The National Iranian Gas Company (NIGC) says it decided to reduce supplies to the neighboring Iraq after debts owed by the Arab country accumulated to over $6 billion.

In a Monday statement, the NIGC said it had decreased natural gas supplies to Iraq after issuing repeated warnings to the Iraqi ministry of electricity about unpaid bills.
�The Iraqi ministry of electricity owes equivalent of more than $5 billion to the NIGC of which a sum of $3 billion has remained frozen in the Trade Bank of Iraq and over $2 billion in matured debts have yet to be paid by the ministry,� said the statement.
It said that the Iraqi side also owes more than $1 billion to Iran over fines accrued on its debts.

�The export of gas to Iraq by the NIGC is a commercial and economic issue the Iranian side has gained almost nothing while being owed over $6 billion,� said the NIGC.

The statement came a day after the Iraqi electricity ministry said that large cities in the Arab country may face serious power shortages because Iran had slashed gas supplies to its power plants.

A ministry spokesman said on Sunday that Iran�s gas supplies to Iraq had been reduced to five million cubic meters (mcm) from 50 mcm per day, adding that Tehran was planning to further reduce the supply to 3 mcm per day because of unpaid bills.

The NIGC said that Iran needs the money gained from gas exports to pay for food and medicine purchases at a time the country is under a series of illegal American sanctions which restricts its access to hard currency.

�Given this, the company has decided to reduce the supply of gas exports based on the terms of the (mutual) contract and after issuing repeated contractual warnings that were unfortunately ignored by the Iraqi side,� said the Iranian company.