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GE (NYSE: GE) has signed a contract with Iraq’s Ministry of Electricity to supply an advanced fuel oil treatment technology, FuelSolv, to help enhance the reliability and productivity of the Al-Quds power plant on the outskirts of Baghdad.

“The Al-Quds power station provides much-needed electricity for Iraq and GE’s innovative gas turbine technology and fuel oil performance solution can help keep the Al-Quds power plant running at peak performance and efficiency throughout the year,” said Joseph Anis, GE Energy’s president for the Middle East.

“This agreement is further testament to GE’s ongoing commitment to support Iraq in boosting its power generation capacity and infrastructure growth so as to supply reliable electricity for Iraq’s people.”

GE is supplying 2,000 tons of FuelSolv, a proprietary fuel oil treatment product that can be added to a variety of power plant fuels, including heavy oil, to protect and improve the performance of power generation equipment.

This contract is the largest fuel oil treatment contract GE has signed in the Middle East and marks GE’s second fuel treatment order in Iraq, following a contract signed last year for the supply of 500 tons of FuelSolv to the Baghdad South power plant. FuelSolv was developed by the water and process technologies business unit of GE Power & Water.

The fuel additive is designed to facilitate safe, continuous operation of the GE heavy-duty gas turbines at the Al-Quds plant. When running at full operation with its six GE Frame 9E heavy-duty gas turbines, the Al-Quds plant generates 800 megawatts for the Iraq electricity grid.

GE has a long history of supporting Iraqi infrastructure needs in power generation, oil and gas, water processing, aviation and healthcare and more than 120 GE power turbines are installed in the country today.

GE has been active in the Middle East since the 1930s and has management and project management offices as well as local repair and service facilities to serve customers throughout the region.

An official from the Central Bank of Iraq said on Monday that the core annual inflation rate in Iraq jumped to 3.2 percent in October, from 1.9 percent in September, due to rising costs of housing, water and electricity. Spending on fuel is excluded from the calculations.

"The inflation rate is still under control", senior central bank adviser Mudher Kasim said. According to World Bank figures, the rate of inflation in Iraq had stabilized at 1.9 percent in August and September.

The central bank aims to ease monetary policy and the promotion of bank credit in order to encourage investment and economic growth in the non-oil sector. And excludes the central bank  when calculating the rate of core inflation.

(Sources: Reuters, XE)

Karbala's local government has signed a contract with a Danish company to install five new electrical generators in the province.

The head of the Strategic Planning and Constructing committee, Abbas Nasser Hassani told AKnews that a delegation from Karbala local government signed the contract with Danish company Simko, which has offices in Turkish capital, Ankara.

Three of the units will have a capacity of 30 mw, with the other two being 20mw.

He said that the company will complete the project within 22 months of the signing of the contract.

Hassani added, "the output of these stations, added to the contract signed with the American company Caterpillar to build a power station with a capacity of 100 mw, which will cover half of the city's electric power total needs (450 mw)."

“We called for the federal government to give the freedom for the Iraqi provincial councils to contract with international companies for the purpose enhancing the electricity production.”

Hassani said that the electricity production of these stations will be separated from the national grid, which needs many years to be repaired.

Regarding the decision by the Ministry of Electricity to increase prices, Hassani said that it is not fair to raise electricity prices, because the people are still suffering from the lack of the electricity.

Karbala's residents get electricity for only one hour in every six.

(Source: AKnews)

National Overview
The national total number of officially reported hostile incidents remained at 119. There was no change to the modus operandi of assassinations in Baghdad during the reporting period; however the seniority of the targets increased and included senior figures in key government ministries. Attacks against the United States Forces - Iraq were minimal; however there was at least one indirect fire attack against the International Zone.

Hostile activity in the north central region was on par with last weeks figures. Balad Ruz in Diyala Province was targeted with a mass casualty attack which killed at least twenty one people. In the northern region activity was consistent as hotspots such as Mosul witnessed the most activity with two vehicle borne improvised explosive device attacks, although they were largely ineffective. The south east’s incident levels remained the same as the last reporting period though there was evidence of an uptick in insurgent intent to launch attacks against security forces in Basra. Explosively formed projectiles and improvised explosive device attacks were aimed at U.S. Forces and private security company targets respectively and a U.S. soldier was wounded in a small arms fire attack in al Amarah, Maysan province. There were very few incidents in the south central area with most of them being improvised explosive device finds. The operational tempo of Sunni insurgents in the western region was rather muted this week.

Political Overview
The deadline set by the Iraqi Federal Supreme Court for the conclusion of the open session of parliament will have lapsed at the end of this week, by which time a parliamentary speaker should have been elected. In an effort to resolve the crisis politicians have been organising an increasing number of meetings, hoping to produce something resembling an official agreement.

Neither of the king makers, the Sadrists and the Kurds, are committed to any one option from the government contenders, with both appearing malleable to the possibility new offers. The Sadrist bloc has made it clear to Prime Minister Maliki that they would be willing to support Adel Abd al-Mahdi should he garner enough support from the Shiite movements and that they wish to see the Islamic Supreme Council of Iraq (ISCI) and Allawi’s Iraqiyyah included in the final construction of government. The Kurds are currently looking to the highest bidder for their support, which seems to be the ISCI at the moment, though the National Alliance and Iraqiyyah are not far behind. For Iraqiyyah however, a few of the Kurds main demands, for example, that the Presidency be set aside for them, are undesirable. Members of Iraqiyyah apparently released statements declaring their willingness to “settle” for the post of President instead of Prime Minister, stating they would not stand in the way of Maliki’s extended tenure. A government containing Iraqiyyah, ISCI and Adel Abd al-Mahdi might be more rewarding for the Kurds than one with the National Alliance as the latter are less likely to deliver on their promises despite their current enthusiasm for the Kurdish “shopping list” of demands.

So where does this leave our timeline for the government formation process? The process of seating a new government will take a long time and it is now looking likely that it will not be completed by 2011, despite recent developments in the negotiating process. This is partly due to a number of upcoming religious festivals that will stall administrative proceedings. If a parliamentary speaker is elected at the end of the week Maliki’s position would be strengthened as his “caretaker government” would be more constitutionally sound and could therefore remain in power in the absence of an alternative. In response to this Maliki’s opponents might try to pursue the dissolution of parliament but this would jeopardize all MPs income, something unanimously undesirable. What is clear is that many of the key influences on the government formation process are touting unachievable aims that are either constitutionally impossible or merely implausible. As these wildly variant demands enter negotiations the goal of a government of everyone becomes increasingly unattainable, leaving Maliki’s extended tenure as the most plausible option.

Baghdad
The number of officially reported incidents in Baghdad remained at 49 last week. There was no change in modus operandi as assassination attacks utilizing improvised explosive devices and under vehicle improvised explosive devices made up the bulk of the insurgent operations. On 25 October the Director General of the Electricity Ministry was shot dead in the south west of the city on his way to work. The following day Mahdi al Allaq, the Undersecretary of the Iraqi planning Ministry escaped assassination when an improvised explosive device detonated against his convoy in central Baghdad. Two days later the deputy assistant of the Interior Minister General Hussein Mahdi Goumaa was wounded when an improvised explosive device struck his motorcade in the al Jihad district. An Iraqi Police Colonel was killed by a under vehicle improvised explosive device in Sadr City on the same day.

Besides these high profile targets several other government ministry workers were killed and injured. Once again the rank and file Iraqi Security Force members in Baghdad were targeted with improvised explosive device and small arms fire attacks while on patrol and static at check point locations with civilian collateral damage occurring. There were many attacks against the Iraqi Security Forces throughout the city in the review period; however, there was little evidence of insurgent targeting of U.S. Forces. There was one indirect fire attack reported on the International Zone on 26 October. There were also unconfirmed reports of Baghdad International Airport being targeted with indirect fire; however the validity of these reports could not be corroborated.

High profile violent robberies continued during the reporting period possibly indicating insurgents’ lack of funds. An armed group attacked a vehicle carrying the salaries of the Education Directorate in the east Rusafa area of Baghdad. The group got away with $1.2 million.

Basra
The number of officially recorded incidents in south east this week remained at ten though there was a definite increase in insurgent intent in Basra Province during the reporting period.

On 26 October insurgents ineffectively targeted a U.S. Forces vehicle with an explosively formed projectile on route Minden to the east of Basra City. The Iraqi explosive ordnance disposal team initially stated that the device was an improvised explosive device; however U.S. Forces later reported that the device was a poorly constructed explosively formed projectile. Another explosively formed projectile was found three days later close to an Iraqi Security Forces check point on route Topeka near the cloverleaf junction. The device was reported to have been well constructed. The following day a private security company was targeted by an improvised explosive device to the north east of Az Zubayr which resulted in minor damage to a vehicle.

The increase in hostilities this week can possibly be attributed to the lack of progress in the government formation process. The Sadrist bloc had expressed its support for Maliki’s second term in office providing their demands were met. A deadline for the demands has now passed and an increase in Shia insurgent activity may well be resultant from this. It is likely that indirect fire attacks against Basra Contingency Operating Base will recommence soon due to the frustrations felt at political negotiations.

On 28 October an under vehicle improvised explosive device targeted a Southern Oil Company engineer in the centre of Basra City. The man was seriously injured and it is believed that the attack was related to a tribal dispute rather than targeting of oil workers. This was the first under vehicle improvised explosive device attack in the city since June and follows two under vehicle improvised explosive device finds in the past two weeks.

According to a report from Associated Press, Iraq's 325 members of parliament have collected their $90,000 stipends, are claiming $22,500 a month in salaries and allowances, and are spending free nights in Baghdad's finest hotel.

That's what they get for attending the only session of parliament since the March elections, a session that lasted about 20 minutes. To cap it all, they haven't passed a single law!

In contrast, a mid-level government employee makes around $600 a month.

As the parliament prepares to hold what will be only its second session since the inconclusive election in March, lawmakers' lavish salaries and privileges are reportedly deepening resentment among Iraqis struggling to make ends meet and frustrated with the political deadlock.

The Shiite religious leadership has warned politicians against living the high life while ordinary people lack basic services, such as electricity and water.

In a mosque sermon Friday, an aide to Iraq's top Shiite cleric urged parliament to lower their salaries when they next meet.

"Iraqi politics has turned into business," said Wael Abdul-Latif, an independent Shiite politician and former lawmaker from Iraq's second largest city of Basra. "Many of the lawmakers would not even have bothered to run for the parliament" if salaries were not so high, he said.

Basra's Council approved an energy project worth 288 billion dinars [$246m] on Thursday, a vice president of the Basra council told Aswat al-Iraq news agency.

“The council approved during its regular session an energy project to establish four generating units with a production capacity of 400kv (sic) at the al-Najiebiya electricity plant,” Ahmad al-Salieti is reported as saying.

These figures do not make sense to IBN - we're guessing they meant 288 million dinars to build 400 KW of capacity.

(Source: Aswat al-Iraq)

The Chairman of the National Investment Commission, Dr. Sami Al- Araji, announced that 125 companies of various nationalities have submitted offers to implement the 'One Million Housing Units' project [National Housing Project] throughout Iraq, and says that 35 companies from that list will be chosen.

Dr. Araji explained that the project will be built on an area of 80,000 donums [20,000 hectares] over a period of two years.

Companies bidding for the work came from America, France, Spain and Korea, in addition to 12 major Turkish companies.

Dr. Araji also said that the NIC is currently evaluating the companies on technical and economic basis before starting the implementation phase, referring that the commission had also informed the investing companies about the importance of cooperation with specialized companies to provide the such infrastructure as electricity, water, sewerage, communications and other important services.

Karbala Council has issued an appeal to its citizens not to pay the new domestic electricity tariffs introduced by the Ministry of Electricity this month, according to AKnews.

The head of Karbala’s energy and fuel commission, Zuhair Samil al-Da’mi, told the agency that the ministry’s ten-fold increase was “completely unfair” in the light of the poor levels of service and supply.

“Why should the prices rise so much when electricity supplies have not improved?” he asked.

Da’mi complained that electricity supplies in Karbala this summer, when temperatures soared above 50 degrees, were so bad that only two hours in six were covered by the national grid.

“Therefore, we call on the people not to pay their bills until the service improves”, he said.

Da’mi added that all of the councils in Iraq’s Middle Euphrates region had gathered in Najaf this week and unanimously decided to reject the ministry’s new domestic tariffs and to demand that they be cancelled.

The federal Ministry of electricity issued the new tariffs to be effective from the beginning of this month in all Iraqi provinces with the exception of the Kurdistan Region.

The 1000% increase in domestic energy pricing was part of a move to encourage the population to consume national energy supplies more responsibly, the ministry said.

(Source: AKnews)

Iraq is meeting with Royal Shell Dutch to finalise a draft of a $12 billion deal to develop a gas-structure project in southern Iraq, and may sign a deal by the end of this year, a senior Iraqi oil official told Dow Jones Newswires on Tuesday.

"There is a meeting being held in Basra to agree on a final draft contract," Asri Mousa, an Iraqi Oil Ministry technical advisor said. It could be the last meeting before sending the draft to the cabinet for approval.

"We are expecting to sign the project with Shell by the end of this year," he said.

Asked why the project was delayed, Mousa said the two parties needed to agree on some legal wording of the draft contract and they had done so.

As we reported last month, the Iraqi cabinet delayed the finalisation of the project with Shell and Japan's Mitsubishi Corp. to capture gas from Basra's oilfields because of legal issues related to the joint venture. The cabinet already had approved the planned investment in June, but it is now waiting to sign the final draft once it is resubmitted by the oil ministry.

Reuters reports that French engineering group Alstom has signed a 20 million euro ($27.83 million; 33 billion iraqi dinars) contract with Iraq on Monday to rehabilitate a unit at one of its power plants.

Alstom, maker of industrial power plants and high-speed trains, said in a statement it would rehabilitate a unit at the gas-fired power station in Iraq's holy Shi'ite city of Najaf.

The unit, which has been out of operation for five years, is expected to be reconnected to Iraq's electricity grid by summer in 2011, Alstom said.

Iraq's power infrastructure has been badly damaged by decades of war and sanctions, and 7-1/2 years after the U.S.-led invasion, its national grid still only supplies a few hours of power a day. Intermittent electricity is one of the public's top complaints.