RE: The Update My Response23 Jan 2025 11:49
HTTps://x.com/KurdistanWatch/status/1882388480765927464
The Iraqi government has rejected amendments proposed by the parliamentary finance committee to the budget law concerning KRG oil production costs and introduce a clause requiring all KRG oil and gas revenues—whether from domestic or international sales—to be transferred to the Iraqi treasury.
In an official communication to parliament, Ahmed Abdulzahra Fatlawi, the government's parliamentary liaison, stated: "The federal government opposes the proposed amendment as it would effectively reduce federal treasury revenues compared to the existing framework, contradicts standard practices implemented across Iraq under the current Financial Management Law, and conflicts with SOMO's established oil marketing and revenue collection protocols, which mandate direct transfer of all proceeds to the Ministry of Finance's oil and gas account."
The core dispute centers on two distinct approaches to handling oil revenues: The federal government's position mandates that all oil revenues be transferred in full to the federal treasury through SOMO's established mechanisms, with production costs to be reimbursed through separate administrative channels. In contrast, the parliamentary committee's proposal would allow production costs to be deducted at source before revenue transfer - a mechanism the government considers problematic as it could circumvent SOMO's oversight and potentially enable unauthorized deductions.
To resolve this impasse, the government has proposed alternative language: "All revenues generated from oil, its derivatives, and gas sales, whether domestic or international, must be remitted in full to the federal treasury as final revenue without any pre-transfer deductions, in accordance with the standardized procedures applied across Iraq and as stipulated in the amended Financial Management Law No. (6) of 2019, with fair cost assessments to be calculated separately."
While the federal government has provisionally agreed to increase the KRG's per-barrel production cost allowance in the budget amendment bill from $6 to $16 for a 60-day period - pending an independent assessment by an international auditor - the bill has stalled in Parliament due to ongoing disagreements over technical and procedural details.
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