Iraq: The Challenges and Opportunities of

Construction in Iraq and the Power Sector

EIC Connect Oil, Gas & Power
Abu Dhabi, June 2013


Agenda Jeff Larkin OBE
Director Power & Water, MENA Region
PB Country Manager and Program Director, Iraq (2004 2011)

PBs Background in Iraq
Challenges
Opportunities
Take Aways

PBs Support in Iraq
2004 - 2007 IRRF Reconstruction program support through PCO
2007 2008 Commissioning of Mussayib Power Plant under GRD
2007 2008 Operations, Maintenance and Sustainability (OMS) Project
2008 2009 OMS II under contract to ME (6 months)
2008 2009 Private Generation Study
Load Forecasting Study
Regulatory Law
2009 KRG master plan (Final presentation 16 Nov)
2009 2013 Consultancy services to MoE-KRG (ongoing)
2009 2010 Iraq Electricity Master Plan
2011 Study of Reverse Osmosis Operations in Iraq for UNICEF
2011 2012 Garraff Field Power Study for Petronas
2012 - 2013 Protection Study of the Transmission Network (ongoing)
2013 Various IOCs in southern Iraq

Al Basrah Power: 22MW
Shuaiba Power: 22MW
Haditha Hydro Power: 105MW
Dibis Power Plant: 45MW
Buzurgan Power: 32MW
Nasiriyia Power: 28MW
Bayji Gas: 260MW
Bayji Mobiles Plant: 120MW
Al Ameen Substation 400kV
Taji Substation
Quds Power Plant: 180MW
Taji Power Plant: 51MW
Hilla Power Plant: 18MW
Najaf Power Plant: 52MW
Dibis-Erbil Overhead Line
North Distribution: (43) RCI, WII
Transmission
National Control Generation
Mosul East Power: 55MW
Central Distribution RCI: (63)
Distribution
Khor Zubair Power: 246MW
Key Benefits
Increased Power Generation to 1.3M homes
Improved Electricity Distribution to 251K homes
Project Overview
- Major Projects Completed
South Distribution: (26) RCI, Perini
PTCH Project Phoenix II: 65MW
Contracting Method Projects
Project
Value
DB Contractors, Cost Plus 80 $856M
Direct Contracting 82 $ 76M
Total 162 $932M
Transmission
National Control Generation
Distribution
Country-wide National Command
& Control System (6)
Central Distribution RCI (32)
South Distribution (42) RCI, Perini
North Distribution (27) RCI,WII
Ammara 400 kV Substation
Sadr City Distribution (69)
Baghdad 132 and 400kV S/Ss (8)
Mosul 400kV Substation
Al Rasheed 400kV Substation
Oil Field Injection Substation (10)
132kV Substations Rehabs (5)
Umm Qasr 132kV Substation
Key Benefits
Improved Power to Baghdad Ring
Reduced Risk of Nationwide/Regional Blackout
Increased Power Generation to 80K Homes
Generate Over $10M/Month Oil Revenue
Improved Electricity Distribution to
over 362K Homes
Maintain generation units
Project Overview
- Major Projects Completed
Baghdad Services RCI (25)
Sammara Mobile 132kV S/S
Generation O&M (Nationwide)
Reliable Power
Sustainment projects: 60 MW
Diyala Substation Rehab.
Baiji V94 upgrades: 28MW
Contracting Method Projects
Project
Value
DB Contractors, Cost Plus 35 $488M
Direct Contracting 210 $852M
Total 245 $1,340M
Generation
Distribution
Key Benefits
Reduce occurrence of blackouts; more reliable power
Increased and Sustained Power Generation to
39K Homes
Improved Electricity Distribution to 51K Homes
Maintain generation units

Sustainment Projects
Shuaiba 2: 21.5MW
Project Overview
- Major Projects Completed
Baghdad Services RCI (5+) and
PRDC projects (14+)
Dohuk-Aqra 132kV OHL and S/S
Al Qaim 400kV Substation Rehab
Fallujah 132kV Substation Rehab
Hashemiya-Shamiya 132kV OHL
Ramadi 132kV Substation Rehab
Babil-Karbala 132kV OHL
Wassit 400kV Substation Rehab
Old Mullah: 21.5MW
Old Diwaniyah 132kV S/S
Nasiriya - Shatre 132kV OHL, S/S
East Sulaymaniya 132kV S/S and
Kalar 132kV S/S
Hilla South- Hashemiya 132kV OHL
East Baghdad SCADA
Farabi/Jameela 132kV Substation
Baiji-Haditha-Qaim 400kV OHL Con.
Al Anbar S/Ss and Feeders (6), and
Fallujah Materials (11)
Contracting Method Projects
Project
Value
DB Contractors, Cost Plus 0 $0 M
Direct Contracting 61 $415M
Total 61 $415M
Transmission
National Control
Iraq Elasticity Master Plan
Recommended Plan - Capacity Installed
Layout of the 400 kV Network
during the Short Term Plan
400KV NETWORK IN 2015
Challenges
Practical and logistics
Business Models and Entry
Contractual and Commercial
Security
Challenges Practical and Logistics
Communications costly and unreliable
Access in and out of Iraq is difficult, for us to get in and the
Ministry staff to get out
Visas are difficult to obtain abroad
Entry rules in Baghdad, Basrah and Erbil are different
Good expat staff willing to work in Iraq are still hard to find
Need security provider, for movements and static security
Housing and hotel accommodation is limited
Challenges Business Models and Entry
Local agents and partners sourced through embassy and export trade depts.
Traditional approach
Hard to find good, reliable local agents
Many promises, but little delivered
USAID contracts are still being awarded as part of the Security Agreement between US and Iraq
A US government contract provides entry advantages, security, badging, and access to
support
International donor agencies World Bank, UN (UNDP and UNICEF) have large programmes
Still hard to execute if you do not know the market place
The IOCs have started their own procurement processes for oil field development, this will open
up further opportunities
But still hard to execute without local knowledge, experience and presence
National Investment Commission www.investpromo.gov.iq
The NIC, led by Chairman Dr. Sami Al-Araji, was established to be the face of private
investment in Iraq and serve as promoter, facilitator, monitor, and policy advisor for
investment into Iraq.
There are a number of business support companies who can provide entry support and most of
the security companies are moving into business support operations as the security market starts
to diminish
Challenges Business Models and Entry
Lack of local resources
There is no reliable local industry
Lack of locally sourced materials of good quality
Lack of enough competent local contractors
Shortage of locally trained skilled staff
ISO 9000 and ISO 14000 unknown
There are good local contractors, but not enough. Local firms can do most of their own
construction, but lack capabilities in the latest technologies
Local contractors do want international partners and support, and they need it:
Financial backing
Design capability
Procurement support
Project management and project scheduling
Either team with an international organisation already established, such as PB, or find a
local firm that offers synergies and develop a long term partnership to support and
develop them
Challenges Contractual and Commercial
GoI contracting has not progressed in the last 15 years
Mentality is still that rules and regulations are set by the central
government to be followed by the Ministries
Lack of an overall Program Management Office within the GoI
Lack of an effective project delivery system within the Ministries
Financial
The local banking sector is lagging behind Int standards
LOCs through the TBI take up to 10 months
Payment security
Bank Guarantees and Export Credit Guarantees could be difficult
(ECGD, EXIM, OPIC)
Local registration is needed to sign contracts with Iraqi Ministries
Need a local lawyer and accountant
There are organisations that will help you do this

Challenges Security
Terrorists organisations are still able to launch
attacks at the centre of government - at will
Threat of kidnapping has reduced, but could increase
again
Lack of stable government could, and is, leading to
increased violence and reduced security

Working around ongoing military combat operations and
coordinating with US Mil and ISF (CONOC) the local
military commanders own their battle space
Life support issues lack of secure accommodation
Need to find a credible security provider
Need to establish your own Security Policy and a Security
Plan - Make sure your staff understand and follow it
Daily security briefs and intel reports keep staff on their
toes and minimizes complacency
Everyone needs to know the - Actions On
Challenges - Security
Iraqs Opportunities
$27 Billion to Develop Electrical Sector
(2008-2016)

Total (Millions) Activity

$15,540
New Steam Generation &
Gas Turbine Generation
Stations

$1,325
Rehabilitation of Existing
Generation Stations

$9,730
New Transmission &
Distribution Networks

$535

Rehabilitation of Existing
Transmission & Distribution
Networks
Existing 2009 Kurdistan System
Proposed 2015 Transmission System
Layout of the 400 kV Network
during the Short Term Plan
400KV NETWORK
IN 2015
Estimated Overall Investment Cost
(US$ millions)
Short Term Long Term
2011-15 2016-20 2021-25 2026-30 TOTAL
Generation 5,000 11,101 10,269 10,800 37,170
Transmission (1) 4,002 1,387 1,844 2,633 9,866
Distribution Rehab 8,549 8,549
Distribution - Expansion 4,644 3,910 5,132 7,699 21,385
TOTAL 22,195 16,398 17,245 21,132 76,970
Per Year: 3,849
(1) Scenario C with Thermals Base load forecast
The ME has purchased 56 Frame 9E gas turbines
(30 units require balance of plant EPC)

SITE EQUIPMENT
AL KHAYRAT
(KARBALA)
10 X 125 MW
QUDAS (BAGHDAD) 4 X 125 MW
AL QAYIRA (NINAWA) 6 X 125 MW
MANSURIA (DIYALA) 4 X 125 MW
WASIT (WASIT) 6 X 125 MW
GE Equipment Sites
3
2
1
4
5
GE Megadeal Sites

1 - Al Khayrat (Karbala)
2 - Qudas (Baghdad)
3 - Al Qayira (Ninawa)
4 - Mansuria (Diyala)
5 - Wasit (Wasit)

Siemens Equipment Sites

The ME has purchased 6 X V94.3 and 10 x V94.2 Siemens
gas turbines (9 units require balance of plant EPC)

SITE EQUIPMENT
BAYJI (SALAH AD DIN) 6 X 160 MW
TAZA (KIRKUK) 1 X 260 MW
SADR CITY (BAGHDAD) 2 X 160 MW
2
1
3

IQ5PP Sites

1 - Bayji (Salah ad Din)
2 - Taza (Kirkuk)
3 - Sadr City (Baghdad)

Iraq seeks IPPs to Build/Own/Operate plants

Eight sites utilizing equipment purchased from GE & Siemens:




The ME & the National Investment Commission have issued an
invitation for proposals; see www.investpromo.gov.iq or
contact the ME
Nassariya (Dhi-qar)
Samawa (Muthana)
Diwaniya (Qadisiyah)
Shat Al Basrah (Basrah)
Amara (Maysan)
Rumalyia (Basrah)
Dibis 1 (Kirkuk)
Dibis 2 (Kirkuk)
Independent Power Producers
Take Aways.
A lot has been done already and it is possible to operate safely
in Iraq.........provided you take the necessary precautions
Security remains an issue, as do the commercial and financial
environments, but security can be managed at a cost
The Ministry of Electricity is setting itself up for the future, but
currently lacks any PMO or GOI coordination cell
With 10,000 MW to build, this will create many opportunities for
those willing and able to operate effectively in this environment
Thus the scope and scale of this effort is enormous, the Iraqi
electrical sector requires.
10+ YEARS and $4 BILLION pa

Thank you
Jeff Larkin
Parsons Brinckerhoff
Abu Dhabi
larkinj@pbworld.com

Rebuilding for their future