The Register Citizen (Torrington, CT)
Siemens, GE battle for $15B Iraq power deal
Siemens AG and rival General Electric Co. are battling for a mega contract worth an estimated $15 billion to develop power stations in Iraq, an order that would hand the winner a badly needed boost amid a deep slump in the industry.
Siemens CEO Joe Kaeser met with Iraqi Prime Minister Haider Al-Abadi in Baghdad Sunday to discuss a plan to install 11 gigawatts of power generation capacity over four years 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.
While Siemens’s chances for winning the order are “high,” Adel Jeryan, Iraq’s deputy electricity minister, said in an interview that the government hasn’t picked a winner or set a price tag on the order. GE is also competing for the project, he said.
In a Sept. 11 tweet, the U.S. company said it’s working to develop Iraq’s power sector and could double generation in five years. GE has presented a proposal to the government that would add capacity, maintain and improve existing plants and strengthen networks, said another person familiar with the plan who asked not to be named.
The contract would come as a breakthrough for either Siemens or GE’s struggling power and gas divisions, which are suffering from a sharp slump in orders triggered by a broad decline in the gas-power market and shift to renewable energy sources. The business at GE has arguably been the biggest drag on the parent company, leading the oncesprawling conglomerate into the throes of a revamp. Siemens’s Kaeser is also reorganizing and cutting thousands of jobs in Germany.
On Monday, Siemens unveiled the long-awaited final plan to cut staff in its home country. The firm will eliminate around 2,900 positions, less than the roughly 3,400 announced in November, 2017 and cut global costs at the power and gas division by 500 million euros. The deal with unions saved a factory in Goerlitz and a production facility in Berlin.
Citing a market outlook by Siemens for the type of large gas turbines used in power plants, Barclays’ analysts said Monday demand is expected to be about a quarter of manufacturing capacity through 2020.