The recently announced multibillion-dollar deal between the Iraq government and Siemens and General Electric (GE, $12.42) is a big boost for the struggling power division of both companies, as it lays the foundation for both companies to win many such contracts in the near future.
Slow demand growth in developing nations coupled with an increasing importance of renewable energy had hit both companies hard in the recent times. But this contract to sell power equipment to the nation’s ailing power infrastructure industry is a big win for both.
Despite a closely fought battle between GE and Munich-based Siemens, the latter was in a pole position to win the entire contract worth US$15 billion. However, with the Trump administration’s late intervention in terms of putting pressure on the country’s government to give some more business to GE, the end result was making GE part of the contract.
GE declared that it had signed a principles of co-operation contract to add 14 gigawatts of power generation capacity, with an immediate order for 1.5GW to come into service next summer. Siemens declared to have signed a ‘landmark’ contract to supply Iraq with 11 gigawatts of power generation over the next four years.