Siemens AG Selected as "Roadmap Partner" for Iraqi Power Sector: Iraqi Cabinet

IndraStra Global

Siemens AG Selected as "Roadmap Partner" for Iraqi Power Sector: Iraqi Cabinet

By IndraStra Global News Team

Siemens AG Selected as "Roadmap Partner" for Iraqi Power Sector: Iraqi Cabinet

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On April 29, 2019, Iraq’s government has released a statement which states that the "Iraqi cabinet" has decided to implement a "roadmap" for the power sector in cooperation with Munich-based Siemens AG. The government gave no further details.

Siemens AG and its U.S. rival General Electric (GE) have been competing for a possible deal worth as much as US$ 15 billion to develop Iraq’s cross-sector power infrastructure including power plants and power grids. But today's announcement has no mention GE and also, did not say whether Siemens AG would be the only company involved in this "roadmap".

Earlier this month, Iraqi electricity minister Dr. Luay Al-Khateeb confirmed that the government was assessing a plan Siemens AG presented to reform the Iraqi power infrastructure. The plan was submitted in 2018 by Siemens AG to raise Iraq's electricity production capacity by 11GW. While the rival GE vowed to add 14GW. [Kindly do note, both Siemens AG and GE have signed preliminary contracts for the planned capacities with the Iraqi government].

At that time Al-Khateeb said "we have a good and equal and balanced relationship with all countries who are willing to support Iraq but I must admit that Siemens roadmap to Iraq is quite helpful because it looks at the cross-sector from transmission, distribution and power generation to build that much-needed value chain to help Iraq move its power sector in the right direction."

While responding to this news, Siemens AG said to Bloomberg – "We are obviously aware of the latest media reports from Iraq and we stand committed to implementing our roadmap for the re-electrification of Iraq.” The statement further reads, “So far, no concrete contracts have been signed to execute the scope outlined in the roadmap."

According to the last year's reports (October 2018), the Iraqi government was being pressured by Trump’s administration to choose GE over Siemens for power contracts. However, the Iraqi government then said the two companies were on equal footing. At that time, Bloomberg reported the Trump administration suspected Iran was pushing Iraq to accept a deal with Siemens AG “as a way of undercutting ties with the U.S.,” as the U.S. was preparing to impose new sanctions on Iran in November 2018. Eventually, on November 5, 2018, the United States fully re-imposed the sanctions on Iran that had been lifted or waived under the JCPoA.

For GE, contracts like Iraq's power sector "roadmap" are expected to be a significant contributor to the planned turnaround. The company has suffered one of the worst years in its 126-year history in 2018 and is undergoing a restructure to restore growth. It posted a loss of US$ 22.8 billion in the third quarter of last year – among the largest in US corporate history and the shares were down around 65 percent over the past two years as of this January. Also, earlier in 2018, GE was hit with a US$ 11 billion charge and disclosure of accounting investigations by US regulators. Amid all, in October 2018, GE got a new chief executive H. Lawrence Culp Jr. who replaced John Flannery and is working to revive the company’s fortunes.

With reporting by Bloomberg, and Reuters.