Power, water, hospitals, transport and municipal services in Iraq all compete for a federal budget that remains overwhelmingly oil-funded. Public-Private Partnerships in Iraq are therefore attractive in principle, whether as BOT structures, availability-payment projects or management contracts for existing assets. The obstacle to Iraq PPP projects is rarely appetite; it is legal architecture.
The Current PPP Landscape
Federal Iraq has no comprehensive PPP statute. A federal PPP bill received a first reading in Parliament in 2022 and was resubmitted by the government in 2025. At the time of writing, we have not identified an enacted text in the Official Gazette, and its status should be confirmed before any project relies on it.
This is not a legal vacuum. PPP-style projects can be structured through Council of Ministers Instructions No. 1 of 2024, Investment Law No. 13 of 2006 (as amended), Government Contracts Instructions No. 2 of 2014, sector legislation and the project contract. What is missing is a statute connecting these elements. No single law tells a sponsor which authority may contract, how procurement must run, what lenders may do or what is payable on early termination.
Structuring therefore begins with project-specific questions. What is the contracting entity’s statutory authority, and what is its approval chain? Which procurement route applies, and who holds the land? Is an Investment Licence available? Who pays, how is the project financed, and where will disputes be decided?
The 2024 Instructions
The Instructions of Investment and Partnership between Centrally Funded Entities and the Private Sector were issued by the Council of Ministers under Federal Budget Law No. 13 of 2023 and published on 29 April 2024. They apply to budget-funded entities and exclude security, defence and sovereignty projects. Under them, an entity may contract either under the Investment Law or through the models in Article 5: service contracts; management and lease contracts of three to five years, renewable only with Council of Ministers approval; and ten longer-term models, including BOT, BOOT, DBFO and ROT.
The choice of model is not cosmetic. A management contract for an existing hospital involves limited capital expenditure and a short tenor. A BOT hospital requires land, construction financing, a long operating period and a reversion mechanism. An availability-payment road depends almost entirely on the paying ministry’s budget. The same Instructions govern all three, but the approvals, risk allocation and bankability differ materially.
Before tendering, the contracting entity must hold a detailed feasibility study, an updated cost estimate and a land allocation free of legal or financial obstacles (Article 6). A Ministry of Planning committee then has 30 days to review the project against the investment budget and development priorities (Article 7). Procurement follows the methods in Instructions No. 2 of 2014, preceded by a competitive dialogue (Article 9). Every contract requires a Council of Ministers decision (Article 5), and the Council also determines the public entity’s profit share (Article 17).
One caveat is fundamental. The Instructions rest on a budget law covering 2023 to 2025, and no 2026 budget has been enacted. Although the Ministry of Planning was training officials on them in 2025, there remains uncertainty as to whether they operate beyond the budget cycle that authorised them. The position should be confirmed in writing for the particular project.
Where the Investment Licence Fits
Iraq Investment Law No. 13 of 2006 is not a PPP statute, but it interacts with PPPs at several points. Article 33 extends it to public-sector projects contracted to the private sector for operation, establishment or rehabilitation. Article 10 permits agreed reversion of the project to the State at the end of the licence, which is the basis of licence-based BOT structures. It also allows the project to be transferred to another investor, with approval, once 40% is complete.
A licence can materially improve project economics. It carries a ten-year tax and fee exemption from commercial operation (Article 15), customs exemptions on project assets (Article 17), repatriation rights subject to Central Bank of Iraq instructions (Article 11), expropriation protection (Article 12) and protection against retroactive amendment of the Law (Article 13). The National Investment Commission licenses strategic federal projects, and provincial commissions license the rest (Articles 4 and 5). Projects above USD 250 million need Council of Ministers approval (Article 7). The two routes can be combined, because Article 5 of the Instructions allows the Council of Ministers to grant a partnership contract an Investment Licence.
An Investment Licence is not the PPP. Article 19 requires all other licences as well. Article 10 separates the project contract, concluded with the sector authority or commission, from the land contract, concluded with the landowning authority. A bankable Iraqi PPP combines the project agreement, licence, land agreement, corporate vehicle, sector licences, environmental and construction approvals, procurement approval, Council of Ministers approval and a financing package. Each has its own counterparty and failure point.
From Concept to Financial Close
Typically, the project is identified and the contracting entity’s authority confirmed. Feasibility, land due diligence and Ministry of Planning review follow, then procurement, preferred-bidder negotiation, licensing, Council of Ministers and sector approvals, financing and financial close. The order varies by sector and authority.
The Investment Law deems a sector authority’s silence for 15 days to be approval (Article 20). In practice, other agencies rarely rely on deemed approvals, and timetables routinely exceed statutory periods. Lenders will treat every material approval as a condition precedent, so long-stop dates must reflect administrative reality rather than statute.
Bankability and Risk Allocation
Payment risk comes first. A centrally funded entity pays from budgetary authority in each year. In 2026, without an enacted budget, spending proceeds under the one-twelfth mechanism of Federal Financial Management Law No. 6 of 2019, which constrains new commitments. A contractual payment obligation is only as bankable as the legal and budgetary authority behind it.
The Instructions permit financing in convertible foreign currency (Article 3), but repatriation remains subject to Central Bank instructions. Government-contract payments have largely been made in dinars in recent years, and current rules should be confirmed for each project. Sponsors with dollar debt should model conversion risk explicitly.
On land, the project company typically receives a lease or musataha right of up to 50 years (Article 10), not ownership, and the asset reverts at expiry. Whether that interest can be mortgaged to lenders, and on what registration, must be confirmed for the particular title. Land held by another ministry or municipality requires its separate consent. Council of Ministers approval is not a substitute for land title.
Article 13 protects only rights granted under the Investment Law. Tax, customs and sector regulation fall outside it. Article 146(2) of the Civil Code permits a court to reduce obligations made excessively onerous by exceptional events, but that is judicial relief, not compensation. Change-in-law and government-action protections, covering permit failures, regulatory delay and interference, must be drafted into the contract.
On termination, Article 15 of the Instructions allows the public entity to terminate for unauthorised assignment, forgery, corruption or damaging non-performance, and to claim damages. The private partner may terminate only for a breach that makes performance impossible, after exhausting dispute resolution. No compensation formula exists unless the contract creates one and a funding source supports it.
Lenders, Security and Step-In
Iraqi legislation does not itself provide direct agreements, lender step-in, cure rights or a receivables security regime for PPPs. The Investment Law offers something narrower. Where a project stops because of a third-party dispute, a lender may, before liquidation, ask the licensing commission to replace the investor, and the commission decides at its discretion (Article 27). That is a substitution request, not a step-in right.
Because unauthorised assignment is a termination ground, lender assignment and step-in need express written consent, ideally in a direct agreement signed by the contracting entity and covered by the Council of Ministers approval. Security over public receivables and land interests remains uncertain and may depend on consent and registration.
Dispute Resolution
Under the Instructions, disputes fall within the jurisdiction of the Iraqi courts. Conciliation is available, and arbitration requires Council of Ministers approval (Article 12). The Investment Law separately permits agreed national or international arbitration (Article 27). Iraq’s accession to the New York Convention, in force since 9 February 2022 and subject to reservations, has improved the enforceability of foreign awards.
Arbitration wording is not enough. The investor must confirm that the counterparty had authority to arbitrate and that every required approval was obtained, or the award becomes vulnerable at enforcement. Enforcement against public assets remains a practical question as much as a legal one.
What Makes an Iraqi PPP Work
Iraqi PPPs are achievable when legal authority, procurement, the Investment Licence, Council of Ministers approvals, land, the payment mechanism, sector regulation, financing and security, dispute resolution and the implementation timetable are deliberately aligned. Elsewhere, a PPP statute performs much of that alignment. In Iraq, the legal architecture must do it, and its quality decides whether a signed contract becomes a financed, operating project.
