VZCZCXRO1551
RR RUEHBC RUEHDA RUEHDE RUEHDH RUEHIHL RUEHKUK
DE RUEHC #3005 1422114
ZNR UUUUU ZZH
R 222101Z MAY 09
FM SECSTATE WASHDC
TO RUEHGB/AMEMBASSY BAGHDAD 6210
INFO IRAQ COLLECTIVE

UNCLAS STATE 053005 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: BEXP BTIO ECIN ECON EFIN EIND ENRG IZ
SUBJECT: GE DISCUSSES PAYMENT FOR IRAQ CONTRACT AND SEEKS 
PARTNERS 
 
REF: STATE 134890 
 
¶1. (SBU) Summary:  Senior GE officials met with NEA DAS 
Richard Schmierer May 20 to signal their concern regarding 
payment for the $2.7 billion contract with the Iraqi Ministry 
of Electricity (MOE).  GE would like to move away from ad hoc 
payment solutions for each installment, as has so far been 
the case, to a more predictable process.  GE also mentioned 
the need for the Iraqis to hire an owner,s engineer with 
sufficient technical ability to successfully implement the 
contract.  GE is also interested in forging partnerships with 
other firms, and requests USG support in identifying 
appropriate counterparts.  In addition, GE is exploring 
opportunities in Iraq,s rail transportation network.  DAS 
Schmierer discussed various financing mechanisms and the 
viability of these options.  He also agreed to support GE,s 
search for appropriate partners, and to connect GE to USG 
sector experts working on rail issues in Iraq.  End Summary. 
¶2. (SBU) Three executives represented GE: Nabil Habayeb, CEO 
for the Middle East and North Africa, Timothy Richards, 
Managing Director for International Energy Policy, and George 
Pickart, Gas Turbine Government Relations Manager.  Their 
main concern was securing a predictable payment procedure for 
the GE contract with the Iraqi MOE to deliver 56 electricity 
generating gas turbines.  In March and May, GE received 
payments of 293 million Euros, but each payment has been a 
challenge.  With increasing pressure from lower budget 
revenue, GE wants to put in place mechanisms that will 
guarantee these payments down the road.  One suggestion that 
GE raised was EXIM financing. 
¶3. (SBU) Though EXIM is currently closed in Iraq, a clause 
still permits EXIM to offer services in Iraq if the financing 
is sufficiently collateralized, e.g. through attachment to 
future oil receipts.  However, NEA explained the USG policy 
that no USG entity (such as EXIM) provide financing to a 
country for one year after the conclusion of debt 
cancellation; since the last tranche of Paris Club debt 
relief took place December 23, 2008, this would preclude EXIM 
financing until December 22, 2009. 
¶4. (SBU) NEA informed GE of the recent decision by the 
Council of Ministers to approve $3 billion worth of bonds, 
with $2.4 billion destined for the electricity sector and 
$600 million for water and railway projects, noting that the 
Council of Representatives must still approve the issuance. 
¶5. (SBU) In addition to the financing issue, GE also is 
concerned about the successful implementation of the 
contract.  In GE,s view, this requires the selection of a 
qualified owner,s engineer to oversee the 
engineering-procurement-construction (EPC) firms that will be 
prime contractors for installation of the generating units. 
For a previous and much smaller purchase of GE generating 
units, the GOI selected an owner,s engineer that was the low 
bidder but lacked experience in this type of generation 
project.  GE might itself serve as the owner,s engineer for 
the installation of the new purchases even though this is a 
role that it ordinarily does not wish to play. 
¶6. (SBU) GE was also very keen on any USG support in 
identifying appropriate partners to further explore the Iraqi 
market.  They presented this as a means to improve local 
capacity while simultaneously improving their market 
position.  These partners would not only be in the energy 
sectors, but also in water, healthcare, aviation, rail, etc. 
Partnerships could take the form of joint ventures or jointly 
bidding on tenders.  GE is not looking for agents or sales 
representatives, but rather firms with which they can do some 
initial work to develop a relationship and see if it is a 
good match.  The idea is that GE would bring skills and 
technology to the table, while counterparts would bring 
on-the-ground resources and knowledge.  Within this context, 
GE plans to open three offices in Iraq: in Baghdad, Basrah, 
and Erbil.  DAS Schmierer suggested that subject matter 
experts in Embassy Baghdad and Provincial Reconstruction 
Teams could serve as important conduits to identifying such 
potential partners. 
¶7. (SBU) GE mentioned future interest in both providing 
technology that will capture the natural gas presently being 
flared through oil extraction, as well as equipment for a 
resurgent Iraqi rail industry.  NEA reiterated that the USG 
has been advocating that Iraq tap into natural gas resources, 
particularly in light of the worsening in Iraq,s fiscal 
position.  NEA also committed to putting GE in touch with the 
members of the Transportation Attach,s team in Embassy 
Baghdad who work on Iraq,s rail network. 
CLINTON