Iraq Chooses Siemens as Partner in $15 Billion Power Deal

Iraqi Prime Minister Adel Abdul Mahdi and Germany-based Siemens on April 30 confirmed reports that Iraq has chosen Siemens as its main partner in what it calls a “roadmap” agreement to develop power generation projects in the country.

Siemens in a news release Tuesday confirmed that the document was signed by Joe Kaeser, president and CEO of Siemens AG, and Luay al-Khatteeb, Iraq’s Minister of Electricity, in Berlin in the presence of Abdul-Mahdi and German Chancellor Angela Merkel.

The signing comes one day after Iraqi government officials in a statement said Siemens would lead Iraq’s plan to upgrade its electricity infrastructure, though few details were initially provided. Siemens and U.S.-based General Electric (GE) have been vying for contracts worth as much as $15 billion to provide Iraq with electricity infrastructure. The Trump administration has lobbied Iraqi officials to choose GE.

Tuesday’s agreement builds on the memorandum of understanding signed between Iraq and Siemens in October 2018. According to Siemens, it “outlines the specific projects, associated budgets and timelines for the execution phase, covering all essential elements of the electrification of Iraq. 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 the contracts in Phase 1 of the agreement are valued at about 700 million euros (about $785 million USD). Siemens said initial projects include “EPC construction of a 500 megawatt gas-fired power plant in Zubaidiya; the upgrade of 40 gas turbines with upstream cooling systems; and the installation of 13 of 132 kilovolt substations along with 34 transformers across Iraq.”

Siemens in its release said its “Siemens Roadmap for the Electrification of the New Iraq” is a series “of short, medium and long-term plans designed to meet the reconstruction goals of Iraq and support the country’s economic development. Along with the electrification scope, Siemens had also committed to the donation of a smart health clinic, a 60 million US-dollar software grant for universities of Iraq, and the training of more than 1,000 Iraqis in vocational education. The clinic will be equipped with the company’s medical devices to make healthcare more accessible to Iraqis and will support the rehabilitation of populations in liberated areas of the country, with the capacity to treat up to 10,000 patients per year. As for the grant, it will empower local university students with the digital skills essential for the future.”

Siemens said it initially presented its plan to Iraqi officials during the Iraq Reconstruction Conference in Kuwait, in February 2018.

“Our mission is to secure reliable and affordable electricity for the Iraqi people and help them rebuild their country,” said Kaeser. “This binding agreement addresses the various aspects of the roadmap. We are also committed to supporting Iraq in arranging financing for the projects, creating attractive jobs and opportunities for small and medium enterprises. Investing in the country’s future workforce through education and training is close to our heart. Contributing to social and economic development is at the core of what we do and forms a significant part of this agreement.”

Monday’s statement from Iraq’s government said, “The (Iraqi) cabinet decided to implement a road map for the electricity sector in cooperation with Siemens.” The statement did not mention GE. It also did not say whether Siemens would be the only company involved in the power grid development.

Projects in Iraq are important to GE and Siemens; both companies power generation businesses have struggled in recent years. Iraq wants to increase its power output as the country has been challenged by outages and an unpredictable of power since the U.S.-led invasion of the country in 2003.

Darrell Proctor is a POWER associate editor.

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