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BAGHDAD -- The Iraqi Transport Ministry announced it has received 95 million euros ($135 million) in state money for constructing the delayed Al-Faw al-Kabir port project in southern Iraq, RFE/RL's Radio Free Iraq (RFI) reports.

The cornerstone of the Al-Faw port was laid in April 2010, one year before neighboring Kuwait announced it was going to build its giant Mubarek al-Kabir port just a few kilometers away on Bubiyan Island in the Persian Gulf.

Baghdad originally objected to the Mubarek project, claiming the $1.1 billion Kuwaiti port would take business away from Iraq and obstruct Iraqi waterways.

But earlier this month, Iraqi Finance Minister Rafie al-Esawi said the Mubarek port would not cause problems for Al-Faw.

Although Iraq originally announced the Al-Faw project in 2005, it has done little at the site since laying the cornerstone last year.

But Deputy Transport Minister for Technical Affairs Benkin Regani told RFI his ministry has officially begun the construction of the Al-Faw port in southern Iraq.

"The ministry effectively began the building of the first phase of Al-Faw al-Kabir," he said. "We began to pave the streets leading to the location of the port. We also agreed with the Defense Ministry on clearing the area from mines left from previous wars," he added, noting that the 95 million euros will only cover work to build a wave breaker and not the whole first phase.

Deputy Amer al-Fayez, a member of the economy and investment committee in parliament, told RFI that "although a little bit late, this [disbursement of money] is a very positive step."

He added that he hopes the beginning of work on the wave breaker will allow the project to get back on schedule.

Former Transport Minister Amer Abdul Jabbar, who is leading a big campaign against Kuwait's Mubarek port project, told RFI that there is another plan to help finance the Al-Faw port project using "oil dollars."

"One dollar from each barrel of oil may be allocated to this project from the [southern] Basrah Province budget," he said.

The Al-Faw peninsula is a marshy region on the Persian Gulf between the Iraqi city Basrah and the Iranian city of Abadan.

It is the site of a several important oil installations, most notably Iraq's two main oil tanker terminals Khor al-Amaya and Mina al-Bakr. The peninsula controls access to the Shatt al-Arab waterway and the Basrah port.