Iraq signs deal with Siemens to upgrade, boost electricity sector
“I believe everyone will be happy with this agreement,” Abdul-Mahdi told reporters just after the paperwork was signed. The overhaul project will take place in four stages and could cost up to $14 billion, he stated.
The agreement, signed by Iraq’s Electricity Minister Luay al-Khateeb and Siemens AG President Joe Kaeser, “includes the addition of new and highly-efficient power generation capacity, rehabilitation and upgrade of existing plants and the expansion of transmission and distribution networks,” Siemens stated in a press release.
"Our mission is to secure reliable and affordable electricity for the Iraqi people and help them rebuild their country," said Kaeser.
The first phase consists of three contracts valued at 700 million euros ($785 million), according to Siemens. The three contracts are construction of a 500 megawatt gas-fired plant in al-Zubaidiya, Wasit province, upgrading 40 gas turbines, and installing 13 substations and 34 transformers across the country.
Emerging from years of war, Iraq has a chronic shortage of electricity and relies on imports from Iran. One factor that sparked deadly protests during the scorching heat last summer in Basra was power outages.
Siemens signed a memorandum of understanding with Iraq in October to explore proposals from the German company for Iraq’s electricity sector, but it faced tough competition from American GE, which inked its own memo with Baghdad at the same time.
“This is all up for competition of course,” said Abdul-Mahdi on Tuesday. “Siemens as a competent, known company with big works in Iraq has great chances in the framework of this roadmap. It can obtain a big part of these projects.”
GE says it is still in the game, however, and “continues to engage with the government of Iraq to strengthen the country’s energy infrastructure,” the company told Bloomberg on Monday. “We expect the government to evaluate all the solutions put forth to make the best decision for the Iraqi people.”
To sweeten the deal, Siemens has pledged donations to health clinic, grants for universities, and vocational training for more than 1,000 Iraqis.
Iraq is keen to bring foreign investment into the country has it struggles to rebuild after the war with ISIS. The country is now enjoying “unprecedented” peace and security, said Abdul-Mahdi.
He argued that Iraq should be given special consideration as it battles terrorism.
“We believe that there are international standards and standards from the European Union that are being implemented on Iraq in an unsuitable manner. They are being implemented as though Iraq hasn’t or isn’t fighting a wide war against terror,” he said.
Describing Iraq as unsafe and weak “prevents” investment and damages international credit rankings, he said. “This is an essential and important topic – Iraq shouldn’t be dealt with like any other country. Rather it should be treated as in the condition of crisis, for it to be treated like its people and armed forces are fighting a fierce battle against terror.”
International organizations need to understand this, he appealed, pointing that while the Islamic State has been dealt harsh blows, it is not defeated yet.
Joining Abdul-Mahdi on his first trip outside of the Middle East as prime minister are the ministers of foreign affairs, commerce, electricity, housing and construction, municipalities, and the national security advisor.
Merkel was asked about specific Iraq-Germany plans like military assistance, training of security forces or reconstruction by Rudaw reporter Zinar Shino.
“We discussed three kinds of relations with the prime minister. The development of the security was also discussed with the German foreign minister within the plan to increase ability of the military. And that is the hope for Iraq,” she replied.
Even though Siemens stole the show, Merkel expressed the need for smaller businesses to prosper.
“Secondly we also spoke about the economy, namely today about the case of Siemens, but it could also over other projects being implemented including the defense industry, and small- and middle-sized businesses, which the prime minister was very positive for creating better conditions,” she said.
Lastly, they spoke about humanitarian issues.
“We also talked about development projects we both want. In terms of humanitarian suffering we spoke about what is in the best interest of both countries and things that have to do with legal matters. I believe that we had a very good common shared perspective in these two or three areas,” she said.
Update: 9:26 p.m.