At a Glance

• Delays in Baghdad’s release of petrodollar funds have halted public service projects in Kirkuk.
• The Baghdad Garage underpass project has stopped at 60% completion over unpaid contractor dues.
• Only five of 13 petrodollar-funded projects have reached the final stage, while eight remain unfinished.

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A delay in releasing petrodollar funds from Baghdad has disrupted infrastructure projects in Kirkuk. Contractors say unpaid financial entitlements have forced them to suspend work on several projects across the city.

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Key Statements and Focus Area

• Funding Shortfall: According to contractors, more than 35 billion IQD in financial obligations remain unpaid by the government. Although 100 billion IQD was allocated to the petrodollar fund, only 35 billion IQD has been received by contractors.
• Baghdad Garage Project: Work on the Baghdad Garage underpass and overpass project has also stopped. The project was around 60% complete, but construction was suspended after 9 billion IQD in payments remained outstanding.
• Project Completion: Only five of 13 petrodollar-funded projects have reached final completion, while eight remain unfinished. — Kirkuk Contractors Union.

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The delay in releasing petrodollar allocations has left contractors facing a growing liquidity shortage and disrupted a number of strategic and public service projects in Kirkuk.

Thirteen projects funded through the petrodollar system were launched last year. Five have reached the final stage, while eight remain unfinished.

The Kirkuk local administration and Provincial Council have attributed the funding shortage to a decline in national oil sales, which has reduced available financial resources.

Mohammed Hafidh, Chairman of the Kirkuk Provincial Council, said the council has repeatedly sent urgent requests to Baghdad for the province’s financial entitlements.

According to Channel8’s tracking, only 11 billion IQD has recently reached Kirkuk. The amount is insufficient to settle contractors’ outstanding claims or restart the suspended projects.

The suspension of construction has also contributed to traffic congestion in several parts of the city.

FYI

The Iraqi petrodollar allocation program, originally established by the federal government under Law No. 21 of 2008 to return 5% of regional oil and gas revenues back to producing governorates, has long served as a fiscal flashpoint between Baghdad and oil-rich provinces like Kirkuk.

Intended to empower local administrations by letting them fund public services and independent infrastructure developments directly, the statutory mechanism frequently breaks down during macroeconomic crises. The current 2026 financial squeeze on Kirkuk's infrastructure stems directly from severe declines in national oil export revenues, which were heavily restricted earlier this year during regional trade disruptions.

With the central treasury utilizing rigid emergency spending mechanisms to manage federal deficits, non-salary budgetary transfers like petrodollar packages are frozen first. This systemic liquidity gap leaves municipal authorities unable to cover outstanding invoices for large-scale engineering firms, directly translating into abandoned underpasses and gridlocked local streets.

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