Iran signed a two-year agreement with neighbouring Iraq to export electricity as Baghdad struggles to add power capacity following months of political deadlock and an ongoing health crisis.

"We signed a contract with Iraq for exporting electricity in 2020 and 2021,” Iranian energy minister Reza Ardakanian said following his visit to Baghdad on Wednesday, in comments reported by Iran’s official news agency Irna.

"With coordination of the Iranian embassy in Iraq, half of the disbursement worth $400 million (Dh1.47bn) was received during the trip,” he added.

Rebuilding Iraq's power infrastructure, damaged by decades of war, is high on the government’s list of priorities. A crippled utility network has been a key factor behind protests across Iraqi provinces during summer months, when temperatures can easily reach 50°C, occasionally requiring government-mandated holidays to cope with the extreme weather.

US Secretary of State Mike Pompeo announced a 120-day waiver in May for Baghdad to continue importing electricity from Iran.

This followed an earlier temporary waiver in April granting continued imports of Iranian electricity.

Iraq's electricity rehabilitation programme, which relies on multinational companies to rebuild damaged utilities, develop new schemes and tackle persistent gas flaring, has dragged following geopolitical tensions earlier this year between the US and Iran, in which Baghdad was caught in the crossfire.

Iraq also plans to import electricity from neighbouring Jordan as well as from the regional GCC Interconnection Authority grid.

The National