MEGA PROJECT PLANS FOR DEVELOPING THE POWER AND

IRAQ CONTRACTORS FORUM March 24, 2014 Dubai-UAE

MEGA - PROJECT PLANS FOR DEVELOPING THE POWER AND WATER SECTOR IN IRAQ AND KURDISTAN REGION OF IRAQBasil Issa – CCC Country Manager

Electricity Sector steps up Power Surge

Introduction

In adequate electricity supply is a major concern for Iraq’s government. This impacts on daily life and constrains economic growth, especially in key areas such as oilfield and industrial development.

A huge effort is being made to improve the supply but a deteriorating network that had insufficient investment for many years exacerbates the current situation. This neglect has left all three components of the system generation, transmission and distribution significantly downgraded.

As a result, multibillion dollar spending on improvements is not an option but an economic and political necessity, particularly since demand has been growing six times faster than capacity is being installed.

While the Electricity Ministry plans a huge increase in capacity and conversion of plants to combined-cycle technology, growing demand may force it to rely on power imports in the short term.

IRAQ CONTRACTORS FORUM MONDAY 24 MARCH 2014 Dubai, UAE 2

MEGA-PROJECT PLANS FOR DEVELOPING THE POWER AND WATER SECTOR IN IRAQ AND KURDISTAN REGION OF IRAQ

Iraqi Federal Ministry Of ElectricityThe Ministry of Electricity is stepping up efforts to implement the development of new generation capacity. The Actual Production capacity is currently 12,100 MW, with demand at 16,500 MW. The Ministry of Electricity aims to produce an additional 7,500 MW by the end of 2014 and another 7,500 MW by the end of 2015. The Iraqi government has allocated $4.7 billion to build power plants and finance existing electricity projects for this year 2014.In terms of projected spending over the next five years, Iraq is the only country in the region whose power sector can compete with that of Saudi Arabia. Between 2012 and 2017, Iraq’s Electricity Ministry plans to spend about US$ 27 Billion on new power generation, transmission and distribution projects.According to the energy master plan, about 24,400MW of new capacity will be added between 2012 and 2017.The main push is to activate turbines bought from the General Electric and Germany’s Siemens in December 2009. The deals were valued at US$3 billion and US$2.1 billion respectively and weredesigned to provide the targeted 10,000MW of power capacity.The generating capacity is due to be installed at a number of existing or new power stations at various locations including Bayji, Taza, Rumaila, Dibis, Nineveh, Al Khayrat, Najaf, Al Hillah, Akkasand Najibiya.Also Ministry of Electricity has decided to issue EPC Contracts with an estimated amount of US$ 925 million will be spent on the planned power plants at Diwaniya, Samawah, Amarah and Shatt Al Basrah .



Power and Hydrocarbon SectorIt is recognized that the power and hydrocarbon sectors need to improve coordination in areas such as investment planning and policy making, in order to optimize long term development of all these sectors. The agreement by the Ministry of Oil to provide feedstock to new capacity coming online after 2015 will help in this task. A shortage of feedstock guarantee in the past has been given as a reason for a lack of investment in generating capacity.A study shows that the Iraq’s total energy feedstock mix comes as per below:

32.7% of heavy fuel oil, 27.8 % from crude oil 13.3% from gas oil. 26.6% from Natural gas fires

Parsons Brinckerhoff’s study expects around 67% of Iraq’s total power generation capacity to be gas fired by 2020, with heavy fuel oil plants phased out. By 2030, the figure is expected to stand at nearer 90%. Dependency on crude and heavy fuel oil for power generation in gas turbine power stations decreases efficiency and increases maintenance requirements and production costs.



Iraqi ministry Of Electricity Master Plan Construction Goals 2012-2017As outlined by the country’s energy Master Plan, about 24,400MW of new capacity will be commissioned between 2012 and 2017. This includes 13,000MW of gas-fired capacity that will come online before 2015, and 7,000MW of thermal power capacity and 400MW of renewable energy by 2015.



Gas Power Plants; 13000

Thermal Power Plants; 7000

Renew-able En-

ergy; 400

Conver-sion to Com-bined Cycle; 4000

Power Plants Investment Program

As of February 2014, Iraq’s cabinet has approved several opportunities for investment and as below:

• 6,000MW of new power capacity.

• 21,000MW of new power capacity was planned in order to meet forecasted capacity in the coming years, with about 6,000MW of new capacity in the contract negotiation phase while an additional 15,000MW project was under study.

• Opportunities in converting about 8,000MW of existing power plants from simple open-cycle to the more energy efficient combined-cycle technology.

• Improving transmission and distribution networks.

• Plans to introduce legalization to reduce wastage in the sector and promote investment.





Powering the Kurdistan Region Of IraqBy 2016, the Kurdistan Regional Government aims to produce enough electricity to satisfy the Region’s energy needs and allow for the export of power to neighboring countries.

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20160

1000

2000

3000

4000

5000

6000

7000

8000

339471 489 482 484

8091047

14351835 1985

9251171

1457 17391889

20962302

2806

3279

3750

4215

46985051

Max. Demand OfPower Electricity

Average DistributedLoad

In 2007, the Region only produced 482 MW of electricity; as of November 2013, that number had increased to 2,800 MW. This constitutes a 480% increase in only six years. Moreover, since 2006, energy consumption within the Region has increased by approximately 140%, with current rates around 3,750 Megawatts per year.



Much of the growth in generation is due to the construction of three major gas power plants located in Erbil, Slemani, and Dohuk, built and operated by Mass Group Holding. The targeted capacity of these three stations alone is 3,500 MW, with room for additional growth.

ELECTRICITY DEMAND BE SECTOR

Households54%

Indus-trial 9%

Commercial12% Governmental

12%

Agricul-ture13%

IPP Building Program

The most successful policy adapted by KRG has been achieved through bilateral negotiations with Jordan-based Mass Global, which has developed more than 90 per cent of the region’s power generation capacity using Independent Power Projects (IPP).

• Generation• Hydro

• 3 Plants• 650 MW Total Output

• Internal Combustion • Numerous Plants• 189 MW Total Output

• IPP• 3 Plants (SGT)• 2500 MW Total Output• 4 Plant (ICE)• 150 MW Total Out Put• Grand Total: 3239

•Distribution• 33 KV Network• 11 KN Network• 415 V Network• 240 V Network

•Transmissions• Substations

• 34X132KV AIS & GIS• 115X 33KV/11KV

• Transmission Lines• 1980 KM 132 KV• 2370 KM 33 KV

• Regional Interconnections• 132 KV to Kirkuk• 33 KV to Iran• 400 KV (Future)

•Power Generation Investment• US$ 5 Billion by 2013

•Total Subscribers• 1.1 Million

•Targeted Annual Growth Rate • 15%



MOE Existing Facilities

•Generation•Plant for KRG Base Load (Thermal)

•Khabat Phase 1•300 MW Total Output

•6000 MW IPP to include:• Hydro – Approximately 1100 MW:• Taq Taq, Rashawa, Mendawa, Deralok

• ICE - 850 MW:• Harir-Soran, Koya, Saidsadik, Ranya

• CCGT – 4000 MW:• Kalar, Khormala, Shekan, Zakho

•Transmissions•Substations

•5X 400KV•19X132KV•10X 33KV/11KV

•Transmission Lines•550 KM 400 KV•1860 KM 132 KV•650 KM 33 KV

•Regional Interconnections•400 KV, 132 KV to Turkey, Mosul and

Kirkuk•Power Generation Investment

•US$ 7 Billion by 2016 •Targeted Power Generation Capacity

• 8000 MW by 2020



MOE Under Construction and Future Projects

Water in Iraq Fact Sheet IntroductionThe combination of climate change, population growth, and limited environmental awareness effectively limits water resource management in Iraq. In addition, the destruction of vital infrastructure, as a consequence of conflict, and a lack of capital investments have resulted in the deprivation of many Iraqis from access to potable water and basic sanitation facilities. According to a 2012 UNICEF report, 91 percent of the population has access to potable water with significant differences among governorates and between urban and rural areas. For example, in rural areas, only 77 percent of the population has access to improved drinking water sources compared to 98 percent in urban areas. Furthermore, 6.2 percent of the population does not use an improved sanitation facility. Poor drinking water and sanitation has increased the risk of waterborne diseases

especially among vulnerable groups such as children and women.



Agriculture, 40.50%

Marshland Mainte-nance; 11.00%

Evapo-ration

and Other

Losses; 8.40%

Civil Use; 3.78%

Industry; 2.77%Power Generation;

0.40%

2015 FORECAST FOR WATER REQUIRMENTS BY SECTOR

Iraq Federal Government plans 50 Water and Sewage ProjectsIraq is to spend billions of dollars over the next two to three years on 50 water and sewage projects that would be open to work by foreign contractors.Iraqi government took steps, including facilitating the issue of visas to businessmen, to encourage foreign contractors to set up shop in the violence-torn country.Iraqi Ministry of Municipality and Public Works announced that the budget allocated to projects that will be awarded in 2014 is $1.5 billion annually for two to three years.New projects, which was numbered at 50, were related to building sewage infrastructure and securing portable water from the Tigris-Euphrates river system.Iraqi Government took steps to reduce bureaucratic procedures, including speeding up the process of awarding contracts and making it easier for foreign investors to obtain entry visas into the country.Also the Iraqi government has already authorized heads of diplomatic missions to issue visas for businessmen and investors within 48 hours.In its attempt to bring in reluctant contractors, the Iraqi government is also offering letters of credit that could be used by contractors who need to import equipment and other supplies.Ministry of Municipality and Public Works oversees at least 50 infrastructure projects, most of them involving companies from Asia and the Middle East, which are more willing than their Western counterparts to take on risk.Recently a consortium comprising Hitachi, Veolia Environment subsidiary OTV and The



Arab Contractors, a nationalized Egyptian construction company has received an order from the Iraqi ministry of Municipalities & Public Works for the Engineering, Procurement, and Construction of a large desalination plant in Basrah, in the south of Iraq. This US$ 242.8 million will incorporate maintenance and operations for the period of five years. Hitachi will oversee the project as the leader of consortium. Construction of the 199,000 m³/d reverse-osmosis plant is scheduled to begin in February 2014, with completion scheduled for July 2016. Existing water purification facilities in Basrah, with a total capacity of 400,000 m³/d, are unable to keep up with the city's huge demand for fresh water - estimated at up to 900,000 m³/d - and are deteriorating. The new plant will purify the river water, which is to be drawn from close to the river mouth, where sanity is relatively high as per the experts’ views. After the successful completion of the project, the project will be regarded as the highest capacity single water-purification plant, capable of supplying 400,000 people. For the first time, since the end of war within Iraq, a Japanese company has received an order for a large-scale water infrastructure project based on internal funds from the Iraqi government, rather than Japanese government yen loans.



Water for everybody in Kurdistan Region Of IraqIraqi Kurdistan may be blessed with a varied geography that includes mountains, rivers and lakes, but as the population grows and the cities expand through massive new residential and commercial projects, enormous strain is being put on the region’s water and sewerage capabilities.The KRG has taken measures in recent years to move the issue to the top of its agenda and today the Ministry of Municipalities and Tourism enjoys the largest slice of the government budget of any ministry, with around US$865 million provided for 2013. Seventy-three percent of the ministry’s budget is focused on developing water and sewerage projects.Under the previous Iraqi regime there were no strategic water projects carried out in the Kurdistan region and 80-90 percent of urban residents received water from wells. However with the rapid growth and urbanization of the previous decade, water levels have dropped dramatically and the threat of pollution has increased. The KRG has embarked on a policy of closing the wells while launching a series of massive new water and wastewater projects around its towns and cities.The General Directorate of Water and Sewerage is the ministry’s department entrusted with overseeing the development of the region’s major water and wastewater projects.The directorate has established a potable water master plan which outlines and locates priorities. Included in the master plan there are currently some US$750 million of active projects under construction which are covered by KRG funding along with a US$350 million soft loan from the Japanese government.



In 2013 the KRG inaugurated a US$200 million water treatment plant in Halabja, while multi-million dollar projects are being developed in Akre, Chamchamal, Erbil, Zakho, Duhok, Shaqlawa, Salahaddin and Barzan. In Amedi district, a US$96 million water project is nearing completion.

However with the Erbil heavy sewerage project alone needing US$1 billion of investment, and many major projects on hold, the government has been pushing through legislation that will allow for greater involvement of foreign companies to make up the budget shortfall.

The Ministry are currently looking at a new way of doing the projects, such as through investment or long-term loans from reliable international companies and are in negotiations with some large foreign companies to bring them on board for some projects.

But it is not just a case of creating a modern and efficient water and sewerage infrastructure with the Kurdistan region’s massive water consumption coming under the spotlight. According to international standards, each person needs 200 liters per day but the consumption rate currently used is 400-600 liters per day per capita, which is a huge figure.

In response, the government has launched a program to install smart meters, which will measure and regulate the water and electricity consumption of households and businesses across the region.

Major challenges remain as the KRG continues to develop this vital cog of its infrastructure, but as it opens investment opportunities to the private sector it is moving closer to achieving its motto ‘water is for everybody’.



Visions for Future

Water Treatment Projects Priorities for Kurdistan Region

1- Erbil Water Project No. 4 (known as IFRAZ-4)Estimated Cost of US$ 600 Million with a capacity of 25000 Cum/hr. on Design, Build, Operate Basis (DBO).

2- Sulaimani Water Project No. 4 Estimated Cost of US$ 300 Million with a capacity of 10000 Cum/hr. on Design, Build, Operate Basis (DBO).

3- Khanaqin Water ProjectEstimated Cost of US$ 195 Million with a capacity of 6000 Cum/hr. on Design, Build, Operate Basis (DBO).

4- Harir Water ProjectEstimated Cost of US$ 110 Million with a capacity of 3000 Cum/hr. on Design, Build, Operate Basis (DBO).

5- Kushaf-Makhmoor Water Project.Estimated Cost of US$ 150 Million with a capacity of 2800 Cum/hr. on Design, Build, Operate Basis (DBO).



6- Darbandi-Khan Water Project..Estimated Cost of US$ 40 Million with a capacity of 2000 Cum/hr. on Design, Build, Operate Basis (DBO).

7- Barda Rash Water Project..Estimated Cost of US$ 80 Million with a capacity of 2000 Cum/hr. on Design, Build, Operate Basis (DBO).

8- Khabat Water Project..Estimated Cost of US$ 80 Million with a capacity of 3000 Cum/hr. on Design, Build, Operate Basis (DBO).



CCC Presence in IraqConsolidated Contractors Company (CCC) was originally formed in 1952 in Lebanon. CCC, with it’s managing office based in Athens - Greece, currently employs approximately 130,000 people in its worldwide operations. CCC is predominately a construction company, providing project management, engineering, procurement and construction services to the industry.CCC opened its first branch in Baghdad in 1965 and now has the below offices and facilities:

-An office in Baghdad established in 1965.-In Basrah CCC established, in 2010, 7 fully equipped Fabrication Shops, with bridge cranes,

skilled Iraqi work-force, stock steel materials, industrial coating, and testing protocols for many mechanical and piping components necessary for the Oil & Gas field developments needs in Rumaila Yard. -CCC has a office and a PMV Yard in Erbil, Kurdistan Region Of Iraq, since 2006.



Resources:-ZAWYA, February 27, 2014 by Haider Ibrahim.-Power Generation a top priority in Iraq, MEED 2012, by Verity Ratcliffer.-Investment Overview of Iraq, by National Investment Commission.-The New Iraq, 2012 Discovering Business by National Investment Commission in association

with UK Trade and Investment.-Business Intelligence Middle East, February 27 2014.-Kurdistan Review Special Edition, January 2014, by Invest in Group.-The Review Kurdistan Region Of Iraq, March 2013 by Invest in Group.-Kurdistan Regional Government, Ministry Of Electricity Overview, 3-5 December 2012, by

Hama Hawrami.-Water in Iraq Factsheet, March 2013, by UN Iraq.-Iraq plans 50 Water and Sewage Projects. Reuters, September 17 2013, by Mahmoud

Habboush.-Iraq Directory, December 20 2013.-The . Report Company, Kurdistan Region, Water for everybody, September 19 2013, by Oliver

Moss.-Visions for Future-KRG, Ministry of Municipality and Tourism, Potable Water and Waste

Water Strategic Projects, 2014.




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