Iraq to Offer Tenders to Revamp 250 State Industrial Plants, Official Says

By Nayla Razzouk - Sep 29, 2010 2:55 AM ET

Iraq issued tenders to redevelop more than 10 industrial plants as part of a plan to revamp 250 state-owned facilities through private investors, an industry ministry official said.

“We now have tenders for more than 10 plants for joint strategic partnerships on a 15-year production-sharing basis,” Deputy Minister Mohammed Abdullah Mohammed said in an interview in Istanbul yesterday. “The tendered plants are mainly producing cement, petrochemicals, steel and pharmaceuticals.”

Since the U.S.-led invasion that ousted the regime of Saddam Hussein in 2003, the new authorities in Iraq have encouraged private businesses to participate in modernizing and strengthening the previously state-dominated economy.

“Our vision is to limit state ownership and turn almost all the 250 plants to the private sector by 2020,” Mohammed said. “We want the ministry to become just a regulating and monitoring authority, and not a holding company running 60 companies.”

The ministry of industry and minerals owns a total of 60 companies that run 250 facilities in six sectors; chemical and petrochemical, pharmaceutical and food, engineering and steel, textile, construction materials, and industrial utilities and services, he said.

“All these 250 plants suffer from poor bureaucracy and are in dire need to be rehabilitated and revamped,” said Mohammed. “The plants need a lot of investments that the government cannot provide.”

North Fertilizer

Mohammed said the government has since 2003 signed similar upgrading contracts for about five facilities, including one affiliated with the North Fertilizer Co. in Baiji, north of Baghdad. That contract was awarded in 2009 to an Iraqi company and Japan’s

“In one year, its production rate already went up from 20 percent to 50 percent,” he said.

Deals for four cement factories have also been signed, including a $150 million contract in April with , the world’s biggest cement maker, and local Iraqi company Al-Rowad.

Lafarge’s contract, which also includes the construction of a 45-megawatt power station for the factory, will raise the plant’s output to 1.8 million metric tons a year from 300,000 tons within 30 months.

“Iraq faces severe electricity shortages, so we resolved this problem by requiring every investor to install his own power station,” Mohammed said.

“These power stations will feed the plant and at the same time will take a big load off the national grid and could even distribute power to the local people.”

Iraq, holder of the world’s fourth-largest oil reserves, seeks foreign investors in all parts of its economy after years of conflict and international sanctions. Dependent on oil for most of its income, Iraq held two licensing rounds last year for oil and gas investments. It has announced a third round for three natural-gas fields, which Iraq is eager to develop for fuel to generate electricity and to export.