Oil-for-Food Background Information
Programme Channels $61 million in Overhead Savings to Humanitarian Purchases for
Oil-for-Food Programme announced this week that $61 million in savings from its
administrative and operational costs and expenditures for phase Xll (30 May –
4 December 2002) would be redirected to the purchase of humanitarian supplies
for Iraq. This brings the programme’s total savings on administrative and
operational overheads to $272 million since September 2000.
and operational costs for the programme are funded from the ESD (2.2 per cent)
account created pursuant to Security Council resolution 986 (1995). In July
2001, the Security Council (resolution 1360) requested the Secretary-General to
have excess funds transferred from the account and applied to humanitarian
In letters to the Chairman of the Security Council’s 661 Sanctions
Committee and to the Permanent Representative of Iraq, the Executive Director of
the Iraq Programme said that $61 million saved by cost-minimizing efforts would
be transferred to the 59 per cent account for humanitarian purchases in the 15
centre and southern governorates. The Executive Director noted previous overhead
savings of $52 million (phase Vll),
$75 million (phase Vlll) and $84 million (phase X). There were no excess funds
available after phases lX and Xl due to shortfalls in oil revenues used to fund
the oil-for-food programme.
exports under the oil-for-food programme totaled 15.1 million barrels for the
week (11-17January) – an average of about 2.1 million barrels per day.
were 10 loadings from the authorized terminals: five from the Iraqi port of Mina
al-Bakr (8.9 million barrels) and five from the Turkish Mediterranean port of
Ceyhan (6.2 million barrels). These are the only outlets for Iraqi oil exports
allowed under the oil-for-food programme.
exports for the week
(15.1 million barrels) generated estimated revenue
of €398 million (euros) or $424 million, at current prices and rates of
exchange. The average price of Iraqi crude for the reporting period was
approximately €26.00 or $27.70 per barrel.
new contracts were approved by the oil overseers for the week, bringing the
current total to 101, covering 255 million barrels of oil. Estimated revenue
generated from the beginning of phase Xlll (5 December – 3 June 2003) at the
current rate of exchange, stands at $1.9 billion.
total 4,992 contracts for humanitarian supplies worth $9.3 billion processed by
the United Nations Secretariat under the Goods Review List (GRL) and new
procedures under Security Council resolution 1409 (2002), the Office of the Iraq
Programme has approved 3,600 contracts worth about $5.1 billion (55 per cent in
terms of value) after assessment by the United Nations Monitoring, Verification
and Inspection Commission (UNMOVIC) and the International Atomic Energy Agency (IAEA)
that they do not contain items on the Goods Review List.
include 1,010 contracts worth more than $1.7 billion that had previously been on
hold by the Security Council’s 661 Sanctions Committee. These have now been
reviewed by UNMOVIC/IAEA under para 18 of the procedures of resolution
total contracts, 1,201 worth about $3.6 billion (38.7 per cent in terms of
value) are on GRL Non Compliant status. UNMOVIC and IAEA will require additional
technical information from suppliers to enable final assessments.
So far, 217 contracts worth $731.6 million have
been found by UNMOVIC/IAEA to contain one or more GRL items. Of these, 103
contracts worth $232.3 million have been reviewed by the Security Council’s
661 Sanctions Committee, of which, 24 contracts worth $9.6 million have been
approved. Eleven, worth $13.3 million, have lapsed because the suppliers have
not submitted a petition within 30 working days of the denial.
Thirteen of the 103 contracts, worth $36.8 million, have been rejected
because of a “high risk of diversion to military use.” An additional 46
contracts worth $161.5 million have been denied approval by the 661 Committee,
Contracts containing GRL items represent 7.8
per cent, in terms of value, of all applications processed by the UN experts so
Humanitarian revenue shortfall
Due to a cumulative oil revenue shortfall
dating from phase VIII (9 June - 5 December 2000) through phase Xll of the
programme, 2,371 UN-approved humanitarian supply contracts worth some $4.3
billion, currently lack funds. The sectors affected by the revenue shortfall
are: agriculture ($676 million); food handling ($596 million); electricity ($467
million); health ($515 million); water and sanitation ($469 million); housing
($454 million); food ($421 million); telecommunications and transportation ($351
million); education ($329 million).
oil-for-food programme was established by the Security Council on 14
April 1995. Some 3.3 billion barrels of
Iraqi oil valued at about $61.7 billion have been exported under the programme
since December 1996. Of this amount, 72 per cent of the total has been allocated
towards humanitarian needs nationwide since December 2000. The balance goes to:
Gulf War reparations through a Compensation Fund (25 per cent since December
2000); UN administrative and operational costs for the programme (2.2 per cent)
and costs for the weapons inspection programme (0.8 per cent).
December 1996 about $41 billion worth of humanitarian supplies, including $3.6
billion worth of oil spare parts, have been approved by the 661 Sanctions
Committee and the Office of the Iraq Programme. Of this amount, some $26 billion
worth of humanitarian supplies and equipment have been delivered to Iraq under
the oil-for-food programme, including $1.6 billion worth of oil industry spare
parts and equipment. An additional $10.5 billion worth of supplies are currently
in the production and delivery pipeline.
Produced for media and public
information – not an official United Nations Document