Iraq signs strategic agreement with GE to boost power grid

The logo of U.S. conglomerate General Electric is pictured at the company's site in Belfort, June 23, 2014. REUTERS/Vincent Kessler

BAGHDAD (Reuters) - Iraq’s Oil Ministry said on Sunday it had signed a long-term “strategic framework agreement” with General Electric which comprised several projects to boost national power resources.

The ministry said in a statement one of the projects would generate more than 400 megawatts (MW) for oil installations by summer. Other initiatives aim to maintain existing infrastructure and reduce gas flaring from oil fields to boost electricity production for use in the industrial and energy sectors.

The ministry did not specify the agreement’s value or timeframe but said it was the result of two years of negotiations.

Though Iraq is a major OPEC oil producer, the country faces chronic electricity shortages, with its fragile grid struggling meet demand after years of war, sanctions and neglect. Many areas lack access to electricity or drinking water, prompting demonstrations by thousands of Iraqis last year to press the government to improve delivery of essential services.

There is a wide gap between electricity consumption and supply: peak demand during the summer, when people turn on air conditioners to combat temperatures that can reach 50 degrees Celsius, is about 21,000 MW, far exceeding the 13,000 MW the grid is currently providing.

Iraq signed a $328.8 million deal with GE in January to boost electricity production capacity by 1,000 MW.

Reporting by Stephen Kalin; Editing by Alison Williams and Ros Russell