the Brent price, though neither Iraq’s nor Kurdistan’s crude oil are sold at the Brent price. We do not know where Prime Minister al-Abadi has gotten such incorrect data and how he can confirm them.

7. The comparison of the cost of production of crude oil in the Kurdistan Region against Iraq by Prime Minister al-Abadi is incorrect and unfair when he stated that the cost of production of one barrel of crude oil in Iraq is 11,000 Iraqi dinars. Prime Minister al-Abadi knows well that the type of contracts for oil production in the Kurdistan Region is Production Sharing Contract, PSC, not Service Contracts used in decades-old established oilfields in Iraq. Besides, in the Iraqi draft budget law of 2018, an astronomical amount of 28,770,000,000 Iraqi dinars has been allocated to the Ministry of Oil and the oil companies operating in Iraq, whereas nothing has been allocated for the companies operating in the Kurdistan Region that has been obliged to export 250,000 barrels of crude oil per day.

8. In the draft budget law of 2018, the amount of obligatory monthly payments for salaries, pensions, etc. in the Kurdistan Region has been set at 334 billion Iraqi dinars. This covers only half of the real monthly salaries of payroll recipients. The same allocation in the Iraqi budget law of 2017 was 497 billion Iraqi dinars. Although no change in numbers of the KRG employees has occurred, the proposed reduction of salary payments in the draft budget law of 2018 has yet to be explained.

9. In addition to the budget cut by the Iraqi Government since 2014, the Ministry of Oil has stopped sending the share of kerosene for distribution to citizens of the Kurdistan Region, which has been a regular practice throughout the country. While the citizens of the Kurdistan Region require 300 million liters of refined oil products, the Iraqi Government has sent only 30 million liters. Also, farmers of the Kurdistan Region have not received their dues from the Iraqi government for their harvest sold to the Iraqi Government from 2014 to 2017. The amount of 733 billion Iraqi dinars due to farmers is accrued but not yet paid by the Iraqi Government.

10. Regarding medicine support according to past practice throughout the country, from 2015 until now the Kurdistan Region has not received its full share of allocated medicines. The support provided by Iraq attributed to only 60 percent of what should have been received,  despite a population increase of two million displaced people fleeing to the safety and security of the Kurdistan Region.

11. With regards to paying salaries of certain directorates such as the Directorate of Dams, the Directorate of Nationality and also the Directorate of Residence, these are federal agencies according to the Iraqi Constitution. Their salaries are directly covered by the Iraqi Government and the number of employees in the Directorate of the Dams for instance is a mere 429 employees with salaries amounting to 389 million Iraqi dinars.