Siemens wins €284m turbines contract for Iraq power project

Baghdad is making a push to upgrade and repair its utilities infrastructure

FILE - In this Jan. 23, 2013 file photo flags of German engineering conglomerate Siemens AG fly during an annual shareholder meeting in Munich, southern Germany. German industrial conglomerate Siemens AG says Friday, July 21, 2017 it’s halting deliveries of power generation equipment to state-controlled companies in Russia and selling its stake in a Russian company that offers services for power plant control systems. (AP Photo/Matthias Schrader, File)

German industrial giant Siemens won a €284 million (Dh1.17 billion) contract to supply gas and steam turbines and generators for an independent power project in Iraq, which is pushing to upgrade its utilities infrastructure.

Citic Construction, the contractor building the plant and the project developer Maisan Power Company, jointly awarded the contract, Siemens said on Tuesday. The deal includes long-term power generation services for the 840 megawatt Maisan Combined Cycle Power Plant, in the Maisan Governorate of Iraq, it added.

The independent power project (IPP) is expected to start delivering power from March 2021 and enter full combined cycle mode by early 2022. It will provide sufficient electricity to meet the needs of more than three million Iraqis in addition to supporting the industrial sector of the war-torn country.

Siemens' scope of supply includes two STG5-4000F gas turbines, one SST5-4000 I-L steam turbine, three SGEN5-2000H generators, along with automation and control systems, transformers and related electrical equipment, the fuel gas system, and supervision during the implementation period by the Siemens team, the German firm said.

Iraq is making a push to kick-start a huge rebuilding exercise including overhauling its power infrastructure, battered after years of fighting against militants across much of the country. It has been courting large multinational energy companies such as Siemens and GE to rebuild its damaged utilities as well as reduce gas flaring, which has led to billions of dollars in lost revenue over the past decade.

A World Bank assessment has pegged the cost of rebuilding Iraq at around $150bn, with the utilities sector ranking high on the government’s list of priorities. A crippled utilities network was the main factor behind protests across Iraqi provinces during the summer months, when temperatures can easily reach 50°C, occasionally requiring government mandated holidays to cope with the extreme weather.

The loss of gas associated with oil production is particularly costly for Iraq, which experiences frequent outages across its power infrastructure, crippled by war. A 2018 study by Siemens found that Iraq could save about $5.2bn over the next four years by reducing gas flared from its fields in addition to other power generation efficiency efforts.

“Iraq is undergoing economic transformation and, as the country embarks on a series of ambitious infrastructure projects, efficient and reliable electricity will be essential to powering this development,” said Dietmar Siersdorfer, chief executive, Siemens Middle East and UAE.

The Maisan IPP project win comes on the back of Siemens' agreement worth €700m to rebuild Iraq's power sector infrastructure. The deal signed with Iraq's ministry of electricity in April kick off the actual execution of the roadmap for rebuilding Iraq's power sector.

As part of its first phase, Siemens will build a 500 MW gas-fired power plant in Zubaidiya, south of Baghdad, as well as upgrade 40 gas turbines with upstream cooling systems. It will also undertake the installation of 13 substations across Iraq.

The roadmap is "bankable" and will support the Iraqi government in "obtaining appropriate financing and arranging coverage for the majority of the scope" of the planned schemes, Mr Siersdorfer said in April.

The first phase of the estimated $15bn scheme for installation of 11GW of power capacity should reach financial close in "the next months", he added.