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BAGHDAD: Iraq passed Wednesday an emergency finance bill to pay debts to Iran to ensure gas supplies and forestall worsening power cuts, as well as to buy grain for “food security”.

Parliament, which has still not adopted its budget for 2022, approved the law relating to “food security and development” totalling 25 trillion Iraqi dinars, or just over $17 billion.

Of that, $2.6 billion will be allocated to settling Iraq’s gas and electricity debts, as well as for buying further energy supplies from abroad.

About $3.4 billion will be used to buy cereals, including large volumes of wheat supplies from both the domestic market and abroad.

Iraq’s agricultural sector contracted by 17.5 percent last year “following severe droughts, energy outages, and the rising global price of inputs”, according to the World Bank.

Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet energy needs.

Neighbouring Iran currently provides a third of Iraq’s gas and electricity needs, but supplies are regularly cut or reduced, aggravating shortages caused by daily load shedding.

Iran had demanded Iraq pay $1.6 billion it owes for gas imports by the start of June to guarantee further supplies.

Payment of the debt is a key requirement to ensure energy supplies for power plants as Iraq enters the intense heat of the summer, when temperatures soar to over 50 degrees Celsius (122 Fahrenheit).

Electricity demand surges as people seek to keep cool. But in recent days, Iran has sharply reduced its gas exports.

The debt dates back to 2020, but payment was stalled amid sanctions against Iran by the United States, which mean that Baghdad cannot pay directly for energy imports in cash.

Iran has “promised to restore the needed supply of gas in the coming days”, Iraqi Prime Minister Mustafa al-Kadhemi said on Tuesday.

Iraq’s parliament has been in deadlock since elections in October.

The two Shiite blocs — a coalition led by cleric Moqtada Sadr, and its powerful rival, the Coordination Framework which includes the Iran-backed Fatah Alliance — have each claimed to hold a majority in parliament and therefore the right to appoint the prime minister.

The emergency financing bill still requires the approval of Iraqi President Barham Saleh.

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