Siemens signs ‘roadmap’ deal on $14bn Iraq grid upgrade

German industrial conglomerate Siemens cleared a hurdle Tuesday in its race with US-based General Electric to rebuild Iraq's electricity grid, signing a "roadmap" at a Berlin meeting with top ministers.

Siemens signs 'roadmap' deal on $14bn Iraq grid upgrade
Iraqi energy minister Luay al-Khatteeb (l) shakes hand with Siemens chief executive Joe Kaeser after signing the deal. Photo: Kay Nietfeld/dpa
Chief executive Joe Kaeser and Iraq's electricity minister Luay al-Khateeb “signed an implementation agreement to kick off the actual execution of the roadmap” agreed last year, the Munich-based group said in a statement.
Under Tuesday's deal, Siemens secured contracts worth 700 million euros ($785 million) to build one power plant, upgrade 40 gas turbines and install substations and transformers “across Iraq”.
Speaking to journalists after meeting German Chancellor Angela Merkel, Iraqi Prime Minister Adel Abdul-Mahdi said the roadmap included around $14 billion of contracts in total that was “subject to competition” although “Siemens has big chances to secure a large share”.
Both Siemens and General Electric signed non-binding memorandums of understanding with the Iraqi government last year on rebuilding and repairing electricity infrastructure.
In a statement Tuesday evening, Iraq's electricity ministry said the deal would be implemented over four years, adding up to 11 MW of electricity to the grid.
“This deal represents the beginning of a strategic relationship between Germany and Iraq,” the statement said
But it appeared to leave the door open for amendments or similar agreements with other energy firms.
“Negotiations will continue over specific projects in the roadmap to improve the terms of the deal, including prices,” the ministry said. It said the agreement should not “impede the work of other serious companies or limit their opportunities to invest in Iraq's electricity sector.”
The ministry declined to comment on whether a similar deal with General Electric was still on the table, but it had previously indicated it would be willing to sign separate agreements with both companies.
Baghdad is under pressure — at home and abroad — to rebuild its energy grid. Protests over chronic power cuts regularly take place in Iraq, which suffers from insufficient capacity and infrastructure weakened by age and terrorist attacks in recent years by the Islamic State group.
Summer especially is a peak time for electricity usage as air condition units inside buildings battle near-unbearable outside temperatures of 50 degrees Celsius (122 Fahrenheit).
Meanwhile, the United States has urged Iraq's government to wean itself off the gas and electricity imports from neighbouring Iran that it regularly uses to plug the gaps.
Tehran has been under American sanctions since US President Donald Trump withdrew from a 2015 deal that eased the economic squeeze in exchange for Iran freezing its nuclear programme.

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‘We’ll continue our protests’: Environmental activists confront Siemens bosses in Munich

Siemens chief executive Joe Kaeser faced environmental protests inside and outside the group's annual shareholder meeting on Wednesday.

'We'll continue our protests': Environmental activists confront Siemens bosses in Munich
Demonstrators in Munich on Wednesday. Photo: DPA

Outraged by the group's sticking to a contract to supply rail equipment to a massive Australian coal mining project, demonstrators were rallying outside the Munich Olympiahalle ahead of the 10:00am kickoff.

A group of around 100 were on the scene from early in the morning, some forming a human chain.

Late Tuesday, Greenpeace had draped a banner from the company's headquarters reading “Bush fires start here”.

“We will continue our protests for as long as Siemens doesn't back down,” said Helena Marschall, a representative of the movement, at a Tuesday press conference.

Marschall herself is slated to speak inside the venue later Wednesday, while the demonstrators plan to urge the company to “abandon coal” at a larger protest in the afternoon.

Kaeser kept activists and observers on tenterhooks for weeks as he decided whether to uphold a contract with India's Adani group related to its Carmichael mine project in Australia.

In the end, he stuck to Siemens' agreement to supply the rail signalling equipment for the massive open-cast mine, not far from the iconic natural landmark of the Great Barrier Reef.

READ ALSO: Outrage in Germany as Siemens back Aussie mine project

'Fulfil contractual obligations'

Groups like Extinction Rebellion and Fridays for Future have homed in on the shareholder meeting as an opportunity to renew the pressure on Siemens.

“What's more important: a small financial loss in the short term, or the disastrous consequences such a project will have for generations?” Marschall said.

She and other environmentalists have been invited to speak inside the cordon by a group of Siemens shareholders.

In mid-January, CEO Kaeser met leading German Fridays for Future activist Luisa Neubauer after protests across the country against Siemens.

But he later said in a statement: “We must fulfil our contractual obligations” relating to the 18-million-euro ($22 million) deal.

Protesters at the meeting. Photo: DPA

“Only being a credible partner whose word counts also ensures that we can remain an effective partner for a greener future,” Kaeser insisted.

Nevertheless, the company plans to create a “Sustainability Committee” with powers to block environmentally questionable projects.

Siemens says it backs the 2015 Paris Agreement and aims to become carbon-neutral by 2030.

27 mn tonnes of coal

The open-cut Carmichael mine is set to become operational next year and produce up to 27 million tonnes of coal annually.

Adani spent years trying to secure private finance for the coal mine before announcing in 2018 it was self-financing a trimmed-down, $2 billion version of the  project.

Supporters say the mine will bring hundreds of much-needed jobs to rural Queensland in eastern Australia.

But conservationists say the project threatens local vulnerable species and notes that the coal will have to be shipped from a port near the already damaged Great Barrier Reef.

Much of the coal from the mine will be burned in India, a country with some of the world's highest levels of air pollution.

By Ralf Isermann with Tom Barfield in Frankfurt