Siemens closing in on $15bn power plant deal in Iraq

CEO Joe Kaeser met with Iraqi Prime Minister Haider Al-Abadi in Baghdad to discuss a plan to install 11 gigawatts of power generation capacity and create thousands of jobs
Siemens closing in on $15bn power plant deal in Iraq
Siemens CEO Joe Kaeser.
By Bloomberg
Mon 24 Sep 2018 04:32 PM

Siemens is closing in on what could shape up to be its biggest contract ever - worth an estimated 13 billion euros ($15 billion) - to build and refurbish power stations in Iraq that would increase the country’s generating capacity by about half in the next four years.

CEO Joe Kaeser met with Iraqi Prime Minister Haider Al-Abadi in Baghdad to discuss a plan to install 11 gigawatts of power generation capacity and create thousands of jobs, the company said Monday in a statement.

A person familiar with the deliberations, who asked not to be named, confirmed the potential value of the contract, which was first reported by German newspaper Handelsblatt.

“We have had a series of meetings and positive feedback from the government for the development of power infrastructure in the country,” Siemens said. “Repowering Iraq is a core element in the road map but it extends far beyond that.”

Siemens’s chances for winning the order are “high,” Adel Jeryan, Iraq’s deputy electricity minister, said in an interview, adding that the government hasn’t set a price tag yet on the order. General Electric Co. is also competing for the project, he said.

Welcome boost

The contract would come as a welcome boost for either Siemens or GE’s struggling power and gas divisions, which are suffering from a sharp slump in orders triggered by a global shift to renewable energy sources.

Kaeser is cutting thousands of jobs at the German firm as a result and GE is in the throes of a deep revamp of the once-sprawling conglomerate that includes shedding assets.

A spokesman for GE based in Paris said he couldn’t provide immediate comment.

For Siemens, the Iraqi project would be bigger than one completed earlier this year in Egypt for power plants and wind farms generating a combined 16.4 gigawatts. That order worth about 10 billion euros was described as the company’s biggest-ever when it was signed in 2015.

Kaeser told CNBC that the company would move quickly over the next three months to bring power to 300,000 people as part of the larger project to develop gas-fired power plants.

“If the government is ready today, we start tomorrow,” he said in the broadcast.

Siemens shares rose 1.1 percent to 111.48 euros at 11:09 a.m. in Frankfurt, paring losses since the start of the year to 4.1 percent.

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