Bulletin 1 2004 UNJLC Iraq
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1. Reactivation
UNJLC, having served the humanitarian community dealing with the situation in Iraq for much of 2003 and into early 2004, has now been reactivated after a hiatus of several months for the latest phase of humanitarian operations dealing with Iraq. This phase will see the transition in Iraq from rule by the Coalition Provisional Authority to a sovereign national government.
Although humanitarian operations are greatly affected by the prevailing security situation, they are nonetheless continuing at a significant level, with emphasis on the most vulnerable groups. A most important part of that work includes assisting in the capacity building of indigenous Iraqi institutions.
2. Transport Corridors
The most important transport corridor into Iraq continues to be the southern one with access from the Arabian Gulf through the ports of Umm Qasr, Khor Al-Zubayr and the lesser ports on the Al-Faw Peninsula and Shatt Al-Arab waterway, supplemented by overland transport from Kuwait. This corridor is followed in importance by the land routes from Jordan in the west, and Turkey in the north. A new land route is expected to emerge from Saudi Arabia.
Umm Qasr Volumes
Monthly volumes of general cargo and bagged food commodities passing through Umm Qasr are estimated at:
|
Vessel or cargo type |
Estimated |
Notes |
| Container vessels | 31,300 | Average number of containers, January to April, 2,978 at 10.5 tonnes ea. |
| Roll on/ Roll off (RoRo) | 11,700 | SSA statistics. 768 Mafi trailers at 15.25 tonnes per trailer |
| Other breakbulk cargo | 7,600 | Average, January to April |
|
Dhows/ small vessels |
34,000 | SSA estimates. 68 calls January to March, at 500 tonnes per vessel |
| Total general cargo | 84,600 | |
| Bagged food commodities | 95,500 | Average, January to April, at least 80% of which is rice |
| Total general & bagged | 180,100 |
Imports of cars are excluded from the above volumes but have been averaging about 2,900 units per month. These are generally carried on RoRo vessels or ferries but many will now be passing through Khor Al-Zubayr and the smaller Shatt Al-Arab port of Abu Flous. The importation of cars is likely to be at or nearing its peak as the market is becoming saturated.
Bulk grain is also excluded from the above as it is handled by a different entity.
Handling capacity seems to be increasing at Umm Qasr as the turnaround time for container vessels has fallen in recent months. However, the volumes actually handled appear to be in decline. The container trade peaked in February at 3,799 TEU’s (Twenty-foot equivalent units), dropping back to about 2,700 in March and April. It is generally assumed that much of the reduction is in cargos delivered under the oil-for-food programme, with any increase in commercial goods imports not quite compensating for this drop.
2. Transport Corridors (cont’d)
Management of Southern Ports
The existing management contracts for Iraq’s main port of Umm Qasr and the nearby but smaller Khor Al-Zubayr, held respectively by Stevedoring Services of America (SSA) and on a de facto basis by A.P Moeller-Maersk, will expire with the transfer of sovereignty to an Iraqi government on June 30th, 2004.
The Iraqi Ports Authority, according to Director-General Mahmoud Salih Abdul Nabi, intends to issue a list of prequalified bidders and invite tenders for contracts to manage these ports in July, and to conclude the contracts by September. Both SSA and Maersk have been requested to continue operating the respective ports at least during the interim period. It is expected that both companies will do so and that operations will continue uninterrupted.
It is understood that in the interests of maintaining competitiveness, and avoid a monopoly situation, no contractor will be allowed to run both ports.
Further information is available from:
http://www.cpa-iraq.org/business/DABV01-04-R-0062_Umm_Qasr_RFP_23_05.pdf
http://www.cpa-iraq.org/business/DABV01-04-R-0063_Khor_Az_Zubayr_RFP_23_05.pdf
Jordan Corridor
The Jordon corridor, which generally carries cargos landed at the Red Sea port of Aqaba through the Karama-Trebil Jordan-Iraq border, witnessed traffic of about 880 trucks per day in late May.
Saudi Arabian Corridor
Reports indicate that the Ar’ar crossing point between Iraq and Saudi Arabia (located roughly equidistant between the Kingdom’s borders with Jordan and Kuwait, will reopen for commercial traffic in early June. This has the potential to significantly decrease the cost of commodities imported into Iraq from western parts of Saudi Arabia, rather than having to transit Jordan or Kuwait as they do now, and to facilitate greater Saudi involvement in reconstruction and humanitarian activities.
Significantly, the opening will enable implementation of a contract for 100 trucks per day of refined fuel product (about 3.6 million litres per day) exports from Saudi Arabia, thus alleviating the shortage of fuel products and providing a further source of supply in addition to Kuwait, Jordan, Turkey, Iran to a lesser extent, and maritime imports.
Other Corridors: Kuwait and Turkey
Limited firm information is available on these two important corridors but they seem to be operating satisfactorily. The Kuwait corridor is, however, affected by the security situation in the south, with very high rates for trucks to Basra. Iraqi trucks are not permitted inside Kuwait; all vehicles crossing into Iraq are generally from Kuwait, Saudi Arabia, or the UAE. Once goods reach Basra, local transporters generally take over haulage, with lower rates. The efficiency of the Turkish corridor has been affected by heavy congestion at the border for outgoing traffic from Iraq. The priority given to military vehicles has resulted in lengthy waiting times for all other traffic.
3. Procurement and Supply Chain Monitoring
Iraqi ministries are gradually assuming responsibility for procurement of good previously handled by the UN’s Office of the Iraq Programme and the CPA. Tender documents are available on the CPA website at http://www.cpa-iraq.org/business. It is understood that each ministry will eventually have their own portal.
In late April, the CPA invited tenders for a 24 hour-a-day, 7 day-a-week Operations Centre/ Logistics Movement Centre to monitor and control the estimated US$3.2 billon in supplies and equipment destined for importation into Iraqi in support of reconstruction and rehabilitation projects. The successful bidder will be expected to provide logistics analysis for all aspects of the supply chain into Iraq.
4. Oil-For-Food Programme Deliveries
Prior to the termination of the Oil-for-Food Programme (OFFP) in November 2003, under UN Security Council Resolution 1483 of May 2003, a total of 2937 contracts representing a value of some US$6.5bn had been prioritised, with most of these amended according to circumstances prevailing in the period following cessation of hostilities in April 2003. Of these 2937 contracts, an estimated 800 have been fully delivered to date and a further 700 have been partially delivered.
Of the remaining 1500 contracts on which no deliveries have taken place, many suppliers may no longer wish to honour the contracts. Although the wind-up period for the OFFP extended for six months from May through November 2003, most suppliers and UN agencies had limited time at the end of this period to amend their contracts. Many experienced a bottleneck at the UN Treasury and suppliers may have made a commercial decision to decline the business. Numbers are uncertain, but it appears that OFFP deliveries will not place a significant burden on Iraq’s transport system in the coming months.
Under the OFFP, a supplier could not be paid for a contract delivered into Iraq without the authentication of the Office of the Iraq Programme’s independent inspection agent, Cotecna, at the entry point. This arrangement was extended through to June 30th, 2004, but Cotecna’s contract will expire on that date. A tender is being prepared to allow for continuation of this service. Further information is available on http://www.un.org/Depts/oip/background/ latest/bvs031119.html.
5. Aviation
Coalition Forces air traffic controllers currently serving at Baghdad International Airport will cede control of civil air operations to Iraqi controllers in early June with full transition from military to civil control expected later this year. In the interim, the Coalition will maintain control over military air traffic and the airspace surrounding Baghdad airport.
Regular civilian air services have not been restored in Iraq, although a scheduled service does operate from Amman to Baghdad, and contractors’ flights regularly serve Baghdad.
6. Fuels
The fuel supply situation in Iraq has remained tenuous over the past six months. The decline in seasonal winter demand for kerosene has been offset to a great extent by increased demand for gasoline with several hundred thousand additional vehicles imported over the past year on the road, and a continued high demand for diesel for electricity generators, given erratic supplies from the national grid. A lower level of gasoline production in late May led to a surge in black market prices in Baghdad and several other key locations to levels not seen since earlier this year.
Domestic production of refined products continues to meet no more than 60% of national fuel needs, with most of the balance of demand made up from imports administered by the U.S. Defense Energy Support Centre and by Iraq’s own State Oil Marketing Organisation (SOMO). Security constraints and sabotage, a lack of sustained electrical power, a continuing shortage of spare parts, and administrative and managerial difficulties at refineries and other facilities continue to prevent any significant and sustained increase in the level of production. The Iraqi Ministry of Oil is reported to have 14,000 men engaged on facilities protection work, perhaps the largest non-military security force in the country.
With Iraq likely to be dependent on fuel imports for the foreseeable future, perhaps even for several years, one encouraging development has been the increased involvement of SOMO in managing imports. Volumes brought into the country by SOMO have increased in both absolute and relative terms, suggesting that they may, in time, assume full responsibility from the Coalition for imports.
Two of Iraq’s three major refineries performed reasonably well over recent months, given their generally poor state of repair and reinvestment. The largest, Baiji, processed about 190,000 barrels per day (bpd) out of its design capacity of 280,000 bpd. The second refinery, Basra, is processing around 100,000 bpd against a design capacity of 180,000 bpd. The smallest and oldest of the three refineries, Daura, in Baghdad, has been experiencing a range of difficulties. It is unclear whether these are technical in nature, or whether the sabotage to pipelines, and the security situation, has prevented crude from being transferred to the facility for processing.
Black market prices continue to be ten to fifteen times the official price, especially in Baghdad where demand is high and fuel has to be transported into the city, given the problems with Daura refinery. Availability of fuels varies widely across the country but shortages have been reported especially in the middle and upper south. The situation is expected to worsen with the onset of summer. Given that restoration of electrical power has not progressed as anticipated, increased demand is expected for diesel and gasoline to run neighbourhood and domestic generators for airconditioning and refrigeration.
One of the most crucial issues from a humanitarian perspective is the supply of LPG, used for cooking. The overall level of domestic production has not improved in recent months and still stands at around one third of requirements. Imports are at a relatively low level, perhaps meeting another 20% to 25% of demand. It is expected that the LPG shortage will continue indefinitely until the production facilities can be properly refurbished and brought up to capacity.
Increased imports from Saudi Arabia, with the opening of the Ar’ar border point, may provide Iraq with an additional and alternate source of fuel imports. Increased imports are also expected from Turkey.
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|
Iraqi Dinars per litre for gasoline, diesel and kerosene; Iraqi Dinars per standard bottle for LPG | |||||||
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|
Gasoline |
Diesel |
Kerosene |
LPG | ||||
|
|
Official |
Unofficial |
Official |
Unofficial |
Official |
Unofficial |
Official |
Unofficial |
|
Baghdad |
20 |
200 |
10 |
150 |
10 |
40 |
250 |
1000 |
|
Erbil |
20 |
35 |
10 |
60 |
10 |
35 |
250 |
1000 |
ABOUT UNJLC
UNJLC is an inter-agency facility reporting to the Humanitarian Coordinator for Iraq and generally to the Inter Agency Standing Committee. Its mandate is to coordinate and optimise logistics capabilities of humanitarian organisations in large scale emergencies. UNJLC operates under the custodianship of WFP that is responsible for the administrative and financial management of the unit. UNJLC is funded from voluntary contributions that are channeled through WFP. The UNJLC project document for Iraq can be viewed at the UNJLC website (www.unjlc.org).
