Basra private oil firms protest dollar-denominated payments paid in dinars

BASRA, Iraq — Private companies operating in Basra's oil sector have protested being paid in Iraqi dinars for dollar-denominated receivables under their contracts, instead of receiving U.S. dollars. Aziz al-Khalidi, speaking on behalf of the companies, said work under licensing rounds is contracted in dollars, but payments are processed in dinars through the Trade Bank of Iraq and private banks at the central bank's official rate of 131,000 dinars per $100. Al-Khalidi said the gap with the market rate, where $100 trades at roughly 155,000 dinars, has left the companies absorbing losses above 20%, a level he said matches their expected profit margin. He added that the Central Bank of Iraq has issued three separate dollar allocations to cover the gap: two earlier tranches of $70 million each, totaling $140 million, were suspended after one or two months, followed by a $30 million allocation whose payments were halted and extended for only one more month. According to al-Khalidi, most companies can no longer absorb the currency loss and have cut staffing on oil projects by up to 80%. He warned that unless a mechanism is established to guarantee dollar payment of receivables, work under the licensing rounds could halt and further layoffs could follow.