Iraq Postpones Budget on Account of Kurdistan Dispute

The Iraqi parliament has postponed a vote on the country's 2013 budget, running at $117.5 billion, as lawmakers differ on whether Baghdad should allocate money for companies working in the country's Kurdistan region in the north, lawmakers said Tuesday.

The Kurds have suspended crude oil exports via the Baghdad-controlled export pipeline since December last year, protesting delays in payment to producing companies in the region. Even in November, the Kurds didn't reach the level of 250,000 barrels a day in exports as agreed upon with Baghdad.

"There is no agreement and the vote on the budget has been postponed to an indefinite time," Mahmoud Othman, a leading parliamentarian from the Kurdistan alliance in the federal parliament, told Dow Jones Newswires. The main reason is that the budget hasn't allocated enough money for paying companies exploring for oil and gas in Kurdistan, Mr. Othman added.

The Kurds want the budget to include some 4.2 trillion Iraqi dinars ($3.5 billion) as payments due to oil companies working in the Kurdish region. The Kurds said that this amount would cover retroactive payments from 2010 up to 2013.

Meanwhile the Iraqi Prime Minister Nouri al-Maliki's bloc in the parliament, the State of the Law, is arguing that the Kurds should first pay for the 250,000 barrels a day they have failed to export from November up to now, said Ibrahim al-Mutlaq, a member of the parliament's finance committee.

The central government in Baghdad has made one payment to companies, but Iraqi officials said last year that they wouldn't pay oil firms a second portion because the Kurdistan Regional Government has failed to reach agreed production under an agreement reached in September.

The KRG further annoyed Baghdad when it started unilateral exports of more than 15,000 barrels a day of oil and condensate via trucks to Turkey at the beggining of January and pledged to increase them gradually. The Kurds also plan to set up their own export pipeline away from the Baghdad-controlled one.

Baghdad paid some IQD650 billion last year to companies but decided to suspend payment of another portion of IQD350 billion because the Kurds suspended exports.

Mr. Othman also said there is disagreement over what percentage of the budget should be allocated to Kurdistan spending. Over the last few years, the national budget has allocated some 17% of spending to Kurdistan assuming that the population in the region makes up some 17% of Iraq's total population.

"Many lawmakers argue that some 17% of budget to Kurdistan is too much and should be made less," Mr. Othman said, adding that the Kurds would accept a fresh population census to determine the percentage but not now as it would delay the budget further.

The KRG and Baghdad are locked on dispute over who should control oil in the Kurdistan region. Baghdad considers scores of oil deals signed with companies such as Exxon Mobil Corp., Total SA, Gazprom Neft, DNO International ASA and Genel Energy PLC as null and void because they haven't been approved by the central government, while the Kurds argue that they are legal according to the new constitution.

Also there is disagreement over the defense ministry budget, said Mr. al-Mutlaq, a member of the Al-Iraqiya bloc led by former prime minister Ayad Allawi, an opponent of Mr. Maliki.

"The Al-Iraqiya bloc has also asked to deduct some IQD2 trillion from the defense ministry budget and transfer it to families who were affected by recent floods along the river Tigris," Mr. Ibrahim said. "We think that the defense budget is too much," he added.



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