PM says Iraq cannot afford to pay General Electric

BAGHDAD Sat Aug 1, 2009 7:05am EDT

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BAGHDAD (Reuters) - Iraqi Prime Minister Nuri al-Maliki said on Saturday his government could not afford to pay General Electric for its services and rebuked parliament for failing to allow a $3 billion bond sale.

In May, Iraq's cabinet approved the sale of the treasury bonds, of which $2.4 billion was meant to pay to revamp Iraq's dilapidated electricity sector. A lack of power is a major complaint among Iraqis, especially in the searing summer heat.

Iraq's electricity minister had said he hoped parliament would ratify the cabinet's decision in early June, but lawmakers stopped work for the summer recess last week without doing so, and parliament was not due to reconvene until September 8.

"The electricity ministry cannot manage $2.4 billion to pay GE and we cannot force parliament to approve our project. As a consequence this process (electricity production) will stop," Maliki told a meeting of tribal leaders on Friday.

"Who is responsible for this? It is the political agendas (of some parties)," Maliki said.

In 2008, Iraq signed multi-billion dollar deals with General Electric and Siemens to add nearly 9,000 megawatts of capacity over the next few years.

Political wrangling between Iraq's feuding ethnic and sectarian groups has bogged down the legislative process, creating a backlog of draft bills needing ratification.

Maliki said he had met GE officials during his trip last month to the United States, who told him they had already manufactured equipment destined for Iraq and had complained of not being paid.

Iraq had to slash its 2009 budget three times due to a sharp fall in oil prices from last year. Almost all of Iraq's income is derived from oil sales from its vast reserves, the world's third largest.

(Reporting by Waleed Ibrahim, Writing by Mohammed Abbas: Editing by William Hardy)

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