The Iraqi government will free $125 million in debt to Iran to pay for Iran's Covid-19 vaccine order, Iranian Energy Minister Reza Ardakanian said.
"The money will be transferred through a Swiss bank to the Covid Vaccination Global Access (COVAX) program for 16 million doses," Ardakanian said.
Backed by the World Health Organization and the Global Alliance for Vaccines and Immunization, the initiative aims to distribute 2 billion vaccines by the end of 2021.
The Iranian minister said money transfer is expected to be completed within a week.
In December the National Iranian Gas Company said Iraq owes more than $6 billion in unpaid energy bills. The debts include $2 billion in arrears and $1 billion in contract violations.
Iran exported 65 billion kilowatt-hours of electricity to Iraq since 2005 worth an estimated $6.2 billion.
Iraq is the biggest importer of electricity from Iran. It needs more than 23,000 MW (per day) to meet growing domestic demand. Besides electric power, Iraq also depends on Iranian gas for its power plants.
COVAX delivered 1.452 million shots of the Italian-manufactured AstraZeneca jabs to Iran last week, taking the total vaccines given by the global organization to 2.23 million, out of the 16.8 million COVAX it has agreed to deliver.
Iran has administered 3.8 million jabs since the start of the national inoculation drive.