Hyundai Heavy Offers Lowest Bid to Build Iraqi Power Plant

South Korea’s Hyundai Heavy Industries Co. tendered the lowest of six bids for the construction of a 500-megawatt power plant in central Iraq, an Iraqi Electricity Ministry official said.

Hyundai Heavy bid $158.9 million for the work, which will help boost power supplies and ease the outages that have sapped Iraq’s economy. Metka SA (METTK) of Greece, Turkey’s Enka Insaat & Sanayi AS, Lanco Infratech Ltd. (LANCI) of India, and companies from Iraq and Jordan also bid for the project, Deputy Electricity Minister Salam Qazaz said in an interview today.

“The winner of the bid will be announced between three days and one week following a study of technical and financial aspects of the tender,” Qazaz said in Baghdad. The natural-gas fired plant in Najaf is to be built within 18 months, he said.

In a separate bid, Hyundai Heavy, Lanco Infratech, three Iraqi groups and an Italian company submitted offers to build a 250-megawatt power station in Al-Qaim in western Iraq, Sabih Ishak, a director general at the Electricity Ministry, said in an interview from Baghdad. Results will be announced April 17, he said. The plant will run on gas from the nearby Akkas field, he said.

Conflict, Sabotage

Iraq’s electricity plants and distribution system have suffered through years of conflict, sanctions and sabotage. Iraqis receive power from the national grid for an average of about one hour in every five. Frequent outages hamper economic reconstruction, and protests over unreliable electricity supplies have made the issue a major concern of the government.

Former Electricity Minister Karim Wahid resigned last June after two people were killed in riots over blackouts and power rationing. Prime Minister Nuri al-Maliki pledged to address the problem after forming his new government in December.

A group of South Korean companies signed contracts on April 7 to build 25 power stations, half of 50 that are planned at a total value of $6.25 billion. Caterpillar Inc. (CAT) and Man SE (MAN) are among companies that have bid for the remaining 25 plants, Electricity Minister Raad Shallal said on March 23.

The government also invited bids in December for the construction of four bigger plants that would raise generating capacity by a combined 2,750 megawatts. Those bids will be for a 1,250-megawatt plant near Basra, and three plants of 500 megawatts each in the cities of Samawa, Diwaniya and Amarah.

Power supply this summer will improve to an average of eight hours a day nationwide, up from about six hours a day last summer, Shallal said last month. Iraq produces 7,000 megawatts and imports an additional 1,000 megawatts, while demand is about 14,000 megawatts, he said.

To contact the reporter on this story: Nayla Razzouk in Amman at nrazzouk2@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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