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Iraq: Siemens Lands $95M Deal

German company hired to build power station as United States moves to 1310share reconstruction work

November 21st, 2003

LONDON - German industrial company Siemens AG has won a $95 million deal to develop a power station in Iraq, an industry source said Friday, days after Washington vowed to share post-war reconstruction work.

The source was confirming a remark made earlier in the day by Britain's trade, investment and foreign affairs minister, Mike O'Brien, who told reporters at a London conference that Siemens had just been awarded a "substantial contract for a power station."

"Siemens won a contract to build a gas turbine...," the industry source said, adding the work was being sub-contracted by U.S. engineering and construction company Bechtel. The turbine has a generation capacity of 266 megawatts of power, the source said.

San Francisco-based Bechtel is lead contractor for the U.S. Agency for International Development and has so far racked up more than $1 billion in work to rebuild the country's schools, bridges, and power and water infrastructure.

The industry source also said Siemens had already won subcontracts worth about $50 million in Iraq.

A spokeswoman for Siemens UK told Reuters in London that the company was in talks with Bechtel but added: "As yet there is no formal contract in place." She gave no more details.

Washington pledged Wednesday open and fair competition for at least 25 new Iraq contracts worth up to $18.7 billion. It said bidding would be open to firms from the United States, Iraq and from countries that participated in the war effort.

Germany was one of the most vociferous opponents in Europe of the war in Iraq. It teamed up with France and Russia in opposing the U.S.-led attack on Iraq in March.

The Siemens news may show companies that the U.S. pledge to share out the work to rebuild post-war Iraq is genuine.

Some companies attending the conference in London on the rebuilding of Iraq also said they were cautiously optimistic after comments by retired Rear Admiral David Nash, who heads the new Baghdad-based office that will coordinate the contracts.

Nash said the prime work would probably go to companies from Iraq and "coalition partners" who helped overthrow Saddam Hussein.

"It is his wish to get as many of the coalition partner companies involved, that is just a fact," said Ian Thomas, from British firm AMEC PLC.

AMEC, in a joint venture with the United States' Fluor Corp., is bidding for around $5 billion in work in Iraq, he said.

"[But] I think the procurement rules in the States might hamper him," Thomas added.

Non-American companies have complained that they cannot qualify for many primary rebuilding contracts in Iraq because the U.S. procurement rules make it difficult for them.

After much behind-the-scenes lobbying from British government officials, the U.S. Agency for International Development (USAID) bent its own rules and said foreign companies would get as much as half of the reconstruction work in subcontracts.

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