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Siemens to rebuild Iraq power infrastructure after signing $786mn deal

Iraq plans to make around $14bn in orders to upgrade electricity infrastructure, which has fallen into poor condition due to war, corruption and mismanagement infrastructure agreement

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Siemens, Iraq, Power, Grid, Adel Abdel-Mahdi
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Iraq's government and German industrial conglomerate Siemens have signed a framework agreement to upgrade the electricity grid of the power-strapped country.

Siemens chief executive Joe Kaeser and Iraqi Electricity Minister Luay al-Khatteeb "signed an implementation agreement to kick off the actual execution of the roadmap" agreed to last year, the company said in a statement.

"This 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 said in a statement.

Under the first phase of the agreement, the two sides agreed to contracts worth €700 million ($785 million) for the construction of a 500 megawatt gas-fired power plant, the upgrade of 40 gas turbines and the installation of 13 substations and 34 transformers across Iraq.

The announcement came as Iraqi Prime Minister Adel Abdel-Mahdi and German Chancellor Angela Merkel were meeting in Berlin on Tuesday.

Abdel-Mahdi said Iraq planned to make around $14 billion in orders to upgrade electricity infrastructure, which has fallen into poor condition due to war, corruption and mismanagement.

Siemens is already active in Iraq and has a good chance of being awarded "a large part of these projects," he said.

"Our claim is that we are a reliable and affordable power supplier to the people of Iraq and want to help them rebuild their country," said Kaeser.

Siemens may also help with financing the projects, which would create tens of thousands of jobs and lead to billions of dollars in fuel savings and revenue generation, the company said.

Iraq has been courting large multinational energy companies such as Siemens and GE to rebuild its damaged utilities as well as reduce gas flaring, which has led to billions of dollars in lost revenue over the past decade.

Siemens intends to increase electricity production in Iraq by around 50% through the building of new power plants, upgrading existing ones and modernizing the inefficient electricity grid.

Critical projects listed include additions of power generation capacity, rehabilitation and upgrade of existing power plants, fuel treatment, better utilisation of flared gas as well as expansion and strengthening of the transmission and distribution networks.

The company is awaiting approval by the Iraqi electricity ministry and will prioritise older stations” and work on switching existing stations from open cycle to combined cycle to increase efficiency.

Siemens intends to take a phased approach and place priority on freeing Iraq from its dependence on electricity imports from its neighbours.

Iraq suffers from major electricity shortages despite sitting on some of the world's largest oil and gas fields. Much of the country's gas is wasted through gas flares.

Summer electricity and water shortages in the oil-rich but impoverished south of the country have triggered near-yearly protests against the government.

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