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Abu Dhabi, UAEMonday 22 October 2018

Siemens to add 11GW capacity to Iraq's power grid as part of $15bn deal

The company is expected to phase in power rehabilitation with the first wave set to allow electricity access for up to 300,000 people

The agreement, which was signed by the Siemens president and chief executive Joe Kaeser and Iraqi electricity minister Qasim Al Fahdawi, follows an earlier presentation of a power rehabilitation roadmap  Pawan Singh / The National
The agreement, which was signed by the Siemens president and chief executive Joe Kaeser and Iraqi electricity minister Qasim Al Fahdawi, follows an earlier presentation of a power rehabilitation roadmap  Pawan Singh / The National

German industrial company Siemens could add up to 11 gigawatts of power in Iraq, nearly 50 per cent of current generating capacity, as part of a $15 billion deal that was presented to the federal government in Baghdad.

Siemens was targeting a phased overhaul of energy infrastructure, with the first scheme set to affect up to 300,000 people and be completed in three months. Medium- to long-term plans for the sector could take 10 to 24 months, the company added.

“Our road map for Iraq can deliver uninterrupted electricity to people’s homes and entire cities, create thousands of jobs for the country’s youth and support their education and skills development, so they can contribute to the New Iraq,” chief executive Joe Kaeser said on Monday.

Siemens’ plan comes amid an increasing push by the Iraqi government to rebuild its power infrastructure battered by a decade of conflict. A World Bank assessment has pegged the cost of rebuilding at around $150 billion, with the utilities sector ranking high on the government’s priority. A crippled utilities network was the main factor for protests across Iraqi provinces during the summer months, when temperatures easily reach up to 50° Celsius, occasionally requiring government mandated holidays to cope with the extreme weather.

Siemens’ road map, which follows a 12-month study on a viable redevelopment plan "is secured by billions of US dollars in potential fuel savings and revenue generation for the electricity sector,” the company said.

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Reducing energy losses, introducing smart grids, strengthening the transmission grid, modernising existing power plants as well as adding new generation capacities in deprived areas are among the priorities of the scheme.

Siemens’s engagement in Iraq on a broader scale follows earlier involvement in developing the utilities sector in the war-torn country. In November last year, the company signed contracts worth “multi-million euros” with the Iraqi energy ministry to maintain and upgrade power generating units across stations in South Basra, Salah El Deen, Middle Region and the Middle Euphrates. The move follows similar engagements by other power and utility companies such as its US competitor General Electric, which won contracts last year to develop substations in provinces such as Ninawa, Salah Al Din, Al Anbar, Karbala, Baghdad, Qadisiyyah and Basra governorates, which are in immediate need of reliable power infrastructure.

Siemens’ proposal to the Iraqi government also includes efforts to reduce flared gas, including the capture and treatment of the fuel to be used in generating electricity.

Flaring of gas associated with oil production, particularly from the southern fields remains a critical challenge for Iraq, which has burnt billions of dollars worth of the fuel due to lack of infrastructure to process it.

Companies such as Siemens and GE have been roped in by the Iraqi government to help reduce the flaring of gas, which the oil ministry hopes to snuff out by 2021. The World Bank estimates around 16 billion cubic metres of gas from Iraqi fields was flared in 2015, costing the economy billions in lost revenue.