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16 April 2010 -Business Weekly

AVEVA Group in Cambridge, one of the world's leading providers of engineering data and design IT systems to the plant, power and marine industries, has won work in Iraq.

State Industrial Design and Consultation Company (SIDCCO), one of the largest EPC contractors in Iraq, has selected AVEVA Plant solutions for ongoing and future projects in the strife-torn country.

SIDCCO is owned by the Ministry of Industrial and Minerals. As one of the largest EPC contractors in Iraq, SIDCCO offers services ranging from feasibility studies to turnkey constructions. Ministry of Industry and Mineral Companies, Ministry of Oil Companies and Ministry of Electricity are among the company’s biggest clients.

Ali Al-Naama, SIDCCO DG, said: "We are impressed by AVEVA Plant's engineering and business benefits, which make it possible to work in the most complex projects by enabling coordination amongst various disciplines in a clash-free environment.

“We look forward to benefiting from AVEVA solutions for more productivity and site rework reduction. SIDCCO's engineering and design teams are having intensive training to be able to start implementing and using AVEVA's solutions immediately.”

Louay Dahmash, VP of AVEVA Middle East, said AVEVA had increased its presence in the Middle East despite the economic downturn.

“We are very excited to be entering such a promising market and being a part of Iraq's reconstruction projects with SIDCCO.

“I am confident that AVEVA will continue proving itself with its proven and evolving technology in Iraq, which will play a great role for AVEVA's growth in the region."

The Iraq success adds to further significant export wins in the first quarter of this year for the Cambridge company.

AVEVA says that sales of its AVEVA NET Information Management solution have surged forward in Russia over recent months despite challenging worldwide economic conditions.

AMET University, India's premier marine industry university, will be featuring AVEVA Marine solutions as part of its curriculum.    Located in Chennai, AMET University is the first private maritime academy in India.

Peter Finch, president, AVEVA Asia Pacific, said: “India's prominence as a source of skilled labour in the marine industry is seen in the rise of outsourced marine engineering projects by the world's leading shipyards.

“The AVEVA Academic Initiative equips graduates with hands-on skills in using the leading shipbuilding range of solutions preferred by top global shipyards.”

Finance Minister Baqer al-Zubaidi discussed on Tuesday with Electricity Minister Karim Wahid the important projects, which will be implemented by the electricity ministry in Iraq, according to a ministerial statement.

“The meeting was attended by representatives of finance, planning and electricity ministries,” said the statement received by Aswat al-Iraq news agency.

“The projects will include the development and rehabilitation of the power grid to provide citizens with excellent services,” the statement added.

The finance minister stressed the importance of benefiting from the financial allocations given to the electricity ministry within 2010 general budget.

( Aswat Al Iraq )

He pointed out that Iran's exports to Iraq exceed Iran's exports to the UAE.

"Iran's export to both these countries in 2008-9 was almost the same Iran's exports to Iraq in 2009-10 doubled compared to the previous year.

Masoud Daneshmand, the head of Iran-Iraq Chamber of Commerce, told Iran Daily on Saturday that Iran's exports to Iraq increased from $2.5 billion in 2008-9 to $5 billion in 2009-10.

He noted that with the situation in Iraq calming down and reconstruction underway, Iranian products are highly favored in Iraq.

"Given the fact that during the (1980-88) war, many infrastructures of Iraq such as electricity and gas were ruined and consumption declined significantly. But now that many infrastructures of the country are being completed, the type of lifestyle and the respective needs change," he said.

Daneshmand also said plans are underway for exporting technical and engineering services to Iraq.

"The Iranian private sector has conducted negotiations with the Iraqi side for concluding contracts, a number of which have reached the implementation phase," he said.

At present, a power plant in Najaf with a capacity of 500 megawatts is under construction. The project will become operational in a year's time and the investment of the Iranian side will be recovered through the sale of electricity.

Two housing projects, with a capacity of building 4,000 residential units, are being implemented in Iraq by the Iranian private sector. One of these projects is located in Basra. These housing projects will be completed within a couple of years.

Negotiations have been finalized for constructing two power plants in the Iraqi Kurdistan region and Al-Amara province. The two sides have also conducted negotiations for building a brick factory and a detergent factory in Al-Amara.

The official said that in 2009-10, Iran's exports of technical and engineering services to Iraq amounted to $1 billion.

"Since launching projects from the feasibility phase to implementation phase is a time-consuming process and technical and engineering services project in 2009-10 did not become fully operational, only $300 million of the projected estimates were realized," he said.

and reached $2.5 billion each.

However, the figure pertaining to Iraq reached $5 billion in 2009-10 while exports to the UAE in 2009-10 remained the same as 2008-9. Our exports to the UAE are reexports, but the Iraqi people are end users of Iranian products," he said.

Daneshmand said the Iranian private sector's exports to Iraq are mostly construction materials such as cement, bricks, plaster and consumer goods as well as food products.

( Iran Daily )

Director of electricity distribution in Maysan , Faleh Hadi Alwan, has said that the highest power load this summer, will be up to 500 megawatts, adding that the national network provides a good share of electricity to the province at the present time.

Alwan said that misuse of the electricity network is one of the major challenges facing workers in electricity conservation.

,At the present time electricity supply in Maysan province is two hours for every four hours of disconnect , according to specialists.

( Iraq Directory )

Iraq Ministry of Electricity said that it will cover two thirds of the country’s need of electricity during the upcoming summer after finishing the rehabilitation of Electricity power stations and to establish new units fast.

 The General Director of the Middle Zone said that the power stations will operate with their full capacity by July 2010. A source in the Ministry of electricity said that for the first time Iraq power production will reach 9000 megawatt during the upcoming summer.

Kareem Waheed, minister of Electricity has inaugurated  the reopening of Al-Rasheed, Al-Dibs gas stations which will supply about 65 mega watts of power to Kerkok province.

A statement showed that these two stations were working in the 80's and had stopped. Today, their production is 31 mega watts. The project will be managed by an Italian company which has supplied engineering and technical staffs.

A contract has been signed to buy diesel and other types of fuel due to a shortage of gas in the middle region, Kareem also said that they hope to finish the project quickly.

( Eye media company )

Iraq’s Presidential Council approved the 2010 budget on February 11, 2010. It is for $71.29 billion, the second largest amount since Iraq regained its sovereignty in 2005. A breakdown of spending shows that operational spending, which goes towards salaries, pensions, and the food ration system is again almost ¾ of the budget, and that electricity appears to be the priority of the government in the New Year.

Iraq has a large and inefficient state-run economy with a bloated bureaucracy. It should be no surprise then that the majority of the country’s budgets since 2005 have gone towards operational costs. In 2010, $51.59 billion, 72.3% of the total, is for the operations budget. Back in 2005, the operations budget was only for $16.1 billion. One major reason for the dramatic increase is that the number of people working for the government has doubled since then, making it the largest employer in the country. Many extra workers have been hired as part of patronage systems and to keep people out of the insurgency. The food ration system, which is the largest in the world, has also increased in cost over the last two years because of declining agricultural output and the on-going drought has led to increased imports. Iraq spent $7.3 billion on the program in 2008. The government has traditionally spent a large percentage of its operational budget.

The capital budget in 2010, which is for investment, is for $19.7 billion. That’s an increase from the previous year when it was $12.73 billion. The Electricity Ministry is getting the largest increase with $3.49 billion in 2010 compared to $1.08 billion in 2009. It has big plans this year to boost output, and build a series of new power plants. Unspecified “other” spending is also going up from $4.73 billion in 2009 to $7.89 billion this year. The Kurdistan Regional Government (KRG) is also getting an increase from $1.95 billion to $2.72 billion. Kurdistan gets a set 17% of the budget however, so the growth in their capital budget is due to the larger budget overall. The other parts of the government are not gaining as much. The Defense, Interior, and Justice Ministries, which deal with security, are only getting modest improvements in their budgets. Defense is getting $380 million compared to $270 million last year. The Interior Ministry is going from $220 million to $260 million, and the Justice Ministry is getting $140 million this year compared to $110 million. Iraq’s eighteen provinces are also getting only $10 million more in 2010. The Iraqi government has never been good at spending its investment budget however, so only around 50-60% of this money may get spent.

The 2010 budget shows where Baghdad’s priorities are for the New Year. First, they want to dramatically increase spending after the 2009 budget had to be cut due to the world recession. Second, electricity and discretionary spending are the focus of investment this year. Last, the bloated government is still eating up the majority of the budget. Baghdad needs to vastly improve its ability to spend its capital budget, and could cut thousands of unneeded workers off the payroll. Both are unlikely to happen however as Iraq’s bureaucracy lacks trained staff and people are use to going to the government for employment.

Iraqi Budgets
2005: $24.4 bil
2006: $34.0 bil
2007: $41.1 bil
2008: $72.2 bil
2009: $58.6 bil
2010: $71.3 bil

2010 Revenue Projections And Budget
Oil Revenue: $47.91 bil
Other Revenue: $4.86 bil
Total: $52.77 bil
2010 Budget: $71.3 bil
Projected Deficit: $18.53 bil

Breakdown Of 2010 Budget
Total: $71.3 bil
Operational Budget: $51.59 bil (72%)
Capital Budget: $19.7 bil (28%)

Operational Budget
Other: $15.82 bil
Finance: $10.55 bil
Kurdistan Regional Government: $6.03 bil
Interior: $5.89 bil
Defense: $4.52 bil
Education: $4.31 bil
Trade: $4.03 bil
Justice: $450 mil

Capital Budget
Other: $7.89 bil
Electricity: $3.49 bil
Kurdistan Regional Government: $2.72 bil
Oil: $2.65 bil
Provinces: $2.18 bil
Defense: $380 mil
Interior: $260 mil
Justice: $130 mil

A delegation from Basra province arrived in India on Wednesday to sign contracts related to electricity sector.

“The delegation includes representatives of state-run institutions,” a local media source told Aswat al-Iraq news agency.

He said that the delegation will examine the possibility of establishing Indian projects in the electricity field in Basra.

The Special Inspector General for Iraq Reconstruction (SIGIR) reports that power output was down for the last three months of 2009. In the 4th quarter of last year Iraq produced 5,285 megawatts or 126,843 megawatt-hours per day. That compared to 138,475 megawatt-hours per day in the 3rd quarter, which was an all time high since the 2003 invasion. At the same time demand dropped by 8% as Iraq entered into the colder months of the year. Reduced output from power plants was the cause of the decreased production. This was the first time that electricity output decreased since the beginning of 2008.

The Electricity Ministry plans to boost production with a General Electric (GE) and Siemens deal to buy new generators. In the last three years the Ministry already increased the country’s feasible capacity by 40% from 8,500 megawatts at the end of 2006 to 12,000 megawatts by the end of 2009. Feasible capacity is how much a generator can produce given the environment it works in. The GE and Siemens deal is meant to double feasible capacity over the next five years.

The SIGIR is unsure whether this deal will allow the Ministry to meet demand however. Iraq’s power plants have historically operated at much lower levels than they can. For example, Iraq has the capacity to produce 15,527 megawatts, but it’s feasible capacity is 11,968 megawatts, and its actual production was only 5,285 megawatts at the end of 2009. Fuel shortages to run power plants, aging infrastructure, and the lack of maintenance are three major causes for the difference between the feasible and actual production. Another problem is that demand has consistently increased since 2003. The government has large subsidies on power, which encourages consumption because the public doesn’t have to pay the actual cost. As electricity production has increased, so has demand. Finally, the power grid needs to be upgraded because it cannot handle a large increase in capacity, but there are now plans to renovate it.

In the latest survey, only 18% of Iraqis were somewhat or very satisfied with the amount of power they received. Despite the large increase in electricity production since the overthrow of Saddam, demand has sky rocketed as well increasing dissatisfaction. The government is making moves to close the gap, but the institutional and structural problems outlined above make it difficult for Iraq to produce what it could. Those issued need to be addressed otherwise the government is wasting a huge amount of its investment on new generators.

Iraq's electricity and transport ministries have announced the launch of a joint railroad project that will carry fuel to the Dora Power Station in southern Baghdad, Aswat al-Iraq has reported.

Transport minister, Amir Abduljabbar has said that a similar project will be carried out in Basra province, south of Baghdad.

( AME Info FZ LLC )