Iraqi Official Casts Doubt on Deals With GE, Siemens
Credit to Author: Darrell Proctor| Date: Mon, 11 Feb 2019 01:03:00 +0000
Multibillion-dollar energy deals that both Siemens and General Electric (GE) signed with the Iraqi government last year may not come to fruition, according to the country’s electricity minister.
The Financial Times on February 10 reported that Luay Al-Khatteeb, who took his post late last year after the deals were brokered, told the newspaper, “I don’t have financial allocations or the processes available at hand, it doesn’t allow me to cherry-pick the right consultancies to deal with these multibillion-dollar deals. The bureaucracy that I inherited is . . . illogical.”
GE in October 2018 agreed to a $15 billion deal to provide 14 GW of power generation projects to Iraq, including 1.5 GW as early as this summer. The agreement, which was called “principles of co-operation” and is not binding, came after the Trump administration reportedly told Iraqi officials that diplomatic relations with the U.S. would be threatened if Iraq pursued that deal with Munich, Germany-based Siemens, instead of Boston, Massachusetts-based GE.
One day after the GE deal was announced, Siemens agreed to a non-binding plan to supply 11 GW of power generation to Iraq. Siemens CEO Joe Kaeser signed a memorandum of understanding with then-electricity minister Qasim Al-Fahadawi.
Kaeser, in an interview with the Al Arabiya television network at the World Economic Forum in Davos, Switzerland in January of this year, said of competing with GE in Iraq: “Fierce competition is good as long as there’s a level playing field so that the best team can win. That’s what we ought to have. If there are other forces in play it’s always hard to have a level playing field but we are a good company. We have great examples to show. We don’t need to promise a lot of stuff.”
Included in the deals with GE and Siemens were plans for both companies to install liquefied natural gas-fueled mobile units to power operations in some of Iraq’s oil fields.
Officials with both Siemens and GE last year said they hoped the Iraqi government would use these initial projects as a gateway for both to develop more infrastructure in the country.
Al-Khatteeb told the Financial Times that both companies’ development plans remain under review. He said, “certainly it’s going to be quite challenging to blindly accept such proposals.” He said he is using what the newspaper called “volunteer experts” to help “read in between the lines of these sophisticated legal contractual documents.” The electricity minister said he did not want the agreements to become a future burden. “It’s a responsibility. It’s not about ‘let’s sign this deal blindly and move on’,” he told the newspaper.
GE in a statement said it is continuing to develop energy projects in Iraq, noting: “Our presence in Iraq is based on a partnership that spans over 50 years. We continue to partner with the government of Iraq to deliver reliable and efficient energy to the Iraqi people.”
Siemens did not immediately comment on the Financial Times’ report.
A GE spokesperson in a statement at the time of the October 2018 deal said, “GE signed an agreement with the Government of Iraq on a comprehensive action plan that is expected to create up to 65,000 jobs, realize annual savings of up to $3 billion, and provide up to 14 GW of power to the Iraqi people by deploying GE’s proven fast power technologies, establishing new power plants, upgrading existing sites, and developing substations and overhead lines across the country.”
Al-Khatteeb has said his agency wants at least a 15% year-over-year increase this year in power infrastructure, which includes projects to meet a 7% rise in demand for electricity, along with an 8% increase in power generation and upgraded transmission and distribution lines.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
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