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Iraq signs $3bn power deal with GE

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By Ed Crooks in London

Published: December 16 2008 22:13 | Last updated: December 16 2008 22:13

Iraq has signed a $3bn (£2bn) contract with GE, the US industrial group, to more than double its electricity generation capacity.

In Baghdad on Tuesday, Iraq’s electricity ministry announced it was buying 56 turbines from GE that could generate 7,000MW of electricity: more than the country’s typical output currently.

Power shortages are one of Iraq’s most serious problems: supply averages less than 6,000MW, while demand is about 10,000MW. From January to August the country had an average of just 12 hours of electricity a day, according to US government data.

A US defence department report in September welcomed a 12 per cent increase in electricity generation over the previous year, and said improved security and stronger defences had prevented attacks on the network and made it possible to repair and maintain transmission lines.

However, it conceded that “the population’s level of satisfaction with essential services remains low as the ministries struggle with ageing infrastructure and increased demand”.

Steve Bolze, the president of GE Energy’s power and water business, said: “The fact that we have done this deal and are signing this contract is an indication that conditions have improved in Iraq.” GE said it expected the turbines would all be operating by the end of 2010. They will be oil-fired initially, burning heavy crude, which is in relatively plentiful supply in Iraq, but can be switched over easily to burn gas.

Iraq is richly-endowed with gas, but much of its output comes as a by-product of oil production, and is burned off in flares for safety.

Royal Dutch Shell, Europe’s biggest oil company, has signed a deal with Iraq to collect that “associated” gas and make productive use of it, including for power generation, but the agreement has been politically controversial.

Mr Bolze said GE’s turbine deal had been agreed with “all appropriate visibility”, including multiple political reviews and an open bidding process with a number of competing suppliers.

There are expected to be more odrers to come. Iraq hopes to install much more electricity generation, perhaps 30,000MW of capacity, to support its economic development over the coming years.

 

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