The New Iraq 2011 - Discovering Business | Coalition Provisional Authority | Iraq

in association with

The New Iraq
2011 Discovering Business
in association with
All information accurate at the time of publication, November 2010.
© Published by Allurentis Limited (www.allurentis.com) All rights reserved.
Acknowledgement: Allurentis would like to thank all our supporting organisations for their kind contributions.
Photos courtesy of:
Essam al-Sudani for the Department for International Development
www.istockphoto.com www.dreamstime.com Angus Beaton Contact: +44 (0) 796 616 6981 email: angusbeaton@me.com
NIC: www.investpromo.gov.iq UKTI: www.uktradeinvest.gov.uk
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Contents
Introduction 4
Iraq 2010 budget allocations 6
Map - cities, oilfields, international airports & borders 7
Messages
Dr. Sami Al-Araji, Chairman of the National Investment Commission 8
John Jenkins, the British Ambassor to Iraq 9
Baroness Nicholson of Winterbourne, Executive Chairman, IBBC 10
Business Landscape & Regulatory Environment
Huge opportunities but guidance is needed - PricewaterhouseCoopers 13
Legal considerations for doing business in Iraq - DLA Piper LLP 16
Finance
Iraqi banking sector - Huge opportunity for growth - HSBC 21
Foreign Investment in Iraq - MerchantBridge 26
Iraqi insurance market - AAIB Insurance Brokers 32
Iraq’s golden investment opportunity - National Investment Commission 37
Iraq: market of potential - UK Trade & Investment 39
Oil & Gas
Oil bonanza will fuel engineering boom 42
Education & Training
Training the next generation of oil & gas engineers - Penspen 45
Risk Management
A fresh perspective on growth in Iraq - Consilium Risk Strategies 53
Security is a challenging area but not insurmountable 56
Securing Iraq - Erinys 58
Infrastructure
Infrastructure review 60
Utilities
Rebuilding a nation - it’s more than just projects - Parsons Brinckerhoff 64
Turning the tide - Mott MacDonald 69
Construction & Civil Engineering
Construction market will be region’s largest 74
Harlow International - Builds on Iraq experience 78
Transport
Ports improvement is vital 82
Future of track in Iraq 85
Automotives - Sardar Trading Agencies Ltd. 87
Air travel security - G4S Risk Management 90
Royal Jordanian 93
Telecommunications
Telecommunications revolution takes off 96
Healthcare
Healthcare needs are immense 99
Travel & Tourism
Building recovery on 10,000 years of history - Dunira Strategy 102
Featured Contacts 107
Iraq was known as Mesopotamia (from the Greek between the
rivers) until the end of the First World War. The region is thought to
contain the legendary Garden of Eden and is where Ur, Babylon and
other historic and religious sites are located.
Following the end of the First World War and the end of Turkish
Ottoman rule, Iraq was placed under British administration in 1920
by a League of Nations mandate. In 1932, the area achieved
independence as a kingdom with Britain retaining military bases
and rights of transit for its forces until the overthrow of
the monarchy.
A Republic was declared in 1958 after a military coup. Saddam
Hussein took control in 1979. After his demise, the country became
a parliamentary democracy following ratification of the country’s
constitution on 15 October 2005.
Iraq has a land area of 432,162 square kilometres and borders
Jordan to the west, Syria to the northwest, Turkey to the north,
Kuwait and Saudi Arabia to the south and Iran to the east.
Iraq is composed of 18 governorates or provinces. These are Anbar,
Babil, Baghdad, Basrah, Dahuk, Diyala, Erbil, Karbala, Kirkuk,
Missan, Muthanna, Najaf, Ninewah, Qadissiya, Salah al Din,
Sulaymaniyah, Thi Qar and Wassit.
Iraq’s population is estimated at 30 million with an average age of
20.6 years. The population is 97% Muslim. Main ethnic groups are
Arab and Kurds but Iraq also has distinctive Turcoman, Chaldean,
Assyrian, Armenian, Bahai, Mandean and Yazidi communities.
Main Religion: Islam (60-65% Shia and 32-37% Sunni) approx
Principal Cities (by population)
Baghdad (capital) (9.5 million)
Mosul (3 million)
Basrah (2.3 million)
Erbil (1.8 million)
Sulaymaniyah (1.8 million)
Kirkuk (1.2 million)
Ramadi (700,000)
Fallujah (850,000)
Karbala (800,000)
Najaf (800,000)
Dahuk (600,000)
Zubayr (600,000)
Al Hillah (510,000)
Amarah (450,000)
Kut (450,000)
Tal Afar (450,000)
Baquba (410,000)
The 2005 constitution guarantees Iraqis basic rights with an
independent judiciary. The President protects the constitution and
unity of the state, while the Prime Minister is the direct executive
authority and Commander-in-Chief; he is nominated by the Council
of Representatives.
The Head of State is President Jalal Talabani since 6 April 2005. The
Head of Government is Prime Minister Nouri al-Maliki since 20 May
2006. Negotiations for a new coalition government have been
I ntroducti on
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ongoing since national parliamentary elections on 7 March 2010.
The elections were based on an open list system that elected the
members of the Council of Representatives, who will elect the
President and approve the next executive branch appointments.
Prime Minister al-Maliki’s State of Law coalition won 89 seats, the
Iraqi National Movement coalition led by former PM Ayad Allawi
won 91 seats. The Kurdish bloc, led by Kurdistan Democratic Party
President Masoud Barzani and Patriotic Union of Kurdistan, President
Jalal Talabani, won 57 seats. The Iraqi National Alliance led by
Muqtada al-Sadr have 70 seats and other parties 18 seats.
The main industry is the production of crude oil with an estimated
2.482 million barrels per day (bpd) in 2009. Estimated oil reserves
143.10 billion barrels, estimated natural gas reserves 3.17 trillion
cubic metres. Other industries include production of chemicals and
fertilisers, textiles, construction materials, pharmaceuticals, metal
products, processed foods, tobacco and paper.
Approximately 13% of Iraq is arable and some 35,000 square
kilometres is irrigated. The country cultivates wheat, barley, rice,
vegetables, dates, cotton, coffee and also farms sheep and poultry.
Iraq’s main export trading partners are the US (38.6%), India
(12.2%), Italy (9.8%) and South Korea (7.1%)
Principal import partners comprise Syria (26.2%), Turkey (19.6%),
US (10.6%), Jordan (6.4%) and China (6%)
Transport:
19 principal airports
Railroad network of 2,272 kilometres standard gauge track
37,851 kilometres of paved roads
Rivers and waterways of 5,279 kilometres including Euphrates
(2,815 kilometres) and Tigris (1,899 kilometres)
58 kilometres of coastline located between Umm Qasr and Al Faw
Main Ports:
Basrah, Khor Az Zubayr and Umm Qasr
Telecommunications:
International Dialling Code: 964
Cellular services based on three nationwide GSM networks
Press:
Al-Sabah - state sponsored
Al-Zaman - private London based daily printed in Baghdad and
Basrah with English language pages
Al-Mada - Baghdad private daily
Al-Mashriq - Baghdad private daily
Al-Dustur - Baghdad private daily
Al-Manurah - Basrah private daily
Television:
Alsumaria- a private satellite TV broadcaster
Al-Iraqiya - state sponsored
Al-Sharqiya - Dubai based private satellite TV channel
Kurdistan satellite channel - operated by Kurdistan Democratic Party
Kurdsat - operated by Patriotic Union of Kurdistan
Internet news services:
Aswat al Iraq
Al-Bawaba.com
Iraq-businessnews.com
Iraq.net
Iraq-daily.com (part of wn network)
sustainableiraq.com
baghdadtonight.com.
Radio:
Two public and three private stations
Source: CIA World Fact Book, BP Statistical Review of World Energy, IMF and the BBC
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Iraq 2010 budget allocations
Ministry or Institution Appropriation Capital Budget
IQD billion IQD billion
Kurdistan Regional Government 10,234 3,180
Interior 7,188 300
Electricity 6,890 1,127
Health Care 5,759 1,127
Defence 5,734 445
Education 5,544 500
Trade 4,786 68
Agencies independent of ministries 4,493 2,556
Oil 4,254 3,104
Higher Education and Scientific Research 2,549 350
Municipalities and Public Works 2,341 1,496
Council of Ministers 1,530 354
Water Resources 1,290 1,060
Construction and Housing 960 700
Industry and Minerals 664 500
Youth and Sports 646 550
Transport 627 450
Justice 543 15
House of Representatives 445 7
State 441 92
Supreme Judiciary Council 316 22
Communications 316 300
Planning and Development Co-operation 294 58
Labour and Social Affairs 269 24
Displacement and Migration 228 15
Culture 202 28
Science and Technology 143 30
Presidency of the Republic 119 14
Environment 95 25
Human Rights 30 10
I ntroducti on - Budget
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Source: Ministry of Finance
Total: IQD68,930 billion IQD18,507 billion
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The Gulf
Kuwai t
J ordan
I raq
Saudi Arabi a
I nt er nat i onal ai r por t
Maj or oi l /gas f i el ds
Syr i a
Tur key
I ran
KARBALA
NAJAF
THI QAR
WASSIT
ANBAR
MUTHANNA BASRAH
MISSAN
QADISSIYA
BABIL
BAGHDAD
DIYALA
NINEWAH
SALAH AL-DIN
DAHUK
ERBIL
SULAYMANIYAH
KIRKUK
Al Amarah
Al Hillah
Al Kut
Karbala
Ar Ramadi
Diwaniyah
Baghdad
Najaf
Erbil
Dahuk
Sulaymaniyah
Basrah
Tikrit
Kirkuk
Map - cities, oilfields, international airports & borders
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Welcome to the second
edition of The New Iraq –
Discovering Business,
an invaluable resource
providing background on
Iraq’s economic and
cultural landscape together
with expert insights into
the country’s key economic
industry drivers.
The rebuilding of Iraq’s
economy is quite possibly
the biggest global
investment opportunity to emerge in the last 50 years, with every
sector open for investment.
With a largely untapped market of up to 30 million consumers,
recently restated high oil & gas reserves (among the highest in the
world) and a strategic location, Iraq’s economy has lain dormant
for decades.
Our Five Year National Development Plan for 2010-2014 targets
economic growth of 9.4% per year. The plan includes more than
2,700 projects worth up to US$186 billion. In the industrial sector
alone, US$10.7 billion of projects are planned to support the
reconstruction effort and a third of the country’s 2010 budget
expenditure of US$72.1 billion is earmarked for capital projects.
Indeed, the country’s infrastructure needs are enormous and as part
of the Government’s commitment to diversifying the economy away
from oil; housing, infrastructure renewal, industry, manufacturing,
agriculture, food processing, transportation, financial services and
tourism are among the many areas in Iraq steadily opening up. The
sky is the limit for investors.
As Chairman of Iraq’s National Investment Commission (NIC) my
mission, with the support of my team, is to help foreign companies
and investors become involved in this massive reconstruction
opportunity. We have taken several steps to facilitate this, making a
number of exemptions, incentives and guarantees available to
foreign investors under Iraqi law. The National Investment Law 13 of
2006 has been amended to allow non-Iraqis to own land for housing
projects as well as investment partnerships with State Owned
Enterprises. The same Law exempts foreign companies from tax for
up to ten years as well as import fees for a period of three years.
We work on a national and provincial level, acting as a one-stop-
shop to assist foreign companies enter and operate efficiently in Iraq
and to help investors to obtain licences, tax exemptions and land.
We are committed to creating mutually beneficial relationships with
investors from all parts of the world and encourage you not to miss
out on Iraq’s unique investment opportunity.
Iraq has the oil, the water, land and manpower to become one of
the region’s richest and most successful economies.
We at the NIC are here to help you and your business and look
forward to welcoming you to Iraq.
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Messages
Message by Dr. Sami Al-Araji, Chairman of the National
Investment Commission
Dr. Sami Al-Araji
As I write this foreword,
seven months after the
7 March 2010 Elections, we
still await the formation of
a new government. It
would be nice to think that
such a government will
have been formed by the
time you pick up this
publication. Insh’allah. In
the Middle East patience is
the essential virtue……..
I have been Her Majesty’s
Ambassador to Iraq since December 2009. I saw the last days of the
previous Government and have waited since then – with many
others – in eager anticipation of the sort of new government which
would deliver the reconstruction that Iraq urgently needs. The length
of the intervening period has been intensely frustrating for the
people of Iraq, who showed their commitment to democracy by
voting in large numbers in March, in spite of uncertain security and
attempts to derail the electoral process. So much still needs to be
done here and any delays often affect the most needy
disproportionately. But all Iraqis need a government that provides
the services and enables the jobs that underpin a decent life. And
business needs a government that takes tough decisions for the
right reasons and enables them to do the work that will underpin
reconstruction and sustainable economic progress. We need clarity,
stability and transparency.
When I reflect on the message my predecessor, Christopher Prentice,
wrote for this publication a year ago, it’s easy to wonder how much
progress has been made in that time. Christopher spoke about
Ministries working in very difficult conditions, lacking
capacity and with poor communications infrastructure. He talked of
the lack of a regulatory framework for business and of
corruption. Many of these problems undoubtedly continue to exist.
But there is also no getting away from the fact that business
continues to be done here. I am pleased that this continues to be
the case for British companies. Not only those multinationals that
are household names but also an increasing number of less well
known companies.
Indeed during the celebrations for the Queen’s Birthday Party held
at the Embassy in June 2010, I was able to talk to our assembled
guests about the progress being made across a range of sectors by
British business in Iraq. Companies active in project management;
in construction; in banking and finance; in software; and in business
services were given as examples. The breadth of engagement
is impressive.
And in my time here I have been pleased to see a growing interest
from British businesses wanting to come to Iraq. There are
opportunities to seize now. And, whatever the current difficulties,
there can only be increasing opportunities in the years to come. That
is why UK Trade & Investment, the government department that
help British companies do business overseas, has expanded its
presence in both Baghdad and Erbil. Our trade officers are here to
help and support more British companies to do business in what is
a challenging and rewarding market.
With the promise of a new Government, I hope that we shall see a
new Iraq that is truly open for business and with an environment
that is welcoming to those who want to trade and invest here.
Message by the British Ambassador to Iraq
John Jenkins
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As a long term friend of the Iraqi people, I am confident that strong
government, democratic representation, the fight against
corruption, the separation and the balance of powers together with
the rule of law are steadily making the headway necessary to
enable the Federal Republic of Iraq to flourish and to succeed.
At the same time, the obstacles that are inhibiting the full
establishment of the free market pose continued and strong
challenges to both inward investment and the steady growth of
local businesses. One result is the exceptionally high unemployment
and lack of skills and qualifications amongst the young who must
provide the talent pool for the future generation of Iraqi managers
and leaders, as well as the all important workforce of today.
In June 2009 I co-founded IBBC (Iraq Britain Business Council) to
assist the growth of Iraq by linking UK businesses with their Iraqi
counterparts. In the short time since its formation, IBBC, a not for
profit company registered in the UK, has become the premier
membership-led organisation promoting business, industry, trade
and investment with the Republic of Iraq. IBBC is committed to a
free, prosperous and diverse Iraq. It is a powerful network of the
most important Iraqi and British business organisations, enjoying
high level support from both Governments, which brings together
Iraqi and British companies and public sector bodies by giving them
a joint platform; and through the identification and fulfilment of their
mutual interests and common goals.
IBBC, however, is more than a business initiator; it also aims, in
coordination with the Iraqi Government, to promote best practice
and international standards as a means to facilitate business in Iraq.
Iraq is now building on her present achievements by reviving and
expanding her economic base in order to bring economic security
and prosperity to her people. We in IBBC are proud to support
those goals.
The following companies are Founder Members of IBBC:
Al-Moosawi Group, AMEC, ArmorGroup Iraq, Asia Power Capital,
Avicenna Capital, Chevron Business Development Inc, Consolidated
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Messages
Message by Baroness Nicholson of Winterbourne,
Executive Chairman, IBBC (Iraq Britain Business Council)
Baroness Nicholson opening an IBBC Trade Conference in Basrah
Contractors International, Control Risks, Dahuk Chamber of
Commerce, DLA Piper LLP, Erbil Chamber of Commerce, Ernst & Young
Iraq, Exxon Mobil, Foster Wheeler, Fursan Security, Gulfsands
Petroleum, HSBC, KCA Deutag, Khoshnaw Company, Kier
Construction, Korek Telecom, Kuwait Energy, Mamnoon Limited, Mott
MacDonald, Olive Group, Penspen Group, PricewaterhouseCoopers,
Rafidain Construction and Engineering, Saracen Trade & Investment
Inc, SKA Air & Logistics, Sulaymaniyah Chamber of Commerce,
Swagelining Limited, Tata Steel, Trade Bank of Iraq, TRC, Vitol,
Zagros Company and Zain.
IBBC is a wholly private sector organisation; led and financed by its
membership. Applications for membership are reviewed by the
Founder Member Board which meets every month. The Full Council
meets twice yearly, while the Sector Tables meet bi-monthly,
supported by Executive Manager, Christophe Michels and Assistant
Executive Manager, Philip Lewis.
IBBC Sector Tables
IBBC has formed the Oil & Gas Sector Table (OGST) under the
Chairmanship of the Penspen Group in order to assist Iraq in the
effective and sustainable development of its petroleum reserves to
allow Iraq to enjoy the best possible economic and social
development that such wealth will bring.
On similar lines to the OGST IBBC has established a Financial and
Professional Services Table led by HSBC and the Trade Bank
of Iraq, that will work to assist and support the promotion of a
strong and prosperous business environment in Iraq as well as a
Construction and Infrastructure Sector Table chaired by Kier
Construction and Consolidated Contractors International.
IBBC University
IBBC believes strongly that the key to Iraq’s long term prosperity and
strength can only be found within the Iraqi people. IBBC has decided
therefore to establish and implement substantial educational and
vocational training initiatives in Iraq in all fields of business and
industry, in order to expand the skills base at every level of Iraqi
society. IBBC will achieve this through its University programme,
started in October 2010 as a private public partnership with the Iraqi
Ministry of Higher Education, having its first campus inside Basrah
University at the invitation of the Chancellor of Basrah University.
The future
After a highly successful first year, IBBC is continuing to organise
high level trade delegations to Baghdad, Basrah and Erbil in
2010/11. Amongst these, IBBC has accepted the kind invitation from
the Governor of Basrah to hold an Investment Conference in January
2011 and from the Government of Iraq to do likewise in June 2011.
IBBC will also organise with the City of London an Iraq Day at
Mansion House in May 2011. Other major work will flow from these
events, as IBBC implements its headline statement, “Together we
build Iraq”.
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IBBC Trade delegation with Iraqi Businessmen in Baghdad
For the past 30 years,
Iraq’s economy has been
distressed by costly
militarisation, three wars
and over ten years of
international sanctions.
However, things are
changing for the better
and faster than the
outside world sometimes
appreciates.
There are big opportunities
for business development
within Iraq’s private sector as the country steadily breaks free from
the shackles of its past, believes Ismail Maraqa, Senior Partner in
the country for PwC.
PwC, which carries out a variety of advisory, tax and audit work for
clients in Iraq from offices located in Baghdad and Erbil, sees
opportunities developing in every industry and governorate –
opportunities that will help build Iraq and support its endeavour to
operate a diversified economy. The nation’s richness in natural
resources makes it potentially one of the wealthiest countries in the
world, with the production and export of oil putting it on the road
to prolonged economic growth and long term affluence.
There are however, challenges, particularly due to the lack, up to
now, of sufficient investment, aligned legislation and business
practices. As a consequence, potential investors need expert advice
and guidance through Iraq’s sometimes complex commercial
environment by those with in depth knowledge of the country’s
economy, regulations and ways of doing business.
As Iraq gradually rebuilds its relations with the international
community, it is vital that those wishing to enter the Iraqi market
develop a deep understanding of the country and its specific
business attributes, Mr Maraqa believes.
Investing in Iraq has started to become very attractive, following
significant enhancements to its security status in the last year.
Nevertheless, prospective investors remain apprehensive about
security and are more likely to name regulatory barriers and other
practical obstacles to doing business as their main concerns.
Despite this, recognition of investor appetite has encouraged Iraq’s
Government and its private sector to take extensive steps towards
developing the business and investment environment.
General investment conditions do however, remain tough and
challenging - particularly for small and medium investors.
Prospective investors need to allow for substantial security costs;
burdensome and obscure procedures regarding business visas or
new business registration; delays in payment for some Iraqi
Government contracts; and sometimes untrustworthy, non-
translucent dispute resolution systems. Claims of corruption are still
prevalent and the inheritance of central planning and immature
state owned entities still restrains economic development. In its
2010 Doing Business Report, the World Bank ranked Iraq in 153rd
place out of 183 on the ease of doing business.
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Huge opportunities but guidance is needed
Ismail Maraqa, PwC Country Senior Partner, Iraq
Even though Iraq is not yet entirely stable, it presents a window of
opportunity for companies willing to invest in one of the world’s
most significant emerging markets and be part of the process of
rebuilding a country from the ground up. Indeed, after many years
of war and sanctions, Iraq has recovery, reconstruction and
development needs across all sectors of its economy. As soon as you
become at ease with the security situation, you will find
tremendous prospects for profit, both financially and morally.
Below are a few key things to be aware of if you are considering
doing business in Iraq.
Political risk – In general, the risk of political instability can be
disruptive to business activities of foreign firms but in Iraq the risk
is multifaceted. The country has made much progress since it
hovered on the brink of civil war three years ago. This can be seen
clearly in its enhanced security situation. However, substantial
cracks remain and it is crucial that foreign companies develop a
good understanding of the political environments of the different
provinces in which they do business, in order to fully assess the risk
to their business ventures.
Laws – Until recently, companies working in Iraq under contracts
with the US Government or other coalition countries benefited from
exemption from the laws of Iraq. However, the Status of Forces
Agreement came into effect this year and put an end to any
exemptions. This means that foreign companies and individuals are
not only subject to criminal and civil liability in Iraq but must also
comply with all regulatory and legal requirements for doing
business there.
Investment licence – Iraq’s National Investment Law incorporates
incentives for foreign companies to invest, including an exemption
from taxes and fees and a guarantee that foreign investor capital
will be treated by the same token as the domestic investor capital.
Under this law, companies must apply for and receive a project
specific investment licence from either the National or a regional
Investment Commission to benefit from the incentives. The
Kurdistan Regional Government has passed its own Investment Law
which includes a few additional incentives.
Imposing contracts – Iraq’s legal system goes back generations and
has deep rooted conventions. Although some contemporary notions
have been introduced, additional work is needed to integrate
international standards for regulating business and settling disputes.
Whenever viable, foreign companies should include arbitration
clauses into their contracts to benefit from more common settings
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Busi ness Landscape & Regul atory Envi ronment - PwC
and laws for resolving disputes. Nonetheless, companies should
bear in mind that Iraq is not yet a signatory to the New York
Convention, the major treaty that guarantees implementation of
foreign arbitral awards.
Property ownership – Although the Central Government of Iraq
allows long term leases for foreign companies, up until 2009 it did
not permit property ownership. In November of that year, an
amendment to the Investment Law provided for foreign investors to
own land in Iraq if such land is to be used for housing projects but
it excludes hotel construction. The Kurdistan Regional Government
has an Investment Law that allows property ownership within its
three Northern provinces.
Trade representative office – The simplest way to establish a
commercial presence in Iraq, especially for foreign companies
seeking contracts with the Government, is to register as a trade
representative office. By doing so, a foreign company gets the right
to conduct business development and to negotiate for contracts with
Iraqi ministries.
Branch office – Non-Iraqi companies may operate through the
formation of a branch office. Although such offices face some
constraints on what they can do, this is the fastest way to set up an
office to engage in commercial activities in Iraq and is less
restrictive than a trade representative office that can engage only in
business development activities. The most popular structures of
incorporation for foreign owned entities are the Limited Liability
Company and Joint Stock Company.
Tax – Foreign companies doing business in Iraq are often mystified
by the tax system as its tax rules are often vague. Normally, Iraqis
and non-Iraqis living in Iraq must pay tax on income that originates
there. Foreign companies should however, seek expert advice on
how their businesses will be dealt with under Iraq's tax laws and
how to track and convey income.
Entry and exit – The Status of Forces Agreement, which removed
immunity, made all foreign company employees subject to Iraq's
visa processes. Visas must now be obtained from an Iraqi embassy
before travelling to Iraq. The visa procedure is lengthy and can
sometimes take weeks or even months. This process can be
speeded up by obtaining a letter of approval from an Iraqi
representative office. Additionally, any foreign company that obtains
an investment licence must have a guaranteed entry and exit
for its employees.
Businesses looking to get involved in rebuilding Iraq have to conduct
a large amount of due diligence and weigh up the risks and rewards.
However, they should not be put off as Iraq offers huge potential for
businesses to invest in a key emerging market and contribute to
programmes that are shaping the country’s future. Operating in Iraq
is about making a difference on the ground and seeing the impact
on a daily basis - it’s truly rewarding work.
PwC firms provide industry focused assurance, tax and advisory
services to enhance value for their clients. More than 161,000
people in 154 countries in firms across the PwC network share their
thinking, experience and solutions to develop fresh perspectives
and practical advice.
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“The nation’s richness in natural resources makes it potentially one of the
wealthiest countries in the world, with the production and export of oil putting
it on the road to prolonged economic growth and long term affluence”.
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This article has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this article without obtaining specific professional advice. No representation or warranty (express or
implied) is given as to the accuracy or completeness of the information contained in this article and to the extent permitted by law, PricewaterhouseCoopers does not accept or assume a liability, responsibility or duty of care for any consequences of you or anyone else acting,
or refraining to act, in reliance on the information contained in this article or for any decision based on it. Copyright 2010 PricewaterhouseCoopers. All rights reserved.
‘PwC’ is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other
member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.
Since 2003, Iraq has been in a period of rapid transition, both
politically and economically. This article highlights the legal
foundations for economic transition.
In order to understand the economic transition in Iraq, one needs to
consider the following key matters:
• Between 1990 and 2003, the Iraqi economy faced a debilitating
series of international sanctions that had a massive negative effect
on the Iraqi economy and the buying power of Iraqis. Coupled with
this was an economy that had, since the early seventies, become
heavily centralised and therefore, by 2003, there was a weak
private sector.
• In 1991, the Central Government withdrew from the Kurdistan
Region which allowed the Kurds to develop their own government
and economy. In many ways, this economy, though tied to that of
the rest of Iraq, has been able to evolve at a different, faster pace.
As a result of the politico-economic developments in the Kurdistan
Region, relations with the Central Government have encountered
tensions, especially with respect to the development of oilfields in
the Kurdistan Region.
• Following the removal of Saddam Hussein from power in 2003 and
the subsequent establishment of the Coalition Provisional Authority
(CPA), the latter attempted an aggressive economic liberalisation
campaign, which was somewhat alien to the Iraqis. It intended to
lay the foundations for a western style economy and attempted to
quickly integrate the Iraqi economy into the world economy.
Examples of this include; establishing the Trade Bank of Iraq to
finance Iraq’s trade needs; introducing new legislation such as an
investment law that opened Iraq to foreign investment and Western
type intellectual property laws; and putting in place institutions that
were intended to create transparency such as the Public Integrity
Commission. In due course, after the CPA was dissolved, successive
Iraqi governments only partially began to implement these laws and
in certain instances reverted to Saddam era laws, as the Iraqis were
more familiar with them.
• In 2003, Iraq had massive debts to the international community,
as well as compensation to be paid to Kuwait following the Iraqi
invasion of Kuwait in 1990. These obligations had led to a large
number of judgments and attachments on Iraqi assets all over the
world. It was therefore difficult for Iraq to engage easily in
international trade. In late 2003, the United Nations Security Council
established the Development Fund for Iraq into which all Iraqi oil
revenue was to be deposited and introduced immunity for the fund’s
account. This immunity continues to be in place, although it is
extended solely through the discretion of the UN and the US.
• The security agreement between the US and Iraq went into effect
on 1 January 2009. Prior to that, pursuant to CPA Order No.17,
foreign companies carrying out business in Iraq with the coalition
were exempt from complying with Iraqi law. After the agreement
went into effect, such companies had to comply with Iraqi law.
16
Busi ness Landscape & Regul atory Envi ronment - DLA Pi per
Legal considerations for doing business in Iraq
This background is intended to provide an overview of the problems
faced by Iraq after the fall of Saddam Hussein, factors that continue
to strongly affect doing business in Iraq in 2010.
A brief overview of the constitutional framework
In 2005, a permanent Constitution was adopted in Iraq by a
referendum. It replaced the Transitional Administrative Law, which
played the role of a temporary Constitution and laid the foundations
of the permanent Constitution.
The principal aspects of the Constitution are:
• That it basically provides for a Federal State, with both a Federal
Government and at this stage, one Regional Government, the
Kurdistan Regional Government. Although the Constitution allows
for the establishment of other regions, no other regions have so far
been formed.
• The Federal structure divides powers between those that are
exclusively of the Federal or Central Government, shared powers
and those exclusively of the Regional Government.
• The Constitution divides powers between the Executive,
Legislature and Judiciary. In turn, the Executive powers are divided
between the positions of President, who is the Head of State and
the Prime Minister, acting through the cabinet, who is also the
Commander-in-Chief of the Armed Forces.
There have been a number of developments with respect to the
Constitution after its adoption that need to be kept in mind when
conducting business in Iraq. These include:
• From almost the beginning, the various political actors have not
chosen to necessarily comply with the provisions of the Constitution,
especially its deadlines – or at least only comply with it when it
suited their needs. For example, the Constitution provided for
amendments to be introduced within four months by the first
parliament elected under it. These proposed amendments were not
introduced until 2009, at the end of the term of that Parliament.
Another critical requirement of the Constitution was that Iraq hold a
referendum by the end of 2007 relating to Kirkuk and other disputed
areas. To date, this has not been done and continues to be a hotly
debated matter.
• When the suggested amendments were introduced – they
require a referendum to be implemented – they included the
establishment of a Federal, higher assembly to effectively make Iraq
a bicameral state.
• One of the principal purposes of the Constitution was to introduce
checks and balances on the Executive, especially the position of
Prime Minister. In practice, however, for a number of reasons, two
inconsistent consequences have resulted. On the one hand, on many
executive matters, there have been no checks and balances, such as
on the Prime Minister’s powers as Commander-in-Chief. On the other
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“Since 2003, there has been tremendous interest by
foreign commercial organisations in conducting business
in Iraq. There has been a large influx of foreign
companies that have entered Iraq”.
hand, the checks and balances that have been effective have
resulted in deadlocks that have tended to weaken the ability of the
State to act cohesively.
• As a result of the extremely tense political atmosphere between
different political factions, coupled with the relative inexperience of
certain MPs, Parliament has not acted effectively as a check on the
executive and in terms of legislation, with laws including key laws
like the budget being held up for long periods.
Legal framework for conducting business in Iraq
Since 2003, there has been tremendous interest by foreign
commercial organisations in conducting business in Iraq. There has
been a large influx of foreign companies that have entered Iraq.
However, most of these were involved in providing services and
goods to the coalition forces. CPA Order No.17, which continued in
force until 31 December 2008, provided companies that carried out
business with the coalition forces immunity from complying with
Iraqi Law. Accordingly, most of these companies, mainly service
providers, did not attempt to comply with Iraqi Law by, for example,
registering their companies or by otherwise complying. In particular,
these companies were exempt from paying Iraqi taxes.
At the time of writing, the current framework for conducting
business in Iraq effectively divides businesses into those carrying
out business with Iraq and those carrying out business in Iraq. Those
carrying out business with Iraq include companies that sell goods to
Iraq, whether to the Government or to companies doing business in
Iraq by way of tender or otherwise. These companies are not subject
to Iraqi Law, other than the laws relating to the implementation of
tenders, anti-corruption laws and importation laws. These
companies are not subject to taxes.
Companies that, however, carry out business in Iraq are subject to
Iraq laws. The principal laws affecting these companies include:
1. Iraqi Companies Law of 1997 (as amended): This law basically
provides that any company doing business in Iraq must be
registered with the Companies Registrar Office at the Ministry of
Trade. This only applies to companies doing business outside the
Kurdistan Region; if a company is carrying out business in the
Kurdistan Region, it must register with the Ministry of Trade of the
Kurdistan Regional Government. Companies can have one of three
types of registration:
18
Busi ness Landscape & Regul atory Envi ronment - DLA Pi per
a. Representative office: a company can establish a representative
office in either Iraq or the Kurdistan Region. The process is relatively
simple, although it may take some time to complete. The activities
of a representative office are limited to marketing
and support services and it cannot transact business or enter
into contracts.
b. Establishment of a subsidiary: a foreign company can establish
an Iraqi subsidiary in both Federal Iraq or in the Kurdistan Region.
There are usually capital requirements depending on the type of
business the subsidiary is conducting as well as requirements for
renting space and hiring legal representatives and accountants. A
subsidiary would be a stand alone entity with limited liability and
could transact the businesses it was incorporated to carry out.
c. Establishment of a branch of the parent: a foreign company can
establish a branch in either Federal Iraq or in the Kurdistan Region.
Currently, the requirements for establishing a branch differ between
Iraq, where the key requirement is that a company have a contract
with the Iraqi Government or an instrumentality thereof, whereas in
the Kurdistan Region there is no such requirement. A branch would
be able to carry out the business activities of its parent, yet there
would not be any limitation on the parent’s liabilities in Iraq.
2. Taxation Laws: Companies that are carrying out business in Iraq
must generally pay taxes to the Ministry of Finance; the general
rate is 15% of net income. There are, however, two significant
exemptions that companies must be aware of. First, the security
agreement between the US and Iraq provides tax exemptions for
companies carrying out business in Iraq through a contract with the
US Government. A prerequisite for this exemption would therefore
be a contract with the US Government. Second, if a company is
investing in Iraq and obtains an investment licence (issued pursuant
to the Investment Law No.13 of 2006, as amended), then it is
exempt from Iraqi taxation for ten years, which period is extendable
for an additional five years upon meeting certain criteria.
3. Employment Laws: With few exceptions, Iraqi Law does not have
a requirement against the use of foreign labour to work on projects
in Iraq. However, where a foreign investor seeks to obtain an
investment licence, the National Investment Commission will look
for 50% of the labour force comprising Iraqi labour, provided that
such labour has the requisite skills. It is also important to note that
a foreign business entity in Iraq must enter into a contract, governed
by Iraqi Law with its employees and the contract must be in the
Arabic language. It must contain certain provisions relating to health
and safety and training, as well as termination provisions.
4. Investment Law: As stated above, the Investment Law provides
certain benefits to foreign investors, including a tax break and the
right to own land if such land is to be used for building housing in
Iraq. Other benefits include the right to import, for a period of three
years, equipment and machinery for use in their projects without
paying customs duties.
Salem Chalabi
DLA Piper, Iraq
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Avicenna Capital is one of the leaders in Iraq's private investment
market, focusing on basic fundamental sectors creating building
blocks for the Iraqi economy. Avicenna's direct investment targets
include opportunities primarily in financial services (banking,
insurance & stockbrokerage), infrastructure (electricity & housing),
oil & gas, aviation, pharmaceuticals, telecoms, food & beverages.
Avicenna Capital's private nature and broad reach ensures that
it is exposed to proprietary deal flow from a unique perspective.
Avicenna Capital is the founding board member of The Iraq
Britain Business Council (www.webuildiraq.org). Avicenna's modus
operandi is to utilise its internal skills in identifying strategic
opportunities, our experience in originating, structuring, executing
and exiting investment deals, along with best of breed strategic
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border transactions. Avicenna is able to leverage strong global and
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institutions and governments.
London Office: Tel: +44 (0) 20 7866 6071 Fax: +44 (0) 20 7866 6070 Istanbul Office: Tel: +90 (0) 212 290 72 92 Fax: +44 (0) 212 292 72 90

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www.avicenna-capital.com info@avicenna-capital.com
Much as Iraq is a country with an extraordinarily rich and cultured
past, similarly its financial services industry has a long and varied
history. While there is no question that the banking sector has a
bright future, charting a clear roadmap is not straightforward.
Similarly, being able to take a long term perspective is essential.
The banking industry in Iraq is currently dominated by the
Government sector. It is estimated that the two largest state owned
banks, Rafidain and Rasheed, account for approximately 90% of all
Iraqi banking assets and a similar proportion of deposits. The private
sector is therefore currently small. It is very clear, however, that it
will be the privately owned banks which will support growth in the
wider economy in the years ahead.
For the Iraq economy to prosper once again, there is a clear
dependency on sustained growth in the private sector. This will
create a better standard of living for all Iraqis and create
employment. In order to achieve this economic growth objective,
the country needs a modern banking sector which will allow the
means for Iraqi entrepreneurs and multinational investors to build
profitable businesses in Iraq. The privately owned banks therefore
play a vital role in the future development of Iraq. As such,
their progress can be seen as a proxy for the well being of the
wider economy.
Milestones in the development of the privately owned banking
sector are as follows:
1890/1 Entry of Ottoman Bank
1922-1964 Establishment of a series of privately and government
owned banks*
1941 Rafidain Bank formed
1964 Nationalisation of banking system
1992 Re-establishment of private sector banks approved
1992-2002 Private sector banks established but prohibited from
international transactions
2003 Private sector banks allowed to process international
transactions, eg. cross border payments and letters
of credit
* A number of the privately owned banks active in Iraq today previously operated
in the country. For example, HSBC which, through Dar Es Salaam Investment Bank,
is currently the largest private sector bank in Iraq by market capitalisation (see
table), had branches in Baghdad and Basrah after World War I.
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Iraqi banking sector - Huge opportunity for growth
James Hogan – Chief Executive Officer, HSBC Iraq
In its present form and in the context of international banking
standards, the privately owned banking sector is less than ten years
old. It is therefore understandable that the sector is still small and
underdeveloped. Currently, there are 36 private sector banks of
various shapes and sizes.
Including the state owned banks, Iraq has around 900 branches
across the country. Its neighbour, Jordan, with a population of 6.1
million, has over 600 branches. By this same measure, Iraq requires
a network of around 3,000 branches to support its population of
near 30 million.
Another relevant comparison is the volume of bank lending. The
Central Bank of Iraq advises that total bank loans amounted to
US$5.8 billion as at June 2010. This compares to around US$20
billion for Jordan and approximately US$250 billion for Saudi Arabia.
In summary, despite the current size of the banking sector, the
potential upside is clearly huge. It is also positive that the larger of
the private sector banks have a reasonable product capability to
benefit both corporate and consumer customers. It is likely this
trend towards improving services and capabilities will accelerate as
the sector consolidates in the short to medium term. The Central
Bank of Iraq requires all private sector banks to have a minimum
capital of IQD250 billion by 2014 (US$214 million). This will require
an increase of three to four times for even the larger private sector
banks, as this table illustrates:
It therefore follows that, in four or more years, the private sector
bank industry will comprise a smaller number of banks than the
current 36. It is inevitable we will see consolidation and some
estimate that, by as soon as 2015, Iraq will have around ten to
fifteen well capitalised private sector banks.
Other key changes that are likely to take place, at an industry level,
over the coming years include:
Education – there is a considerable need for investment in training.
Looking at employees of private sector banks, many either
entered the industry before the early 1980s (when the period of
war/embargo commenced) or have joined very recently. Either way,
they have had no opportunity to learn modern banking techniques.
A key role for foreign banks entering Iraq is the ability to provide
access to training resources in such vital areas as Risk Management
and Finance.
Private Sector Bank Majority Shareholder Date Established Paid Up Capital
30 June 2010
US$ Million
Market Capitalisation
30 June 2010
US$ Million
Dar Es Salaam Investment Bank
Bank of Baghdad
Credit Bank of Iraq
Middle East Investment Bank
HSBC (70.1%)
KIPCO Group/Burgen Bank (55%)
National Bank of Kuwait (75%)
Iraqi Shareholders (100%)
1998
1992
1998
1993
57
86
86
56
315
170
169
98
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Fi nance - Banki ng
Leading private sector banks by market capitalisation
Entrance to the Baghdad Branch of the Imperial Bank of Persia, 1926
Greater balance between government and privately owned banks
– as mentioned earlier, the public sector currently accounts for
around 90% of the total banking industry. It is expected the private
sector will take a proportionally larger role in the future. Currently,
the privately owned banks have little involvement in meeting the
banking needs of government ministries and offices. This is likely to
change which will lead to greater competition which, in turn,
will lead to better banking services for both corporate and
consumer customers.
Independent regulation – a strong and independent central bank is
a prerequisite to growth of the banking sector. Currently, the Central
Bank of Iraq has regulatory responsibility for private sector banks and
the Ministry of Finance for government owned banks. At some point
in the future, it is likely there will need to be a single regulator to
ensure a consistent approach across the wider Iraqi banking industry.
External audit standards – currently, for banks wishing to lend, it is
difficult to obtain accurate financial information from potential
borrowers. The ability for borrowers to prepare basic financial
statements, such as Profit & Loss Accounts or Balance Sheets, is
limited. Furthermore, there are only a very small number of suitably
qualified external auditors which can provide third party verification
of such financial statements (where they are prepared). It is likely
Iraq will see the emergence of a strong accountancy and audit
profession in parallel with the growth of the banking sector.
Credit infrastructure – to also facilitate greater bank lending at an
acceptable level of risk, easy access to information about borrowers’
past records is important. This applies both to retail and corporate
borrowers. The establishment of a Credit Information Bureau or
similar will be helpful for all banks as it will allow transparent access
to historical borrowing records.
It is positive that all the above changes are already at various stages
of progress. In addition, there is a whole host of other industry
“reforms” under consideration and discussion. When implemented,
they will further increase the ability of Iraqi consumers to have
confidence in the banking sector.
To this end, as the quality of the banking infrastructure improves, so
too does the range of available banking products. Already, many
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In the not too distant future, as the
industry matures, other retail and
wholesale banking products will also
become available. Corporate
borrowers will also benefit from the
establishment of a syndicated
lending market
”.
The Baghdad Branch of British Bank of the Middle East, 1960
of the larger private sector banks provide the following products
and services:
• Local and foreign currency accounts – Iraqi dinar, US dollar, Euro
and a host of other currencies
• Transfer of funds within Iraq – paper based and electronic transfer
• Inward and outward cross border payments – same day
processing capability
• Trade finance – import and export financing through both Letter
of Credit and Open Account
• Payroll – processing of salary payments for employees
• Treasury and foreign exchange – buying and selling of Iraqi dinar
against other currencies
• Lending – short and longer term financing
• Leasing – cars and other consumer products
• Mortgage – property financing
• Insurance – distribution of life and non life insurance products
• Stockbroking – purchase and sale of shares listed on the Iraq
Stock Exchange
Some banks already support the above products through a variety
of delivery channels such as telephone, ATM and internet.
In the not too distant future, as the industry matures, other retail
and wholesale banking products will also become available.
Corporate borrowers will also benefit from the establishment of a
syndicated lending market, where banks jointly support a single
borrower and effectively share the risk. Such initiatives require the
close collaboration and cooperation of banks. But this trend is
already starting to emerge to the benefit of the wider banking
industry – another example of such collaboration will become
evident through the development of interbank foreign exchange or
lending markets (which do not currently exist).
To conclude, the industry holds considerable potential but is not for
the faint hearted. Various challenges and risks remain. However,
just as the private sector banks have evolved over the past one to
two years, it is likely this speed of change will continue and allow
the banking industry to play an ever increasing role in Iraqi
economic development.
24
Fi nance - Banki ng
The Head Office of Dar Es Salaam Investment Bank. Located in central Baghdad
Despite all the uncertainty concerning the appointment of the Prime
Minister and the new government since March 2010, all the
ministries have continued to work without interruption. This is in
stark contrast to the previous election time, when ministries were
effectively shut for business. Investing in Iraq requires both the public
and private sector to be fully functional. Amongst others, this is
because several milestones must be achieved to invest in Iraq:
• Invariably, an Iraqi registered company is required to channel
investments. However, it takes up to five months to register a
company with foreign shareholders. Bureaucracy is to blame and is
unlikely to improve.
• Private Iraqi banks will only provide credit to Iraqi companies.
Most of these require corporate guarantees from the shareholders.
However, an ‘instruction’ from the Central Bank of Iraq requires the
private Iraqi banks not to accept guarantees from foreign entities,
unless they are foreign banks lending in Iraq.
• Tax exemption and holidays are available, subject to filing with
the National Investment Commission (NIC). This file must be
presented by an Iraqi registered company.
Despite this multitude of challenges, Iraq is open for investments.
No one knows this better than MerchantBridge, which has made
several successful headline investments in Iraq in communications,
banking, manufacturing and very recently, oil & gas. MerchantBridge
is an international private equity group with diverse interests
operating from offices in Iraq, Lebanon, the UAE and UK. It has been
present in Iraq since 2003 and its first assignment was to advise the
Ministry of Industry and Minerals with its Programme of Lease of 35
State Owned Enterprises. Today, MerchantBridge is the most active
private equity investor in Iraq, with current investments totalling
over US$1.5 billion in debt & equity.
Sectors ripe for investments
MerchantBridge is currently increasing its investments in the sectors
they regard as the leading areas for investment; these are:
Oil & Gas
Iraq boasts a recent 24% increase in proven reserves to 143.1 billion
barrels and given the limited exploration over the past two decades,
this figure can increase by up to 215 billion barrels including
probable and possible reserves. The Iraqi oil sector benefits from
premium quality oil, low extraction costs and abundant reserves.
Despite these attributes, the country ranked ninth among world
producers at 2.48 million bpd in 2009.
26
Fi nance - I nvestment
Foreign Investment in Iraq
Case study: MerchantBridge
Since 2009, the Government has scheduled two bidding rounds
allowing foreign companies to develop Iraqi oilfields with ambitious
targets of expanding production to circa 12.0 million bpd by 2017.
As the oil majors start to develop the fields, approved local
contractors shall be required to undertake all the services they
require, from drilling to pipes and life support. Furthermore, the
increase in production shall prompt investments in Iraq’s storage and
transportation infrastructure, as well as its refining capabilities.
The gas platform, on the other hand is under-developed, with
almost half the daily production lost due to flaring. This has
triggered the Ministry of Oil to consider establishing the Basrah Gas
Company to capture the flared gas from four fields. It also targets
the expansion of production to 2.5 trillion cubic feet (TCF) per year
within ten years from the current 0.5 TCF production rate.
Power
The power sector suffers from a supply demand mismatch; average
demand in the second quarter of 2010 reached 9,441MW compared
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Country rank Oil reserves
billion barrels
1 Saudi Arabia 264.59
2 Venezuela 211.17
3 Iran 150.31
4 Iraq 143.10
5 Kuwait 101.50
6 UAE 97.80
7 Russian Federation 74.20
8 Libya 44.27
9 Kazakhstan 39.83
10 Nigeria 37.20
Source: British Petroleum, MerchantBridge Research
3,000
2,500
2,000
1,500
1,000
500
0
Targeted production (1,000 bpd)
Total production to reach 12 million bpd by 2017
Targeted additions (1,000 bpd)
Active oilfields in Iraq
Country rank Oil production
million bpd
1 Russian Federation 10.03
2 Saudi Arabia 9.71
3 US 7.20
4 Iran 4.22
5 China 3.79
6 Canada 3.21
7 Mexico 2.98
8 UAE 2.60
9 Iraq 2.48
10 Kuwait 2.48
Source: Petroleum Contracts & Licencing Directorate
to a supply of 6,202MW. Even if the country was to operate at full
potential and eliminate the frequent outages, the installed capacity
is insufficient at around 9,000MW. To meet domestic demand, Iraq is
currently utilising floating power stations and has offered for
investment 16 power plants adding more than 10,000MW in
generation capacity.
Banking
In total, there are 43 banks operating within the country, of which
seven have significant foreign ownership. Despite the large number
of private banks, sector assets remain controlled by the two state
owned banks, Rafidain and Rasheed Bank. The banking system is
highly liquid with total deposits amounting to US$33 billion in 2009.
In 2010, the Central Bank took the initiative and reduced the
required reserve ratio to 15% from 25% as well as its key interest
rate to 6%, facilitating future investment and lending in the
economy. Additionally, the Central Bank set a minimum capital
requirement for banks of IQD250 billion to be achieved within the
next three years.
Regardless of the Central Bank requirements, the banks have an
urgent need to upgrade their capital in order to increase their
lending limits. Total outstanding lending amounted to US$5.8 billion
in June, a fraction of the future investments envisaged in the oil &
gas sector on its own. They also have an acute need to upgrade their
systems and the quality of their staff, especially as the oil majors are
establishing bases in the country. They will expect similar levels of
banking services to those they are accustomed to in their country
of origin.
The next few months should see some consolidation between the
private sector banks, conceivably those without foreign partners and
hence outside the following list:
Hospitality
The National Investment Commission (NIC) estimates that up to
US$145 billion in foreign investments is needed over the next five
years within the hospitality industry. Several hotels have already
taken the initiative: the Sheraton in Baghdad opened on 19
September 2010. The newest hotel in Erbil, the Rotana, is accepting
bookings on its website from 15 December 2010 onwards.
Three further hotels are confirmed to come online within the next
three years.
The birth of capital markets
The ISX currently has 84 listed companies, growing from 15
companies at its re-launch in 2004. In August 2010, the total market
capitalisation and monthly turnover reached IQD2.9 trillion and
28
Fi nance - I nvestment
Independent
power project
47.1%
Engineering procurement
and construction
52.9%
Source: Ministry of Electricity
Source: USAID, KIPCO, Zawya
Target Acquirer Foreign
Ownership %
Dar Es Salaam Investment Bank HSBC 70%
Bank of Baghdad KIPCO/Burgan Bank 52%
Credit Bank of Iraq National Bank of Kuwait & IFC 85%
National Bank of Iraq Capital Bank of Jordan 72%
Commercial Bank of Iraq Ahli United Bank 75%
Al Mansour Bank Qatar National Bank 23%
Dijla & Furat Bank Aayan Leasing 35%
IQD16.6 billion, respectively. Historically, the banking sector’s
combined market capitalisation represented more than 70% of total
market capitalisation.
In early 2009, the exchange launched its Electronic Trading System
provided by Nasdaq-OMX. With 45 licenced brokers, the exchange
operates five days a week for three hours daily. Trades are settled at
T+1 for share transactions with a price change limit of 20% of the
previous day’s price. The exchange suspends companies from trading
15 days prior to any general assemblies.
Since 2008, the ISX index outperformed several of its regional peers.
Of the various constituents of the ISX index, the services index
registered the most significant uptake.
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2
0
0
9
M
a
y
2
0
0
9
J
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2
0
0
9
J
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l
2
0
0
9
A
u
g
2
0
0
9
S
e
p
2
0
0
9
O
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t
2
0
0
9
N
o
v
2
0
0
9
D
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2
0
0
9
J
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2
0
1
0
F
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2
0
1
0
M
a
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2
0
1
0
A
p
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2
0
1
0
M
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y
2
0
1
0
J
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2
0
1
0
J
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2
0
1
0
A
u
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2
0
1
0
120
100
Iraq
Kuwait
Dubai
Qatar
Abu Dhabi
Muscat
Bahrain
Saudi Arabia
80
60
40
20
Source: ISX, MerchantBridge
For investors with a one to three year investment horizon, the ISX
portrays attractive valuation multiples. The market’s low correlation
with global peers, coupled with full foreign ownership, would trigger
a rapid pick up in international investor appetite. At present,
foreigners contribute to around 20% of the market.
The new securities law anticipated privatisation of the telecoms
sector and the mandatory increase in capital for the banking sector
could drive dramatic capital market expansion.
To seize this opportunity, in 2010 MerchantBridge launched one of
the few funds investing solely in the ISX. The Iraq Mesopotamia
Fund is a US$ denominated open ended fund, with a minimum
participation of US$250,000. The fund aims to identify investment
opportunities based on solid financials, sufficient stock liquidity and
strength of the management team.
30
Fi nance - I nvestment
350
300
250
200
150
100
50
J
a
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2
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0
8
F
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2
0
0
8
M
a
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2
0
0
8
A
p
r
2
0
0
8
M
a
y
2
0
0
8
J
u
n
2
0
0
8
J
u
l
2
0
0
8
A
u
g
2
0
0
8
S
e
p
2
0
0
8
O
c
t
2
0
0
8
N
o
v
2
0
0
8
D
e
c
2
0
0
8
J
a
n
2
0
0
9
F
e
b
2
0
0
9
M
a
r
2
0
0
9
A
p
r
2
0
0
9
M
a
y
2
0
0
9
J
u
n
2
0
0
9
J
u
l
2
0
0
9
A
u
g
2
0
0
9
S
e
p
2
0
0
9
O
c
t
2
0
0
9
N
o
v
2
0
0
9
D
e
c
2
0
0
9
J
a
n
2
0
1
0
F
e
b
2
0
1
0
M
a
r
2
0
1
0
A
p
r
2
0
1
0
M
a
y
2
0
1
0
J
u
n
2
0
1
0
J
u
l
2
0
1
0
A
u
g
2
0
1
0
Banking
Investments
Industry
Agriculture
Insurance
Services
Hotels & Tourism
ISX
0
Source: ISX, MerchantBridge
Perceptions versus realities
For the handful of private equity investors who took the risk to
establish themselves in Iraq in the early days after the fall of the
previous regime, when the general perception was that it was
impossible to do business, the reality is that the returns have been
commensurate with the risks taken.
While it is likely to remain so in the near future, experience from
other countries reveal that, as the major oil companies start their
operations, a corresponding increase in GDP and the credit
environment, to which the returns are inversely linked, is triggered.
As an example, Qatar credit ratings went from strong (“A”) in 2002
to very strong (“AA”) recently, following the increase in gas
exploration. Correlatively, skyscrapers now dominate the city of
Doha. It is within the reach of Iraq, whose credit rating is currently
one of the worst in the world, to see similar improvements as oil &
gas revenues drive growth in the construction, real estate, trade and
hospitality sectors. It will, however, take time and Iraq is unlikely to
see as fast a transformation as Qatar. Investors must therefore take
a long term view.
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In early 2009, the exchange
launched its Electronic Trading
System provided by Nasdaq-OMX”.
Iraq’s insurance evolution
Iraq’s insurance market has shown great resilience and ability to
cope with unique pressures over the last two decades. However, as
the country rebuilds, its insurance industry faces key challenges
and requirements in order for it to return to its pre-1980 glory days,
when it was one of the strongest insurance markets in the
Middle East.
Regulatory environment
To perform well and to grow, an insurance market requires
investment in infrastructure, which includes regulatory and market
institutions, technical resources and business capacity. It also needs
suitable and supportive economic, legal and political environments.
These are still evolving in Iraq, however, a great deal of hard work
has been done and progress made on many fronts.
A major step forward was the introduction of the Insurance Business
Regulation Act No. 10 of June 2005 and various regulations made
subsequently to the enactment of the legislation. The insurance
regulator (the Iraqi Insurance Diwan) assisted in bringing in the Law
that regulates insurers operating in Iraq. The Law gives the Diwan
various powers to govern areas of licencing, inspection,
intervention, capitalisation, reserving, solvency, investments,
sanctions, accounting and auditing. The Law meets international
standards and made important changes bringing in greater
transparency, financial security and consumer protection. It clarifies
the process for setting up an insurance company and so allows a
greater degree of competition. Most of these objectives behind the
Law have been achieved and the Regulator has worked
conscientiously to implement the Law and supporting regulations.
However, under the 2005 regulation, there is no requirement for
local placement of insured risks - a disastrous state of affairs for
Iraq, which has lost the country an awful lot of insurance premium
when you look at the trillions of dollars which have been spent in
the Rebuild Iraq effort. It is hoped that in the near future local
placement of insured risks will be mandatory.
As an Iraqi registered and licenced international broker, AAIB
Insurance Brokers operates on the basis that the local market should
be involved whenever possible. Ultimately the decision is down to
the client. We advise our clients of the situation from a legal
perspective as well as highlighting considerations such as potential
changes to future legislation as well as the importance of
contributing to the redevelopment of Iraq. We find that most of the
big multinationals are opting for local placement and then 100%
reinsured in the international markets. These companies want to be
compliant in advance of any change in the legislation.
Wider issues have also negatively impacted on market growth and
insurer options. While I write this article there continues to be a lack
of a political consensus with no formation of a Government
following the elections in March 2010. There is also a perception of
widespread corruption in the country as well as the ongoing security
concerns. All of this acts as a further brake on investment and
business development.
Measuring performance
There is little industry data available to see how the industry has
fared over the last five years as it is not obligatory for all companies
to make results publicly available. We can draw some conclusions,
however, by identifying key trends in the industry:
32
Fi nance - I nsurance
Iraqi Insurance Market
William Wakeham – Chief Executive Officer, AAIB Insurance Brokers
Competition
Locally, a growing number of companies have entered the market,
as illustrated in the expanding list of registered insurance
organisations on the Insurance Diwan website. However, these
companies are small and have not really changed the status quo. It
is the state companies, Iraq Insurance, National Insurance and Iraq
Reinsurance that continue to play a central and hugely influential
role in the market.
Competition has increased from outside Iraq. Regional insurers such
as Chartis and IGI are increasingly looking to write exposures in Iraq
on the back of contracts signed by multinational companies with
operations in Iraq or supplying equipment and goods to Iraq. The
London Market is becoming more attracted and focused on Iraq.
There is clearly a growing interest in Iraq and its potential. At the
General Arab Insurance Federation (GAIF) meeting held in March
2010 in Jordan, AAIB Insurance Brokers held dozens of meetings
with insurers who were looking to write business and who were
seeking information on the practicalities of doing business in Iraq. It
was clear that areas such as conventional business processes,
approaches to underwriting and product design will need a degree
of modification. They will need to be flexed to meet the needs of
clients and to accommodate local players.
Capacity
Capital requirements for insurers are still modest by international
standards. An argument exists for further regulation to raise these
requirements, in order to strengthen the ability of insurers to
withstand financial and other events.
The legal minimum capital requirements are as follows:
IQD1 billion for companies transacting Reinsurance.
IQD750 million for companies transacting both Life and General.
IQD750 million for companies transacting Life insurance.
IQD500 million for companies transacting General insurance.
Note: US$1.00 = IQD1,168.50, 1 October 2010
Recently, market capacity overall has increased but not markedly.
This hampers the ability of insurers to absorb risk, as investors in
large projects attempt to transfer risk, especially for the sizeable
infrastructure, construction and energy related projects. Insurance on
these types of projects is invariably required contractually and by
prudent managements. If local insurers are unable to cater for these
requirements, the international and regional markets will take a
larger share of this business.
Limited capitalisation and retention capacity prevent local insurers
from taking lead positions on key accounts and stops them from
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dictating the terms, conditions and rates; and earning potentially
larger profits.
Products
The products supplied by local insurers are largely based in
traditional wordings. The lack of experience and exposure to the
international market means there has unfortunately been little
innovation in domestic product design or service delivery.
Indeed, Iraq’s insurance industry has never really recovered from the
loss of high calibre people who left Iraq under the former regime to
manage insurance companies in the Gulf and Europe. A lack of
experience is one of the biggest factors holding back the industry. In
this regard, AAIB Insurance Brokers takes its role in helping to
develop Iraq’s insurance industry very seriously. We organise an
annual two day workshop to which all Iraqi state owned and private
insurance companies together with regulatory officials are invited.
Last year, a number of Lloyd’s underwriters, claims handlers and
trainers from the Gulf Insurance Institute participated in the
workshop, which saw the sharing of best practice as well as
addressing various issues and concerns.
Considering future prospects: supply and demand
Iraq’s private sector will certainly not be the driver of Iraq’s
insurance growth. Insurance is still not properly understood and
insurers do not enjoy a high degree of trust. Also, according to
United Nations statistics, 23% of Iraqis are living below the income
poverty line threshold of US$2.20 per day, indicating that insurance
is likely to remain a low priority. In response to this, we actually
launched the first dedicated medical insurance policy for local
employees in Iraq and the Kurdistan Region, providing cover for in-
patient and day-patient hospital treatment, including injury and
illness resulting from acts of war, terrorism and kidnap. In today’s
culture of Corporate Social Responsibility, the Regional Health Plan
provides companies, both local and international, the opportunity to
provide their local employees with the best possible employment
benefits and practises.
Within the corporate sector, the non oil & gas industries are being
stimulated and insurance is sometimes purchased for areas such as
marine cargo and construction. However, evidence suggests that
many Iraqi companies prefer to self insure.
Iraq’s oil industry is where the insurance market can significantly
contribute. The industry underpins the entire economy, with oil
accounting for 95% of exports and 98% of government revenue. The
growth of this sector will help deliver improvements in the wider
economy and the Government is forging ahead with challenging
expansion targets for oil production. The recent awards of technical
service contracts will result in major oil companies, oilfield support
and service companies, making huge investments in the country.
Huge sums will be spent establishing depots, drilling facilities, field
operations to overhaul, refurbish and expand production, refining
and distribution capabilities. This major initiative offers a unique
opportunity for Iraq’s insurance industry.
The way forward
I am optimistic about the prospects for the Iraq insurance market. In
my mind approach, vision and flexibility are the key elements to its
continued success.
34

Companies in Iraq and those coming into Iraq must
take the long term view
”.
Fi nance - I nsurance
1. Approach
Establishing mutually beneficial relationships between local insurers
and international brokers and insurers will play to the strengths of
both parties. The importance Iraqis place on relationships cannot be
underestimated. Certainly for AAIB Insurance Brokers, by working on
the ground in Iraq over the last five years, we have been able to
forge important relationships. Iraqi insurers have distribution
channels, local market knowledge and valuable contacts in
commercial and government networks. In turn, brokers have access
to a range of markets and can play a key facilitation, placement and
servicing role and foreign insurers have the capacity and
underwriting, pricing and risk management expertise. We have
been feeding information on Iraq to those who are eager to know
more for some time now. It has engendered a lot of goodwill both
in Lloyds and other international markets. Working together is
certainly a potent and powerful combination.
2. Vision
Companies in Iraq and those coming into Iraq must take the long
term view. The Iraqi insurance market continues to rebuild its
reputation; it has a proud history; has proved resilient in the face of
considerable challenges and is positioned to grow larger and
stronger, if it can improve its integration and access to the
international insurance market. Understandably there is
apprehension about moving into high risk, emerging countries like
Iraq but the country is turning a corner and there has been a gradual
but noticeable improvement in the security situation in Iraq.
3. Flexibility
Based on the commendable tenacity and adaptability demonstrated
by local insurers and their flexible approach in overcoming
obstacles, I have no doubt that they will continue to flourish. I also
believe that after many years in the wilderness, Iraq’s insurance
industry will gain more and more exposure to the international
market. What’s more, regional and international insurers will come
to work in Iraq. The questions are how quickly and what are they
prepared to invest in the local market?
William Wakeham is the Founder and Chief Executive Officer of AAIB
Insurance Brokers, a company specialising in high risk and non
standard insurance cover for emerging countries.
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I am optimistic about the prospects for the Iraq
insurance market. In my mind approach,
vision and flexibility are the key elements to its
continued success
”.
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The No.1 insurance brokers for Iraq
We can help you to invest in Iraq with greater risk confidence.
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The improvement of the security situation in 2009, resulted in an
impressive improvement in the investment projects presented to the
National and Provincial Investment Commissions. This is shown by a
427% increase in the number of investment licences issued from 33
in 2008 to 174 in 2009.
The value of the projects that have been granted investment
licences in 2009 also increased by 230% reaching US$6.6 billion
from US$2 billion in 2008. Housing projects had the lion’s share with
36%, industry projects came second with 28%, hotels at 14%,
tourism projects at 11% and malls at 6%. The remaining projects
were in the agriculture, transportation and communications
sectors amongst others.
As for launching the one million housing project within the
upcoming period, the picture is going to shift dramatically and the
investment scene throughout Iraq will gain an upward trend. This
mega project will stimulate other sectors in the economy
throughout Iraq’s provinces, with a variety of investment activities
which will include; power, water, sewerage systems,
communications, malls, commercial and entertainment centres.
On the strategic investment level, the National Investment
Commission (NIC) is negotiating with a number of investment
companies to execute several strategic projects. These include:
Building 1 million housing units throughout Iraq for US$50 billion
This includes 1 million housing units throughout Iraq with
distribution is based on population size in each province. Each
housing unit will sell for a maximum of US$50,000 for each 100
square metres. Coordination has been finalised with three Iraqi
Banks (Rafedain, Rasheed and Trade Bank of Iraq) to guarantee
payments to investors after finishing the projects and sell it to NIC.
The NIC have now reached the final stages of signing contracts with
some of the companies.
The project to build Al-Rasheed City (previously Al-Rasheed camp)
in Baghdad for US$21 billion
This project includes building a complete city containing 65,000
housing units, along with all required services at Mu’askar
Al-Rasheed area as a first phase. Signing the contract will
be announced in the near future once all project details have
been finalised.
Defaf Karbala City project for US$30 billion
This includes building a complete city containing 40,000 housing
units as a first phase which can be increased later along the banks
of Al-Razaza lake, the pilgrimage route and the strategic line for
transporting crude oil. This project will have a positive impact on
Karbala province, famous for its religious tourism.
City of the Future project in Baghdad for US$12 billion
This project includes building a complete city containing 35,000
housing units as a first stage, subject to increase. Contract award will
be announced in the near future once all the details of the project
have been finalised.
37
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Electricity projects
The NIC in direct and ongoing coordination with the Ministry of
Electricity and through a joint committee is leading the investment
efforts in this sector. The NIC is promoting investment in the units
supplied by GE and the establishment of new power plants. The NIC
has received applications from investors to produce 27,000MW for a
gross value of US$30 billion. Currently, the NIC is focusing its efforts
to invest the GE units in four select locations according to the fueling
plan provided by the Ministry of Oil.
The NIC, in coordination with the Ministry of Oil, has also received
several direct investment applications and joint venture proposals to
establish refineries in the provinces of Kirkuk, Karbala, Amara and
Thi Qar. Based on the technical and the implementation value of
these projects they are estimated by the Ministry of Oil to total
US$25 billion. These opportunities were presented in a conference
designated for this purpose in June of 2010.
Overview of Iraq Investment Law (13) 2006
Opens all sectors and areas of investment to foreign and Iraqi
investors, except:
• Oil & gas extraction and production
• Banking and insurance
All investors have the right to repatriate capital brought into Iraq
and any profits derived from that investment in convertible
foreign currency.
Stock Exchange – Investors can trade in shares and bonds listed on
the Iraq Stock Exchange (ISX) and create investment portfolios.
Land – Investors may rent or lease land for the term of the project,
not to exceed 50 years. An amendment to the Investment Law
passed in October 2009, allows foreigners to own land for housing
developments, excluding hotel projects.
Guarantee – There shall be no seizure or nationalisation of a covered
project, except by order of the courts.
Insurance – Investors may insure projects with any licenced foreign
or national insurance company.
Tax Exemptions – With the approval of the NIC, a project is exempt
from all taxes and fees for a period of ten years from the date of
operation, depending on conditions.
The NIC can extend the period to 15 years if Iraqi investment in the
project is more than 50% of the initial investment.
38
“As for launching the one
million housing project within
the upcoming period, the
picture is going to shift
dramatically and the
investment scene
throughout Iraq will gain an
upward trend”.
Nati onal I nvestment Commi ssi on
In this article, Gary Soper, former Head of UK Trade & Investment
operations in Iraq reflects on his twelve months in Baghdad.
Business: the potential remains…
It will likely be some while before Iraq loses its ‘market of potential’
label if for no other reason than its potential is unlikely to be
fulfilled for some time yet. But why should that be? There are some
positive and not so positive reasons. On the positive side, it’s the
sheer scale of the opportunity that continues to exist here in Iraq
from healthcare to education; from hydrocarbons to manufacturing;
from construction to power; and from communications to life
support services. Iraq still needs more investment in these sectors,
especially where it can improve the delivery of its public services.
However, whilst the opportunities undoubtedly exist, so
unfortunately do the obstacles. Some companies, British ones
among them, are doing good business in Iraq but they still face a
number of hurdles such as securing a licence to operate; finding a
reputable partner; registering a company; dealing with day to day
difficulties of the poor communications infrastructure; or simply
getting around.
New democracy is still working to reform the inefficient and
bureaucratic practices that had become ingrained in many of the
ministries here: and every business needs to deal with one ministry
or another. The Iraqi Government has identified corruption as a
major problem in all areas and has set up bodies and developed
programmes to tackle it but these are in their early stages.
Whilst improvements have been made to the Government’s
planning and budget execution processes, a huge amount of central
Government of Iraq (GoI) funds remain unspent at the end of the
year, which is a great pity in a country that still has around 23% of
the population living below the poverty line. Potential investors are
keen to see a more joined up approach across the ministries.
We need to recognise that in a post conflict society such as Iraq, it
will take time for the situation to ‘normalise’. The GoI has made
huge efforts over the past 18 months in particular to encourage
higher levels of Foreign Direct Investment (FDI). It is right that they
should but I believe there needs to be a greater recognition of the
wider benefits, which can be brought by the rather simpler
extension of existing trading relationships.
Much of the economy is still dominated by the activities of a very
large number of State Owned Enterprises, that will continue to
dominate the economy for many years to come. In addition, the
small but growing private sector in Iraq is largely inexperienced in
dealing with international business. Whilst that is changing, it is
changing slowly. Many of the private sector medium sized Iraqi
companies I have met, are eager to get into partnership
arrangements with overseas companies. This will help bring the
skills and technologies they need to succeed at home and
increasingly in international markets too.
I was heartened to see the formation of the Iraq National Business
Council (INBC) at the tail end of 2009. This organisation, with the
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Iraq: market of potential
blessing of the Government, aims to promote the Iraqi private sector;
increase foreign investment in Iraq; and help reduce corruption. Many
of the country’s leading businessmen are members, representing
companies operating both on and off shore. Hopefully with the INBC
now in place we will see a valuable contribution to Iraq’s economic
recovery in the coming months and years.
In my time here, one key to the success of any foreign business
looking to operate in Iraq is being able to identify and work with a
trustworthy local partner. In many cases that partner may be a State
Owned Enterprise, in others a private sector company. As I have
said, the private sector is growing and indeed the UK Trade &
Investment team is compiling an expanding list of what we believe
could be suitable partners for British companies. It should be noted
that obtaining a validated list from UK Trade & Investment is not a
substitute for undertaking your own due diligence. Whilst company
information here is not always easy to come by, there are specialist
companies who are happy to undertake that work for you. One way
to get this information would be to commission UK Trade &
Investment’s Overseas Market Introduction Service (OMIS), which
can provide market advise and support during a visit from the
embassy. This can include arranging meetings with key contacts,
analysis of market entry strategies, bespoke events and
identification of potential business partners.
I have hardly mentioned security. Whilst security related issues are
never to be under stated in this market, for many companies this is
simply another cost to be taken into consideration. It is not cheap
but there are a number of excellent companies (many of whom are
British) who can help in this regard and who offer a broad range of
business facilitation services – some of whom will be advertisers in
this publication.
So the message remains: there are good opportunities for
companies willing to invest time and money in building up the
contacts and getting a good understanding of the market. But it’s
unlikely to be a place where you’ll get a quick return on your
investment. But some things are worth the wait….
Source: World Bank/COSIT/KRSO Iraq Household Socio Economic
Survey 2007
40

There are good opportunities
for companies willing to invest
time and money... some things
are worth the wait”.
UK Trade & I nvestment
Fresh ideas for those
fresh out of ideas.
UK Trade & Investment is the
government department that helps
UK-based companies succeed in
international markets. We assist
overseas companies to bring high
quality investment to the UK’s
dynamic economy.
For further information, please visit
www.ukti.gov.uk
Oi l & Gas
Oil bonanza will fuel engineering boom
With the signing of a deal in May 2010, with a consortium
comprising China National Offshore Oil Corporation and Turkish
Petroleum for development of the Missan field in southeast
Iraq, the Government finalised negotiations for all 11 oilfield
development licences it offered in an international bidding round
in 2009.
The implementation phase is now beginning for the technical
service contracts awarded for the development of Iraq’s oilfields.
It is the first serious development of Iraq’s oil resources in
several decades.
As a result, Iraq’s Ministry of Oil is confident it can achieve an
increase in the country’s crude production to 4.5 million barrels per
day (bpd) by 2014 - a result that would represent a near doubling
of existing production rates.
Some estimates conclude that the country’s oil output could rise to
around 7 million bpd by 2015 and as much as 12 million bpd by
2017. If all goes according to plan and this prediction is fulfilled, Iraq
could become the region’s petroleum sector leader.
At the same time, Iraq’s hydrocarbon vision is widening. As oil
production increases, gas output has the potential to rise
considerably, providing for domestic power needs and
for exports.
In 2008, Royal Dutch Shell signed a heads of agreement with the
state owned South Oil Company to form a joint venture to capture
and sell natural gas. The plan envisages capturing the gas currently
flared and exporting part of the volume in the form of liquefied
petroleum gas.
Shell’s Vice President for New Business in the Middle East, Mounir
Bouaziz, predicts that “Iraq will become a regional player in the gas
sector and an exporter to the region and the world”.
The focus for the moment is on potential oilfield investments. These
are huge, with a figure of US$20 billion reported for Rumaila alone.
Drilling contracts for the latter, which has estimated reserves of 17
billion barrels, have already been let by the development
consortium comprising BP and China National Petroleum Company.
The contract’s reportedly valued at US$800 million, have been
awarded to China’s Daging Oilfield Company, the US’ Schlumberger
and Weatherford, Iraq Drilling Company and Turkish Petroleum
International Company.
Work will lead to big increases in demand for equipment,
particularly rigs. Pipelines, floating oil terminals, pumping stations
and processing plants will also be required.
New York based consultant Ergo estimates that if all the deals from
the licencing rounds proceed as planned, the value of the oil
services sector in Iraq will increase to US$8 billion by 2014, a more
than 80% increase on 2009.
Extremely substantial supplies of water for reinjection into wells are
also going to be required as well as power generation. In addition,
paved roads will need to be built in order to bring in vast amounts
of equipment and supplies to remote areas.
There will also be a growing demand to connect the new and
expanded oilfield operations with export facilities. Hundreds of
kilometres of pipelines as well as pumping stations need to be built
from the oilfields to the coast.
42
While US engineering company Foster Wheeler is building three
pipelines and offshore moorings to serve the port terminal at Umm
Qasr, considerably more expansion is going to be required since the
port is struggling to accommodate current export volumes.
While an array of engineering, procurement and construction work
is opening up, there are many difficulties still to overcome. Some of
these are procedural such as inadequate entry points for oil industry
equipment and cargo. Other difficulties include inconsistent customs
procedures and problems concerning visas for non-Iraqi skilled and
non skilled workers.
Not least, progress is also awaited on a proposed new oil law
codifying the position of those firms participating in the sector. At
present, there is no comprehensive and regulatory framework for
the petroleum sector.
This legal vacuum makes the Government of the day the only
guarantor of any deals struck with foreign companies, which adds to
political and commercial risk.
The status of oil development contracts signed by the Kurdistan
Regional Government with foreign oil companies also has to be
clarified. In addition, as the country’s crude production is increased,
difficult discussions are likely to lie ahead in agreeing a new oil
production quota for Iraq within OPEC.
The last agreement was nearly 20 years ago when Iraq was
allocated a quota of 3 million bpd, a similar figure to Iran’s. This is
a production level that has not been reached for years but seems
likely to change within the near term.
After decades of under utilisation and production in its oilfields,
observers believe though that Iraq has a convincing argument to be
allocated a much higher figure in future by the cartel.
In spite of uncertainties, companies from around the world are
seizing the moment to participate in a unique and unlikely to be
repeated opportunity to develop the world’s greatest untapped
proven hydrocarbon resources.
Iraq’s oilfield development licences
Oilfield Developer Estimated reserves
Rumaila British Petroleum, 17 billion barrels
China National Petroleum
Corporation (CNPC)
West Qurna-2 Lukoil (Russia), 12.88 billion barrels
Statoil (Norway)
Majnoon Royal Dutch Shell, 12.58 billion barrels
Petronas (Malaysia)
West Qurna-1 ExxonMobil (US), 8.7 billion barrels
Royal Dutch Shell
Halfaya CNPC, Petronas, 4.1 billion barrels
Total (France)
Zubair Eni (Italy), 4 billion barrels
Occidental (US),
Kogas (South Korea)
Missan China National Offshore 2.5 billion barrels
Oil Corporation, TPAO
(Turkey)
Gharraf Japex (Japan), Petronas 1 billion barrels
Najmah Sonangol (Angola) 850 million barrels
Qayarah Sonangol 800 million barrels
Badrah Gazprom (Russia), Kogas, 50 million barrels
Petronas
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INTRODUCTION
1.1 Iraq and the oil & gas business
The oil & gas business is big and will become bigger: the US Energy
Information Administration (EIA) [1] predicts that world energy
demand will grow by 49% between 2007 and 2035 with fossil fuels
remaining the primary sources of energy. Liquid petroleum demand
will be 111 million barrels per day (bpd) by 2035. At US$60 per
barrel, this is a US$6.6 billion a day business.
Iraq will have a key role in meeting this demand: Iraq currently has
proven oil reserves of 143.1 billion barrels, which is 10.4% of the
world’s total reserves and is producing 2.2 million bpd (2008).
Depending on the political and security situation and the price of oil,
Iraq could be producing 8.3 million bdp by 2035 [2], with
11.1 million bpd being a government target [3]. It is also worth
noting that it is believed that Iraq has significant untapped natural
gas resources.
Currently, according to the International Monetary Fund (IMF) [4],
crude oil export revenues represent over 75% of GDP and 86% of
government revenues in 2008.
Politics and security are obvious challenges facing Iraq if she is to
fully develop her vast petroleum resources. There will also be a need
for huge infrastructure investment: the World Bank estimates that at
least US$1 billion each year needs to be invested in the oil industry,
just to sustain current levels of production [5].
There is one other area that will need heavy investment – people.
There will be a need for men and women with the skills and abilities
to drive Iraq forward into this oil & gas future. An expansion in the
industry will need an expansion in the workforce – both in terms of
numbers and in terms of skill.
The oil & gas business relies on engineers for everything from
safety to profits and as a country expands its oil & gas business,
it must expand its workforce and ensure employees have the
necessary skills.
These skills are needed for rehabilitation of existing infrastructure, to
building the new infrastructures to accommodate the increased
flows. Unfortunately, this obvious need for people and skills is
usually overlooked, as there is always a hope that ‘market forces’
will produce the required workforce. This will not happen [1], as
there is already a major skills crisis in the oil & gas industry and it
is expected to worsen.
Hence, Iraq needs to start planning to develop its people and skills
to allow its oil & gas business expansion. This article gives an outline
of the strategy needed to achieve this development.
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Training the next generation of oil & gas engineers
Case study: Penspen
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Educati on & Trai ni ng - Penspen
2 DEMAND FOR SKILLS IN THE INDUSTRY
The oil & gas industry requires many differing skills and many of
these skills can take decades to master. Increasingly, these skills are
disappearing and there are a number of reasons for this [1]. Below,
two major reasons are explained.
2.1 Ageing workforce in the industry [1]
The oil & gas industry workforce is old: a ‘young’ worker is about 43
and an ‘old’ worker is 55. Their average age is about 50 and their
average retirement age is 55; therefore, it is obvious that the sector
faces a major skills crisis in the next five to ten years, as more than
half the experienced workforce will leave the industry.
This ageing workforce will be called upon to help with any
rebuilding or expansion of an oil & gas business and it will be called
upon to assist in Iraq’s future but clearly, much of this workforce will
be retired as the demand increases.
Why is the workforce so old? It is because of the ‘missing
generation’ in the oil & gas industry. The workers who trained in the
1960s and 1970s are approaching retirement; but the new, young
generation attracted to the industry by the boom and huge salaries
of the past ten years are still too young to replace the retirees.
Replacement takes time: it takes about 3 years for new staff to
become familiar with the industry and about a further ten years to
gain a professional discipline [6].
2.2 Increasing global demand for skills
There is a skilled workforce in the oil & gas business, albeit ageing
but they are in great demand. Hence, we need to replace the
missing generation, plus introduce another generation to meet the
increased demand for skills. This is because new oil & gas finds will
require huge workforces; for example, Brazil’s Tupi field is equal to
all the reserves in Norway. Also, the shift from the rapidly depleting
older fields in the Middle East, to the new discoveries in places such
as Canada, will create a global recruitment problem. Iraq will need
to compete with these other regions.
Reference 5 quotes, “Faced with one of the biggest periods of
expansion in its history, the global oil & gas industry is already
Photo © PwC
being held back by its failure to attract, recruit and retain highly
skilled staff. This is true from rig workers to senior scientists and
engineers. Through short term thinking and a belief that required
staff can be bought, the oil & gas industry has stretched its resource
base to breaking point”.
The oil & gas industry will also face fierce competition from other
industries; for example, the demand for skilled staff in the
renewable energy sector has increased by 60% over the past two
years [7].
3 DEVELOPING SKILLS IN THE OIL & GAS BUSINESS
There are two approaches (or combinations of these approaches) to
supplying skills in the oil & gas business in Iraq:
• ‘Buy-in’ skills via expatriates and foreign providers
• Grow skills in-country
Clearly, the first option is a short term fix with considerable risks, as
this foreign workforce is already in great demand, ageing and
may not be attracted to countries such as Iraq while security
is a problem.
Hence, the only realistic, long term solution is to grow skills
in-country.
3.1 Growing skills in-country
State run companies in the Middle East and Asia have already
identified the reliance on ‘ageing’ expatriate workers and the need
to develop their own skills base. These countries and companies are
now systematically employing nationals, with the intention of
replacing the existing foreign and ageing workforce.
This means organisations have to make large numbers of new
recruits ‘job ready’ quickly [6] but this influx of inexperienced, albeit
able staff require training, mentoring, etc., by the older, existing
expatriate workforce. These latter workers are overworked, short
staffed and many may be looking forward to retirement; therefore,
they are unlikely to be able to help.
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Nationals
Expatriates
Age 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63
‘Push’ by Middle East and Asian Countries to Replace the Expatriate Workforce with Nationals [6].
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It is not sufficient to ‘hope’ that skills can be grown in-country. There
needs to be a strategy to guarantee skills development.
3.2 Oil & gas education and training – a new strategy
Countries such as Iraq will need to rapidly produce staff with oil &
gas skills but this will not be easy. Therefore, there needs to be a
focused, aggressive, fast track strategy put in place to create and
nurture these skills. This will require both use of the existing in-
country learning centres and external providers.
To ensure we have the necessary skills for the expansion of the Iraq
oil & gas business we need to:
• Increase industry involvement in universities and technical
training colleges
• Change to modular learning
• Use the internet and distance learning
• Change how we learn
• Change industry mindsets
3.2.1 Universities and industry working together
Industry and academic organisations must work together to bring
both young and older engineers to attractive, tailored courses that
satisfy skill shortages. Industry must take the lead and invest in
learning organisations willing and able to offer oil & gas engineering
education. We need to be extremely careful in these learning
initiatives – academic organisations may well try and put forward
training packages that they already have, rather than bespoke
courses and industry may not give the necessary technical
leadership and effort. Without a common goal and resolve, all this
learning will fail.
Students also appreciate ‘hands on’ and industry involvement in
courses [8] and it is unlikely that universities will be able to produce
and deliver the intense, focused courses the industry now needs.
There is a good example of the oil & gas industry working with
universities in the UK: Newcastle University has set up two Masters
programmes in oil & gas engineering topics [9]. UK companies such
as Penspen Ltd., are taking a leading role in the development of
these courses and are committed to their delivery and success [1].
It may be that the industry has to finance its own institutions to
meet its education and training goals but rapid reviews of
universities and colleges in Iraq will determine if new resources and
facilities are needed and how much external assistance is required.
The oil & gas industry and academia need to work together to
produce and offer ‘modular learning’: modules related to current and
future industry issues should be on offer. This is a major change for
both academia and industry.
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The key factor in this changing approach and academia/industry
partnerships, is resolve.
3.2.2 Modular learning
Engineering is rapidly changing and engineers need to keep pace
with all technical changes. This is not possible without life long
learning. Additionally, all engineers need to be highly trained, to be
able to move between jobs and countries. Structured modular
training courses can provide this learning and these can complement
or replace traditional qualifications such as degrees.
Globalisation, fierce commercial competition and changing
technologies require engineers to be quick to react. Similarly,
engineers need to have easy and quick access to new knowledge.
This is becoming increasingly important: staff no longer want to
spend long periods away from home and workplace; they would
rather embark on modular learning where they select suitable
training packages from a comprehensive list and participate in that
learning programme in their own time.
Structured modular learning packages need to be offered to existing
staff to allow continuous professional development. Traditional
courses can still be undertaken but they will be spread over many
years – focused, modular courses, will additionally allow a rapid but
structured and systematic development of skills.
3.2.3 Harness the internet
The internet offers unlimited facilities for learning - today’s students
and existing staff expect modern learning. It is a ‘now’ generation:
going to a library is time consuming and a chore. The internet and
intranets can offer instant access to information and knowledge. This
is an important point: the current baby boomers in the business
have benevolent temperaments that want to transfer all their
knowledge to younger staff but today’s younger generation has a
‘just in time, just as you need it’ outlook [1]. This may not be ideal
but all learning packages must recognise this.
3.2.4 Distance learning (e-learning or Virtual Learning Environments)
The security situation in Iraq currently deters visitors. Hence, it will
be difficult to attract learning providers to the country in the short
term. This means in-country resources will need to be used
extensively but distance learning can fill in any gaps.
Universities and colleges, both in Iraq and worldwide, need to offer
distance learning packages for all their possible students. A flexible,
distant learning approach is in line with the changing work place and
the expectations of both the young and old today. It will appeal to
both young engineers wishing to enter the oil & gas sector and
existing staff in the industry.
The internet offers the platform for both modular courses and
distance learning. Distance learning formats can be easily produced,
albeit at a price but the distinction between campus learning and
distance learning is fast disappearing with the advent of ‘Virtual
Learning Environments’ (VLE).
VLEs are internet based ‘platforms’ – software that organises all the
information needed for distance learning. The platforms can be
commercial and paid for or open access and free which allow staff
and students to log on and access all course materials, bulletin
boards, chat rooms, information updates, announcements, libraries,
etc., in an easy user friendly web page format.
There are a number of commercial VLEs [10]: we now have the
technology to offer distance learning to the oil & gas industry. Now
we need to:
• Produce the learning modules
• Produce experienced staff to supervise the modules and students
• Place the modules on a suitable platform
• Manage and maintain the learning
Distance learning will be essential for all the oil & gas business but
particularly in Iraq. Again, there needs to be a major investment in
this area as very few distance learning packages exist and many will
need to be newly developed.
3.2.5 Learning strategy
The industry is entering a period of great technological challenges:
the world’s new oil & gas reserves are in difficult (deepwater and
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arctic) environments and our existing reserves may be in regions of
conflict, such as Iraq. Also, the increasing cost of conventional oil will
take us into unconventional sources (oil sands, shale gas, etc.)
requiring new technologies and new skills. These challenges require
the industry and its staff to adapt, change, develop and expand into
new skills areas.
These challenges will not be simply solved by new university and
college courses, or bespoke modular training courses. The solution
rests in a coordinated approach to staff education, training and
development.
We all know that a raw engineering graduate is of little use in a
company; they require training. Then, ‘trained’ is not enough: an old
army saying is ‘trained doesn’t mean ready’. An engineer is ‘ready’
for unsupervised decision making after an intense period of on the
job training and organised mentoring.
The essential development steps for engineers.
The above is a life long learning journey: there is no ‘finish’ with
education and training.
3.2.6 Industry mindsets
Developing skills rapidly is not a cheap exercise and learning should
always be of the highest quality. This means the industry must invest
and invest heavily. There is no excuse not to, when there is a clear
gap to fill and a healthy flow of oil revenue to finance it.
The oil & gas industry needs to be as enthusiastic about developing
and buying training and learning packages, as it is when buying new
IT systems, or gleaming HQ buildings. They are a fraction of the
price, better value and attractive to all staff. This is an important
point: our limitations in the oil & gas industry and the pipeline
sector, over the next ten years will not be computers,
communications, finance or technologies. It will be learning,
experience, values and information: the successful companies will
be investing in these.
4 THE START OF A NEW ERA OF PARTNERSHIP IN EDUCATION IN IRAQ
The Iraq Britain Business Council (IBBC) [11] is an organisation which
facilitates business, trade & investment, human resources, training
and transfer of technology and ‘know how’ into the Republic of Iraq.
It seeks to bring together Iraqi, British and international companies
and public sector bodies by giving them a joint platform and
identifying their mutual interests and common goals. Prime Minister
Nouri al-Maliki and through him the National Investment
Commission, fully support IBBC in its goals.
The IBBC has as a core goal; the mission to search out and
implement increased cooperation in the fields of tertiary education
and vocational training in all fields of business and industry, in order
to achieve technological transfers and to expand the skills base at
every level of Iraqi society.
During recent months the IBBC has, in partnership with the Iraqi
Ministry of Higher Education and with the University of Basrah, laid
the foundations for the establishment of an IBBC University. The
University will work as a private/public partnership between the
IBBC and the Iraqi Ministry of Higher Education. The first campus will
be initiated in Basrah University this academic year (2010-2011).
The IBBC University will be partially modelled on the successful
establishment of the Kazakh British Technical University (KBTU) in
Almaty, Kazakhstan. The IBBC’s Executive Chairman, Baroness
Nicholson of Winterbourne, has recently returned (2010) from a visit
to Almaty, where she has received the full support of the Rector and
the Vice-Rectors of the KBTU for the establishment of an IBBC
University in Iraq.
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Educate Relevant academic/trade qualifications
Industry specific training Train
Mentor Field experience & mentoring
Ready Continuous professional development
Baroness Nicholson has said: “The IBBC has already set up a range
of IT and English language classes in Basrah University, which will be
complemented by oil & gas sector related classes, as led by
Professor Phil Hopkins of Penspen Ltd, UK. We are looking forward
to establishing a fully fledged Technical University which will be
combined with Business and Project Management related faculties”.
5 CONCLUSION
The success and growth of the oil & gas industry in Iraq is dependent
on many things. One key element will be the skills of its people.
These skills will need to be rapidly developed and this will require
a partnership between industry and academia, modular learning
packages, distance learning and heavy financial investment.
The need is real and the start time is now.
REFERENCES
1. P. Hopkins, ‘The Skills Crisis in the Pipeline Sector of the Oil &
Gas Business’, Journal of Pipeline Engineering, 2008.
2. Anon., ‘International Energy Outlook 2010’, Energy Information
Administration. US. July 2010.
3. Private communication. Republic of Iraq. Ministry of Oil. Letter
to G Raynes, Penspen Ltd. 11 April 2010. Reference 595.
4. Anon., ‘Iraq: Second Review Under the Stand By Arrangement
and Financing Assurances Review - Staff Report; Staff
Supplement’, International Monetary Fund (IMF) Country Report
No. 08/383. December 2008.
5. Anon., ‘Independent Statistics and Analysis – Iraq’, Energy
Information Administration (EIA), www/eia.doe.gov.
6. P. Parry, V. Davidson, A. Clark, Z. Guildford ‘Labour and skills
crisis could stall oil & gas boom’, Booz Allen Hamilton, 2006.
7. N. Daly, ‘The challenge to staff renewable projects’, Energy
World, July/August 2008. p.2.
8. J. Winters, ‘Extra Credit’, Mechanical Engineering, November
2007. p.32-35.
9. www.ncl.ac.uk/marine/postgrad/taught/subsea/ and
www.ncl.ac.uk/marine/postgrad/taught/pipeline.htm
10. S. Hoare, ‘Universities adapt to a shrinking world’, The
Guardian, UK. 7 March 2006. Higher Education. p.11.
11. www.webuildiraq.org.
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The internet and intranets can
offer instant access to
information and knowledge”.
Penspen Gr oup
Oil & Gas Lifecycle Services
Penspen is a leading independent group of companies
providing studies, engineering, operations, integrity and
maintenance to the oil and gas industry for pipelines,
production, transportation and storage facilities both
onshore and offshore worldwide.
Concept • Feasibility • Front End Engineering Design (FEED) • Detail Design • Project Management • Operations & Maintenance • Integrity
www.penspen.com
Penspen Group Head Office
3 Water Lane
Richmond upon Thames
TW9 1TJ
United Kingdom
Tel: +44 (0) 20 8334 2700
Fax: +44 (0) 20 8334 2701
Penspen International Limited
Al Yasar Tower (Micco Building)
Flat 303, 3rd Floor (Office Block)
Abu Dhabi (PO Box 46562)
United Arab Emirates
Tel: +971 2 679 2526
Fax: +971 2 678 0913
Consilium Risk Strategies (CRS) is playing a pioneering role in the
development of Iraq’s business infrastructure and is increasingly
optimistic about the country. Andy Edwards, CRS’ Chief Executive
says, ‘The situation is slowly improving and is now dramatically
better for business than when we first began’. CRS recognise that as
the country rebuilds and improves its infrastructure, organisations
wishing to work there also need to address how they operate.
Andy Edwards continues; ‘Many organisations are so large and
entrenched in the provision of one service, such as construction, oil
and energy or security, that they have become monolithic and have
difficulty in responding to different situations. In effect, they are
forced to do what they have always done’.
CRS by contrast, have conducted research with Iraqi businesses and
the results are clear: they want to make their businesses more
efficient and more capable of competing on a world stage. They also
want to attract foreign investors and to make it easier for them to
operate and establish successful new businesses in Iraq.
This may all sound obvious but how does it translate into tangible
actions? Following the Invest Iraq conference in 2009, CRS were the
first Private Security Company to open a fully equipped business
centre in the heart of Baghdad, providing a full range of integrated
business and security solutions. This included; office and meeting
facilities, legal services, due diligence and consultancy and 4 star
luxury accommodations. This type of approach has been warmly
welcomed by the business community, the National Investment
Commission (NIC) and UK Trade & Investment (UKTI).
Over the past eighteen months, CRS has gained considerable
commercial experience in Iraq and remains the premier ‘complete
solution’ provider in its field. CRS is now combining this experience
with its findings from the business community, to launch two new
initiatives, which are unique to Baghdad and Iraq. These include:
1) Human Capital Development
Is there sufficient internal resource to maximise a return on
investment within Iraq’s new infrastructure? This question underpins
the Human Capital Development (HCD) initiative and reflects a
period in which investment in building skills is becoming as
important as investment in building structures.
As Ian Hearne, Director, Middle East & Asia for CRS Worldwide Inc.
comments, ‘We regard people as the single greatest source of
competitive advantage, that is why we regard people as Human
Capital and not simply as Human Resources’.
In keeping with this philosophy, CRS has developed two Human
Capital Development programmes, which give stakeholders access to
world class training and development.
This includes the CRS Management Development Initiative, which
encompasses four distinct programmes and deals with the four most
common challenges faced by managers:
Management Development Programmes:
• Recruitment Skills Programme
• Performance Management Programme
• Coaching Skills Programme
• Team Leadership Skills Programme
CRS is also launching the CRS Commercial Skills for Managers
initiative. As Ian Hearne explains, ‘If Iraqi managers intend to
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Case study: Consilium Risk Strategies
compete with managers from the US, the UK, Japan and
Europe, then they should be as well trained and supported as
their competitors’.
This key initiative provides programmes that have been tried and
tested in more than 25 countries and successfully delivered to more
than 20,000 people. These include:
Commercial Skills Programmes:
• Marketing Skills Programme
• Tele-selling Skills Programme
• Selling Skills Programme
• Presentation Skills Programme
• Negotiation Skills Programme
• Account Management Skills Programme
2) Assisted Proactive Business Development Initiative
CRS also believe that organisations can do more to aid Iraq’s
development. They recognise that simply providing business services
it not enough, as Ian Hearne explains, ‘there are a number of
prominent international Private Security Companies (PSC’s) operating
in Iraq today, who simply do just that, provide security. Some are
now trying desperately to reinvent themselves as providers of
‘business services’ without actually understanding what it means or
how to do it. Supermarkets sell a lot of ingredients but they don’t
show you how to bake a cake. In essence that is the main CRS
differential and the thinking behind the ‘Assisted Proactive Business
Development’ initiative’.
Services included:
• Business Consultancy – due diligence
• Finance – international frontier investment facilities
• Legal services
• Connections and links to ministries
• People – recruitment, training, talent management
• Security – including full life support (secure 4 star
accommodations)
• Contacts – translators, suppliers, customers, trade affiliations,
embassies
• Support Services – accompanied travel, visas
Ian Hearne continues, ‘CRS aims to seek, meet and attract foreign
investors into Iraq, through our relationships with affiliation bodies
and commercial organisations based outside of Iraq. Thereafter, we
will provide a full assisted business development service to those
same incoming investors’. For more information regarding CRS and
their services, please contact:
Ian Hearne - Director, Middle East & Asia
Email: ian.hearne@crsworldwideinc.com
Web: www.crsworldwideinc.com
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Ri sk Management
Travel to so many emerging market areas around the world,
particularly in post-conflict regions, can be a challenging experience
for the uninitiated with apprehensions fuelled by a lack of clear and
reliable advice.
Iraq is no exception and nobody can pretend it is an easy market in
which to pursue business. However, in spite of most foreign ministry
advisory notices continuing to caution against travel to Iraq due to
the unresolved security situation, business goes on, albeit at a level
well below its potential.
Perceptions can invoke extreme caution. A recent survey of 367
executives by the Economist Intelligence Unit (EIU) found that 64%
of executives questioned believed that it was still too dangerous to
do business in Iraq at the present time.
There has been plenty of adverse news coverage to add to the
pessimism with a spate of serious incidents during 2010, not helped
by the time taken to form a new government following elections,
with insurgents exploiting the failure to reach a power sharing
agreement according to the Oil and Electricity Minister, Hussain
al-Shahristani.
Though the security situation in Iraq is still tenuous, however,
improvements are being made. Sectarian and terrorist violence
continues, though at levels lower than in previous years.
One clear message emerges that it is possible and practical for
visitors to travel to Iraq and inside most of the country in relative
safety, as long as the advice of security professionals is heeded.
The security situation in Sulymaniyah, Erbil and Dahuk governorates
in northern Iraq has, for example, been more stable relative to the
rest of Iraq in recent years. Other areas including the capital
continue to strive towards a much more secure environment.
Most of the EIU’s respondents even expected the security situation
for foreign executives and their employees to improve over the next
two years, with 46% saying it would improve somewhat and 9%
saying it would improve dramatically.
While a majority judged that the ongoing violence means doing
business in the country will remain off limits for some time, 38%
considered Iraq to be a country with significant opportunities for
those willing to accept risks in the short term.
One of the biggest changes in the campaign to subdue terrorism in
Iraq over the last 14 months has seen Iraqi government forces
taking over responsibility for an increasing amount of the country’s
internal security. In 2009, US military combat forces began to
withdraw from all major Iraqi cities including Baghdad.
The last US combat mechanised units left in August 2010, while a
bilateral agreement between Iraq and Washington calls for the
withdrawal of the remaining 50,000 American military personnel by
the end of 2011.
It represents a major challenge for Iraq, for which they are receiving
substantial support and mentoring from members of the former
coalition. The US has allocated more than US$22 billion in training
and equipping Iraq’s security forces since 2004, according to the
New York Times.
The US State Department has also said it intends to hire a further
7,000 security contractors in 2011, to help the Iraqi Government
improve its police department and other civil agencies.
Ri sk Management
56
Security is a challenging area but not insurmountable
While the increase in Iraq’s security forces has allowed them to take
on work previously done by the American army, they are not a like
for like replacement. Nevertheless, they do understand how Iraqi
streets and communities operate in a far more detailed and
sensitive way, which augurs well for long term community
protection and development.
For the time being, the effort is drawing on the assistance of more
than 50 private security contractors currently working in Iraq for a
variety of clients including foreign governments, private industry
and international organisations.
Some 12% of the US$50 billion that the US Government is
expending on reconstruction in Iraq goes on security services
provided by private companies.
They provide an array of armed and unarmed security services,
including static security, personal security details, intelligence
analysis and operational coordination.
The work includes; providing bodyguards for diplomats and top
commanders as well as guards for military bases, military supply
convoys, contractors and subcontractors supporting US activities
in Iraq.
Some security firms offer a wider remit than just securing the
physical safety of people and assets. This can range from organising
itineraries in particular sectors as well as briefing insurance
companies on what cover is advisable for a visitor. Other
services include arranging accommodation in Baghdad’s
7.7 square kilometre International Zone or in private secure
compounds and villas as well as protected travel in the country.
Sound expert advice is essential for visitors knowing what is safe
and reliable. It is not a question of having the nerve to visit but
rather in spending time on detailed preparation.
Having the right intelligence allows outsiders to be attuned to such
fault lines, allowing business visitors in particular to operate with
much more confidence and efficiency.
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The Erinys mission is to create and maintain a safe and secure
environment, enabling its clients to focus on their core activities and
achieve their business objectives in remote and difficult areas.
This is achieved with minimum acceptable risk to people, assets
and reputation.
Erinys Iraq Ltd, part of the Erinys Group of Companies, has been in
continuous operation across Iraq since May 2003. During that time,
Erinys has witnessed many momentous changes in Iraq. It has
continually adapted and refined both its business model and
approach, fully engaging with the reconstruction and rehabilitation
process, alongside its commercial clients and the Government of Iraq.
Erinys’ hallmark is its ability to manage large and complex projects
in demanding circumstances. As well as contracts with both Iraqi
and US Governments, Erinys has also successfully supported many
commercial organisations engaged in Iraq’s post conflict
reconstruction efforts. Success has been achieved by working hard
to anticipate and understand their clients’ requirements in dynamic
operating environments and implementing jointly agreed courses of
action, maximising the benefit to host nation stakeholders.
Erinys continues to develop its range of services to suit rapidly
developing commercial requirements for organisations seeking to
enter and succeed in Iraq. Two examples of these are:
• The development of the suite of Enterprise Support Services that
address differing requirements throughout project life cycles from
project planning to demobilisation. Erinys is able to package services
using a range of experienced capable partners. The ‘single face to
industry’ approach not only delivers a safe and secure environment
but has the additional benefit of reducing clients’ administrative and
management burdens and associated costs. This invariably increases
the clients’ operational efficiency.
• In recognition of the fact that Iraq presents commercial
organisations with a critically important emerging market, Erinys
has launched the Bridgehead range of services including: Visa
processing, secure accommodation and secure transport. These are
designed to enable clients’ preparation and market entry, with the
minimum of fuss. The Erinys Bridgehead service is complemented by
the InSight intelligence service that provides a comprehensive range
of market intelligence products, including specifically commissioned
surveys and reports.
Erinys’ enterprise support services and Bridgehead are not mutually
exclusive but rather complementary, enabling Erinys to better
understand their clients’ service requirements, allowing them to
embed security by design.
Foreign commercial, government and non-governmental
organisations wishing to achieve their objectives in a rapidly
changing post conflict Iraq, require a robust level of situational
understanding and a finely developed sensitivity to the country’s
cultural heritage. Both can be readily obtained by seeking the advice
and help of organisations who have gone before and learnt from
their experiences.
Erinys has provided services to the Iraqi Ministry of Oil, the US
Government and a host of commercial organisations engaged in the
reconstruction effort. In the process, Erinys has employed thousands
of Iraqis across the tribal spectrum and provided training and
advancement for many along the way. Erinys has thus developed a
deep understanding for the culture and environment, which may not
otherwise be immediately obvious to market entrants.
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Securing Iraq
Case study: Erinys
Ri sk Management
SECURING YOUR FUTURE
SUCCESS IN IRAQ
[brij-hed] – noun; pioneering foothold: a position
from which further advancement can be attained
For further information or to book your Erinys
Bridgehead services:
Call: +971 (0)4 609 1141, or
Write to bridgehead@erinys.net
Pre-deployment briefing, preparation and training
Business intelligence & information
Travel, visa and immigration services
Secure accommodation and offices
Close protection (static and mobile)
Medical, emergency response and evacuation
Host Nation liaison
Communications and information systems support
Logistics support
www.erinys.net
Erinys Bridgehead services enabling
your critical business planning and
market entry
Iraq is emerging from its struggles and seeking to diversify its
economy in order to create long term economic opportunity. If you
consider the baseline position and look at the progress made on the
previous year, things have moved on. At the end of 2009, Foreign
Direct Investment (FDI) had increased by almost 241% on previous
years. This was largely due to the successful oil licencing rounds. The
UK was fourth in terms of FDI in Iraq, well behind the UAE and US.
Oil & gas currently attracts 46.58% of all investment in Iraq (FDI
2009). This is followed by mixed residential, commercial & industrial
developments 32.05%. The successful development of the oil sector
will increase overall business confidence in the Iraqi market and
endow the Iraqi Government with the resources to implement its
ambitious infrastructure redevelopment plans.
11 oilfield development licences have now been awarded with an
estimated potential production output of 12 million bpd. Crude oil
prices currently stand at US$81.58 per barrel (as of 1 October 2010)
indicating the huge potential wealth of the country. Iraq has the
potential to become the world’s 2nd biggest producer of crude oil.
These long term service contracts will provide a back bone for the
Iraqi economy. Oil is without a doubt the key driver of development
in Iraq but in order to deliver the ambitious oil production targets,
supporting infrastructure must be developed. Oil revenues will
enable the necessary economic diversification, job creation and
investment required for long term economic sustainability in Iraq.
There have been a number of positive changes that make the reality
of rebuilding Iraqi infrastructure and achieving long term goals
possible. The economy has shown promising signs of stability with
successful policies limiting inflation and acheiving high rates of
annual growth. Significantly improved levels of security make
travelling to Iraq a more attractive proposition for foreigners and the
successful staging of the elections held in March 2010 gave a signal
that things were improving. The improved security situation has also
been the basis for positive economic forecasts and over the next five
years economic growth is predicted to average 5.8%. However, the
stalemate in the leadership contest is doing little to support the
significant improvements seen in the security situation over
previous months but there is still a sense of optimism as to an
agreement being reached and progress continued.
The important challenges still facing the country also represent
opportunities for organisations that view the rewards as worthwhile
and believe that they can adequately manage the risks. These
companies must also be prepared to commit to building long term
relationships in Iraq. Both the international and the Iraqi private
sector will play a catalytic role in the redevelopment of Iraq. In
addition to the oil & gas sector, large international companies are
now participating in Iraq’s economic growth.
The Iraqi Government has always publicly stated the need for the
participation of foreign experts and investors to achieve its
objectives. A challenge that has seemingly appealed more to the
European, Asian and US nations than the British. Apart from a
handful of pioneering British companies, most large UK companies
involved in infrastructure have perceived Iraq as too high risk.
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I nfrastructure
Infrastructure review
Although it remains challenging there is now a mounting body of
evidence that with the right approach it can be a manageable risk
and a risk worth taking.
Infrastructure projects are key to unlocking Iraq’s economic
prosperity and are essential in achieving the stability of the country.
The ability of the Government to meet basic needs is a prerequisite
for a successful state. What that state looks like will be determined
by the Iraqis but the unequivocal truth is that a successful state will
only exist with significant infrastructure development.
Prior to 2009, the Ministry of Electricity (MoE) put in place
programmes which resulted in significant increases in power
generation. Some estimate that production doubled between 2003
and 2009. However, the current production of electricity in Iraq still
fails to meet basic needs, with electricity supply averaging less than
14 hours per day. The future plans for the industry are necessarily
ambitious with the sector facing many challenges. The biggest
challenge is the wide ranging need for new power plants, a
challenging requirement not least due to the extraordinary costs of
such an overhaul and the limited resources available. This year we
saw rioting in the streets of Basrah due to public frustration at what
was perceived as the failure to improve the provision of electricity.
This prompted the then Minister of Electricity to step down and
the Government to take the step of appointing Hussain al-
Shahristani the Minister of Oil, as custodian of the MoE until further
notice. The MoE has developed a model which stimulates foreign
investment in the sector through a buy back agreement, a
development that required significant change in approach and
legislation. This was part of an ongoing process to remove some of
the financial constraints faced by the sector. The MoE has also
engaged in discussions with the World Bank and international
financiers in an attempt to develop suitable financial models
for investment.
This year the first round of power stations were tendered, putting
forward six plants for redevelopment. Again the response from
international companies was significant.
Iraq is aware that it needs to almost double its current electricity
production in order to meet demand and is taking steps towards
achieving this objective. With a growing population and increasing
economic wealth, demand is steadily increasing. Iraq is already
considering the use of nuclear power plants to meet this demand
but will also need to give serious consideration to sustainable power
generation options. Under the previous Minister there were plans to
tender a further ten power projects this year. With the change in
leadership at the MoE there is no doubt that adjustments
will be made to plans to meet the increasing demand for power
in Iraq.
The National Investment Commission’s US$70 billion infrastructure
package announced in 2009, included a broad range of sectors and
a clearly ambitious target. The package included targets of US$25
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This year the first round of power
stations were tendered, putting forward
six plants for redevelopment. Again the
response from international companies
was significant
”.
billion for housing development and US$8 billion for transport.
Concerns were raised over the supporting infrastructure that would
make this scale of investment possible. However, the subsequent
housing development plan assembled by the NIC Chairman, Dr Sami
Al-Araji has been significantly progressed.
Amendments to the Investment Law which relate specifically to land
possession have increased the attractiveness of physical
development projects in Iraq. A number of hotels and other leisure
developments have sprung up, including the large and ambitious
Basrah Sports Stadium project. The US$500 million scheme was
tendered in 2009 and received a considerable response from
international consortiums partnering with Iraqi firms. The project
was eventually awarded to an Iraq/US consortium and construction
began last year. When completed, the sports city project will
accommodate 65,000 spectators and also includes the development
of four hotels.
Housing is a major priority for Iraq which already faces an acute
housing shortage. 3.5 million housing units are required in the next
five years alone. Large scale housing projects have been agreed
with UAE and South Korean backing. The exciting redevelopment of
Sadr city is underway. A notoriously deprived area of Baghdad,
overcrowded and rundown, is the focus of a reconstruction
programme. Ten firms were shortlisted this year to complete the
Phase 1 planning and design of the programme. The intention is to
include 75,000 new housing units and supporting utility and
community infrastructure.
Water is perhaps the most highly political and critical issue facing
Iraq. Iraq known as Mesopotamia in ancient times, meaning,
between two rivers surely provides an indication of the importance
of access to water for the future of Iraq. The Ministry of Water
Resources was one of the first ministries to start the process of
privatising its state owned companies. In order to solve the
potential water shortage crises, the Iraqi Government is employing
diplomacy and looking at ways to increase efficiency. The US$70
billion infrastructure package identified an investment target of
US$5.539 billion for the development of water resources and
sewerage networks in Iraq.
In the transport sector, the focus has been given to plans for the
development of major transport hubs comprising of ports, airports
and railways. Iraq has an extensive railway network, with some
1,900 kilometres of track. Both the track and rolling stock are
antiquated and in much need of modernisation. The efficiency of the
railway network has a significant part to play in supporting the Iraq
redevelopment plan. In 2009, the Ministry of Transport announced
signing a Memorandum of Understanding with Deutsche Bahn for
the redevelopment of the railways.
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A fascinating array of projects
has come to life, everything from
the Baghdad Eye to Monorails.
”.
In 2009, the US was firmly focused on the redevelopment of the
port of Umm Qasr, they claimed that this would be the only major
port development in Iraq. At the same time the Iraqi authorities
were talking about the development of the port of Al Faw in
addition to Umm Qasr. To anyone looking independently at the
situation it was immediately clear that Al Faw was about to see
some major change. In 2009, an Italian consortium were awarded
the project. The project is ongoing and the design and planning
stage is expected to be completed in 2011.
The development of the aviation sector and major Iraqi airports form
a fundamental part of the transport plan. There has been much talk
about the possible development of Baghdad International Airport
(BIAP) and it is rumoured that agreements are in place for its
development with international partners. There has been a marked
change in approach at BIAP in 2010 and Etihad announced the
addition of Baghdad to its international flight list.
Tenders for projects such as the Baghdad Metro, an ambitious
project set to ease congestion in the city with a 2 line, 41 station
metro, developing over 39 kilometres of track. An idea that has
been lying dormant for some time suddenly came back to life. The
Monorail was also tendered this year.
The resolve of the Iraqi Government to initiate major development
has been clearly demonstrated in 2010 with the steady stream of
tender announcements. A fascinating array of projects has come to
life, everything from the Baghdad Eye to Monorails. The resolve of
the Iraqi’s to bring on large scale change and engage with
international investors and developers should be applauded.
However, tender announcements can sometimes be more of an
expression of the abstract rather than a well developed and clearly
defined project need.
The development of Al Faw Port and the Italian consortium, led by
Technital that eventually won the project is a stunning example of
how long term engagement can be rewarded in Iraq. International
engagement demonstrates that there is a way to manage the risk.
Many of the perceived risks are misconceptions. Admittedly, Iraq’s
modern history of centralised government structures has endowed
it with a limited private sector and many basic systems in
developmental stages. This can make it difficult for international
companies to grasp the real demand for goods and services in Iraq.
Even those companies that take steps to initiate active engagement
in Iraq can find it difficult to navigate the challenging environment.
However, many companies are overcoming those challenges and
doing business in Iraq. This is a clear indication that with the right
knowledge Iraq is a country worth exploring.
So are UK companies leaving it too late? They are put off by the lack
of clarity and the speed at which things progress but are they
missing the point? While other international companies are in Iraq
helping with the streamlining process and helping the Iraqi
government take these crucial steps, they are developing valuable
knowledge and relationships that will make it difficult for British
companies to catch up later. Over the last year, numerous projects
have been announced but have not seen the light of day falling foul
of challenging financial systems or other bureaucratic difficulties.
Despite these challenges, Iraq still possesses outstanding natural
resources, a rich archaeological heritage and vast human resources
– with such strong foundations Iraq has every reason to succeed.
Leanne Case is a consultant specialising in Economic Development
and Business Strategy and has been helping companies in Iraq
since 2009. Email: leanne.case@btinternet.com
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Parsons Brinckerhoff (PB) has been providing programme and
project management services to rebuild, expand and modernise
Iraq’s war torn electric power system since 2004. Programme
Director Jeff Larkin looks back over his team’s contributions.
Electricity is the life blood of modern day economies and although
water, fuel and communications are also essential services, nothing
effectively happens without power. In March 2004, PB mobilised to
Iraq to support the reconstruction effort and the development of the
Iraq power system and found itself in the middle of political,
economic and social tensions. PB was supporting the US
Government’s Projects and Contracting Office (PCO) - an independent
body established by the US Government to provide management
and oversight of the US$18.6 billion Iraq Relief and Reconstruction
Fund (IRRF). The reconstruction programme wasn’t just about
building and handing over projects; it also aimed to employ
thousands of local workers, stimulate the economic recovery of Iraq
and if possible, provide 24 hours of power each day.
By October 2008, PB had overseen the implementation of more than
600 electrical reconstruction projects worth over US$3.6 billion
throughout Iraq’s 18 governorates.
The task ahead
The amount of reconstruction work taking place in Iraq at the time
was unprecedented in this part of the world. The electrical sector
team awarded over US$750 million worth of projects during the
summer of 2006 alone. In addition, PB was responsible for supplying
equipment, critical spare parts and training totalling some
US$150 million.
During the reconstruction programme, PB completed 68 major power
plant projects, 417 distribution projects, 60 transmission projects and
seven nationwide Supervisory Control and Data Aquisition (SCADA)
projects. The entire reconstruction programme increased the power
generation capacity in Iraq by over 2,000MW and in December 2008,
daily output finally exceeded 6,000MW, the target set by the Iraq
Reconstruction Management Office (IRMO).
However, the Government soon realised that simply restoring
systems to their previous state would not achieve its ultimate
objective - 24 hours of power a day for all of Iraq. Although output
today exceeds 6,000MW and has peaked at 7,400MW, this is still far
short of the estimated 13,000MW needed to achieve 24 hours of
power per day. Additional consideration needed to be given to the
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Rebuilding a nation - It’s more than just projects
Case study: Parsons Brinckerhoff
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provincial cities and towns outside of Baghdad, which had never
benefited from 24 hours of power, even before the war.
The magnitude of the problem facing Iraq’s electricity system before
the reconstruction programme began, was bigger than anyone
realised. US$3.6 billion is a large sum but with a shortfall of
7,000MW it would take closer to US$20 billion to achieve 24 hours
of power for all. Today, the country is still hampered by rolling
blackouts from governorate to governorate and many people only
have access to as little as five hours of power each day. The
shortages hamper the economy by restricting local industry and
commerce, hindering communications and making efficient and
effective business difficult.
Tackling unique challenges
At the height of the insurgent activity, daily meetings with the
Ministry of Electricity (ME) to discuss developing new projects,
identify network expansion needs and determine which projects
would provide maximum benefit, became situation reports on which
towers and lines had been taken out of service the previous day. PB,
along with other contractors in the region, found themselves in the
unique position of being able to contribute to real time discussions
on how the ME were going to manage the destruction that was
taking place around them.
Even now, Iraq continues to face chronic power shortages, rolling
blackouts, an overloaded distribution network and demand
increasing at an exponential rate. Striving to maintain existing
facilities, while trying to rehabilitate and expand the electrical
generation assets and the transmission and distribution networks is
a constant battle for the Ministry.
Milestones
In 2007, PB stepped in to take over completion of the Doura Power
Plant rehabilitation. That August, Units 5 and 6 at Doura, both
160MW steam turbines, became operational simultaneously, both
serving Baghdad for the first time in six years – a truly great
achievement for Iraq and a rewarding one for the PB team.
Also early in 2007, the US Government agreed to support the ME
with the completion of the Mussayib Gas Turbine Power Plant. PB
mobilised a team to commence site assessments and
commissioning supervision for the Mussayib GT power plant and the
first LM6,000 unit was synchronised to the grid in August 2007. By
the summer of 2007, PB had built up its team to 240 staff in Iraq
with 60 staff in the UK, US and Jordan supporting the programme.
Operations and maintenance
In October 2007, PB was awarded the follow on Operations &
Maintenance and Sustainability (OMS) contract to provide support to
seven major ME power plants, which accounted for 3,410MW of
generation capacity.
PB was responsible for seven man-camps across Iraq under the OMS
project. The work involved support and assistance to the ME to
enhance the skills needed to achieve increased reliability and
production of electrical generation output. The programme provided
mentoring to the ME plant managers and support to the ME plant
staff on a daily basis to investigate problems and failures, develop
solutions and review operational data and procedures.
PB provided a full time technical team of international and local
staff on every site. These sites made up a significant segment of the
ME generation capacity in thermal and gas turbine plants. The
average daily availability of these plants reached 65% as opposed
to 45% from the previous year. The OMS sites increased production
to the point where they produced over 2,000MW or nearly
50,000MWh daily - nearly 44% of the total daily generation. Across
all seven sites, average production figures increased by nearly 30%
from the previous year.
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The Kurdistan Region
The Kurdistan Region of Iraq has struggled to meet its own power
demands for many years. Recognising what PB was able to
accomplish for the Iraq Ministry of Electricity, the Kurdistan Regional
Government’s (KRG) Ministry of Electricity (MoE) asked PB to
support the management of its region wide Electricity Network
Rehabilitation Programme and develop an Electricity Masterplan for
the Kurdistan Region to 2030 and so PB mobilised a team to Erbil in
January 2009. The completed masterplan addressed generation,
transmission and distribution expansion plans in an integrated
manner, thereby ensuring that the proposed capital investments
were part of a long term structured plan for the power sector
infrastructure in KRG. In its management role, PB is providing
programme and project management support services for
project implementation.
The team in Erbil is currently supporting the Ministry in the
management of more than 90 transmission projects worth over
US$650 million and the development of a 300MW thermal power
plant project.
Iraq Transition and Assistance Office (ITAO)
To support the goals of transition, the Iraq Transition and Assistance
Office (ITAO) has undertaken a number of capacity development
initiatives and PB has been supporting some of these. These
initiatives have included a survey and study of the private
neighbourhood generation market in Baghdad, a load forecast study
to determine the current demand and to develop a load forecast for
the next ten years. This was the first such analytical and
comprehensive load study undertaken since 2003 and not only
produced a study but trained the Ministry’s load forecasting team in
preparing such studies so that the work could continue on an annual
basis. PB also worked with the Ministry to develop a regulatory law
which will eventually establish the framework for an electricity
regulator in Iraq.
As a follow on to this initial capacity development work, PB has
been working on a long term electricity masterplan for Iraq over the
past year, working with the ME’s Planning and Studies Dept. The 20
year masterplan includes an updated long term load forecast study,
a generation plan, a transmission plan and a distribution plan. The
study will deliver a least cost power system expansion plan for Iraq
but more importantly, it has also provided the training and capacity
development to continue the planning process into the future.
Look into the future
PB is trying to help the Iraqis regain control of their country once
again. The cultural change that the ME staff are going through is a
long and arduous process. The damage caused by conflict and the
oppression of the Iraqi people, systems and government will take
time to mend but ultimately it will be mended. Carrying out
reconstruction efforts in the face of continued terrorism, militia
activities and warfare is not easy but to their credit, there are large
numbers of Iraqis within the ME who have done just that. Iraq has
a long and proud history of resourcefulness and creative problem
solving and the whole reconstruction programme, which PB is proud
to have supported, has helped to give the Iraqi people a renewed
focus on their path to stability.
Jeff Larkin, Country Manager - Iraq
Tel: +1 817 665 6350
Email: jeff.larkin@pb-iraq.com
“The 20 year masterplan includes an updated long term load
forecast study, a generation plan, a transmission plan and a
distribution plan.”
Parsons Brinckerhoff (PB) is a leader in the development and
operation of infrastructure to meet the needs of communities
around the world. The rm provides strategic consulting,
planning, engineering, and program and construction
management services across a full range of market
sectors—power and water, transportation, buildings and
facilities, urban/community development and the environment.
PB has 14,000 people in 150 ofces around the world. This
year, we celebrate 125 years of serving our clients. We began
working in Iraq in the 1950s and remained in-country through
the 1980s. In 2004 PB re-established itself in-country to
support Iraqis as they re-build their nation—from
transportation master plans to electricity networks.
Through delivery of these projects for our clients, PB is
contributing to the growth and re-development of the nation.
PB has opened ofces in Erbil and Baghdad to support our
in-country presence and to ensure our clients of our
commitment to the long-term future of Iraq.
Delivering the future.
Buildings and Infrastructure Environment Power and Water Transportation
Tel. (VOIP): +1 817 665 6530 E-mail: memarketing@pbworld.com www.pbworld.com
Though there is much still to do, improvements to the quality and
reliability of the water supply have been achieved across southern
Iraq, writes Gordon Turley, Regional Director, Mott MacDonald.
Grim headlines on the state of Iraq’s water and sewerage
infrastructure mean that improvements made over the last seven
years are often overlooked. Iraq’s water and wastewater sector
suffered from three decades of acute under investment. Many
suburban areas were developed without adequate infrastructure.
Maintenance and repair of existing treatment works, pumping
stations and pipes was neglected. Leaking pipelines resulted in
massive potable water losses. Leaks also allowed fresh water to
become contaminated by foul surface water. The international trade
embargo placed on Iraq during the 1990s meant essential parts and
equipment were unattainable. In addition, acute power shortages
meant that mechanical treatment processes and pumps frequently
stopped working.
The legacy is that, according to the Ministry of Water Resources,
today 65% of Iraq’s 30 million population are without safe drinking
water and 80% without adequate sewerage. Rivers and waterways
– the principal sources of drinking water – are heavily contaminated
with sewage. As a result, diarrhoea is rife. The United Nations
reported more than 500,000 cases of acute diarrhoea in 2008. It is
one of the leading causes of child mortality in Iraq.
One of the leaders in tackling the huge challenge is Mott
MacDonald, a global consultancy firm that has been working on
relief and reconstruction projects in southern Iraq since 2003.
Starting with work to restore basic services in the immediate
aftermath of the second Iraq war, Mott MacDonald led repairs to
water treatment works, pumping stations and pipelines, trunk
sewers and wastewater treatment works, alongside power, fuel,
communications, health and education projects.
Today, Mott MacDonald is playing a key role across southern Iraq in
identifying, prioritising and delivering projects to improve water
supply and sanitation. This involves working closely with municipal
authorities and utilities companies on forecasting demand and
assessing their existing infrastructure to identify specific needs. On
their behalf, Mott MacDonald develops financial models and
prepares business cases for work and presents them to funding
organisations to assist in securing project finance. The company then
provides world class design, management and construction
supervision services. Clients include the international funding
agencies in Iraq as well as Iraqi government departments.
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Case study: Mott MacDonald
While the scale of the challenge in improving the Iraqi water and
wastewater sector remains immense, Mott MacDonald led projects
are making a major difference to life for thousands of people across
southern Iraq.
Needs assessment and master planning
In 2003, Mott MacDonald conducted a condition survey, identifying
immediate investment priorities and longer term targets. This was
followed by a master planning exercise to assess water and
sewerage requirements in cities, towns and villages across southern
Iraq. Master planning was focused not just on present needs
but the future demands imposed by projected population growth
and movement. This exercise was geared to matching resources
to demand.
Stemming leakage
A major leak detection and repair programme was among the first
investment priorities. In addition to leakage resulting from war
damage and age related deterioration, the detection programme
revealed widespread illegal connection to the supply network –
people had drilled into pipes to take off water for everything from
domestic use to crop irrigation, fish farming and providing ponds for
water buffalo. Many connections were extremely poor, with water
gushing from the pipe junction.
It was also found that, because mains pressure was so poor, people
were rigging up pumps on their supply pipelines. In some places
demand was so great it was creating negative pressure in the trunk
main and, as a result, dirty water was being sucked through leak
holes and contaminating the clean water supply.
Mott MacDonald designed repair works, set out construction
methodologies, oversaw selection of contractors and provided
project management. Over 30,000 major leaks were fixed, helping
to reduce water losses by 30% and raising water pressures by 25%.
Leakage repair in water and wastewater pipes significantly reduced
cross contamination of potable water with sewage, making a major
contribution to improving water quality.
Leak repair and network strengthening is now supported by
programmes of public education aimed at encouraging water
Uti l i ti es - Water
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conservation and getting people to report leaks. As part of the
initiative, water information centres have been set up.
Strengthening supply
In parallel with the leakage campaign, 160 kilometres of new water
trunk main pipeline has been laid and 400 kilometres of network
reinforcement has been carried out across Basrah.
At Al Hayaniah, Basrah, three new water towers and service
reservoirs – the largest water storage and distribution facility in
southern Iraq – were commissioned in 2009.
In 2009, supply and quality were boosted further by completion of
a major refurbishment of the R-Zero water treatment facility,
involving replacement of filter media, valves and pumps, plus a
major overhaul of tanks. A new treatment works was delivered at
Az Zubayr. For both projects, Mott MacDonald provided both design
and project management.
Salinity is a common problem with groundwater across much of
southern Iraq. In rural communities reliant on wells or pumped
groundwater supplies, Mott MacDonald has added reverse osmosis
water treatment systems to remove salt. These typically meet the
demands of communities of up to 5,000 people.
Enabling repair and maintenance
Over a decade of trade embargos meant that replacement parts for
much essential equipment could not be obtained. Equipment had
ground to a halt, was operating inefficiently, or was being nursed
along with improvised parts. Mott MacDonald ordered spare parts
and ensured they were distributed across southern Iraq to where
they were required.
Improving resilience and reliability
Due to damage, inadequate maintenance, lack of funding and the
unavailability of parts or chemicals, water quality has been poor in
villages across southern Iraq. This is being overcome in part by Mott
MacDonald’s innovative design of water treatment plants that
function without relying heavily on mechanical systems and
chemical processes.
To successfully deliver treatment works with ‘low mechanical
content’, Mott MacDonald has sited them so that water will flow to
them from rivers or canals under gravity, removing any need for
pumping. Simple but highly effective sand filters then remove
impurities. The technique has been tried, tested and proven
worldwide over centuries. Eight such treatment plants have been
built to date, supplying a total of close to 250,000 people. All have
been built by Iraqi contractors employing a workforce from the
local community.
Capacity building
Mott MacDonald has been supporting government agencies and
utilities companies in building up the necessary skills to operate
infrastructure sustainably. Staff need to be able to identify
immediate and long term needs, plan, secure and manage
investment, develop and implement projects and tackle
maintenance proactively, not just reactively. Owners and operators
are being assisted in developing tariff charges and revenue
collection strategies, enabling them to improve cost recovery.
The company has equipped water industry staff with the IT hardware
and software needed to operate efficiently. This includes state of the
art Geographic Information System (GIS) mapping, which enables
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Mott MacDonald led projects are making a major
difference to life for thousands of people across
southern Iraq
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infrastructure owners and operators to compile comprehensive
records of asset location and condition in a user friendly way. GIS
mapping is a powerful tool for planning and logging maintenance.
Upcoming priorities
Among the most pressing needs is a comprehensive masterplan for
sewage treatment across Basrah. In parallel with major water and
wastewater infrastructure, significant power generation and
transmission improvements are needed. The present intermittent
supply hinders efficiency in all sectors.
About Mott MacDonald
Mott MacDonald is a US$2 billion consultancy of unrivalled diversity,
providing leading edge solutions for public and private sector clients
across 12 core business sectors. It has over 14,000 staff and works
in 140 countries.
The company has worked in Iraq since the late 1950s, helping
deliver projects in the power, water, sanitation, telecommunications,
buildings, transport, bridges, airports and oil & gas sectors. Contacts
developed with local consultants, contractors, planners, municipal
authorities and other clients have endured to this day. In the last
two decades, acquisitions made by Mott MacDonald have secured
the company further experience of working in Iraq.
Since 2003, Mott MacDonald’s experience and network of contacts
have been of major advantage, helping the company deliver
effective emergency relief and reconstruction projects and to build
up a team of over 150 staff in the country. Mott MacDonald is a
registered company with the Iraqi Ministry of Commerce and its
offices are staffed principally by Iraqi professionals.
Gordon Turley led Mott MacDonald’s
re-establishment in Iraq in 2003 and remains
the company’s Country Director.
Email: gordon.turley@mottmac.com
Uti l i ti es - Water
GLOBAL SKILLS
LOCAL EXPERTISE
Mott MacDonald is a US$1.7 billion global consultancv of
unrivalled diversitv, spanning 140 countries with over 14,000 staff.
Our breadth of skills, services and global reach makes us one of
the world's top plavers delivering management, engineering and
development solutions.
We've been working in lraq for over 50 vears. Todav our
predominantlv lraqi team, backed bv our international expertise,
is working throughout lraq in all sectors including oil and gas,
water, power, transport, buildings, logistics, education and health.
For more information please contact Gordon Turlev.
( marketing@mottmac.com
www.mottmac.com
Constructi on & Ci vi l Engi neeri ng
Construction market will be region’s largest
Iraq’s construction potential has no bounds. Apart from the priority
to build millions of new homes and repair existing buildings, huge
infrastructure renewal is required, not least in the treatment of
water and its distribution, new sewerage systems, roads, airports,
rail systems and ports.
Oilfield developments already agreed, will necessitate substantial
investment in access roads, workers’ accommodation, pipelines,
storage and pumping stations. For the private sector there is major
work stretching ahead for decades.
There will be many prospects for pioneering innovation, where firms
having access to new building technologies and design will be able
to contribute to the rebuilding and development of Iraq’s urban
environment. Opportunities exist in every discipline and sector.
Much of the initial focus is on rolling out affordable housing projects,
with the Government planning to build at least 3.5 million housing
units over the next ten years to meet necessary demand and not
just in Baghdad and Erbil. Maysan, Wassit, Muthanna, Qadissiya,
Basrah, Najaf, Thi Qar and Diyala provinces have all announced
housing schemes this year.
A New Zealand firm, Atconz Real Estate Development, is working on
a US$100 million project known as New Azadi to build 1,565 homes
in Erbil. The company’s CEO, Dean Michael, has described Iraq as
likely to be the biggest emerging market in the region for the next
20 years.
Opportunities for investment are not limited to housing. The
governorates of Anbar, Thi Qar and Karbala have announced projects
for development of industrial areas, which when fully developed
could involve billions of dollars of investment.
Wassit Province Investment Commission and the Ministry of Tourism
have announced plans for a US$1 billion development of a 500,000
square metre tourist city near Kut, to include real estate, hotels,
sports, leisure and entertainment areas.
Basrah Sports City Complex is under construction to host the Gulf
Cup football competition at the end of 2012. The focal point will
be a 65,000 seater stadium surrounded by water and accessed
by a bridge.
“So much attention is given to
hydrocarbon resources that it is
easily overlooked that Iraq has
considerable untapped solid
mineral resources”.
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The 360 acre site will also contain a smaller stadium, practice
facilities, a training complex and swimming pool among other
facilities. The masterplan also calls for a commercial district to be
developed, including two 500 room hotels, four shopping malls and
entertainment facilities.
Implementation of Iraq’s many investment projects and plans may
take time but activity is gathering momentum in infrastructure
renewal and housing schemes. As a result, opportunities are
opening up across the construction sector for consultants, planners,
developers, engineers as well as providers of building materials.
So much attention is given to hydrocarbon resources that it is easily
overlooked that Iraq has considerable untapped solid mineral
resources. Once rail and other transport links are in place, substantial
opportunities lie ahead for the extraction of iron ore, copper,
bitumen, dolomite and marble as well as for production of building
materials including glass, bricks, steel and cement.
France’s Lafarge Ciments has seized the opportunity and is steadily
consolidating its presence in the Iraqi market, helping to reduce the
country’s need for imported materials. The company, the world’s
largest cement maker, has been involved in Iraq since early
2008, when it acquired plants near Sulaymaniyah at Taluja and
Bazian, which now produce 2.3 million and 2.7 million tonnes a
year respectively.
In May 2010, Lafarge launched a US$200 million renovation of a
cement production plant near Karbala. The company’s Chief
Executive in Iraq, Marcel Cobuz says he expects that the
modernisation of the 27 year old factory will see its output increase
tenfold within two and half years.
“Iraq is a country in which we can do business. I think the fact that
we have operated in the north for a few years made us comfortable
to move to the south”, he says.
Cobuz believes that Iraq’s investment climate is improving, though
foreign investors are awaiting the passage of national industry and
consumer protection laws to further improve the environment. “The
Investment Law of 2006 is a good step forward. It is guaranteeing
basic industrial rights. It is paving the road with tax and capital
incentives. So it is rather a modern legal framework”.
In March 2010, the giant Luxembourg based steel maker
ArcelorMittal agreed a joint venture with Turkey’s Dayen Dis Ticaret
to construct a new steel mill in Sulamaniyah.
In its initial phase, the mill is due to produce 250,000 tonnes a year
of rebars from locally sourced scrap. The investment of between
US$100 million and US$130 million is to be jointly subscribed by the
two companies. Production is due to start at the end of 2011 and
could increase to 500,000 tonnes a year.
According to ArcelorMittal director Christophe Cornier “There are
many opportunities to assist in the development of the country.
There is great demand for steel produced for the local construction
industry, which we aim to meet, working closely with our partner
Dayen and the local government in northern Iraq”. The firm is also
planning to refurbish a steel making plant in Basrah.
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Lafarge Cement Iraq is the largest
investor in the cement industry in Iraq,
with an established business in the
Kurdistan Region of Iraq. In a joint
venture with Faruk Group Holdings
operating the Tasluja Cement Plant
(rehabilitated state-owned under lease
agreement) and the Bazian Cement
Plant (the largest Greenfield in the
cement industry in Iraq).
In 2010, Lafarge signed a joint venture
with MerchantBridge and undertook the
Rehabilitation and Lease of the Karbala
Cement Plant in Karbala Province.
With its position in the Iraqi cement
industry and investments to date,
Lafarge is the largest non-oil industrial
investor in the country.
BELIEFS & VALUES
Values we believe in:
Caring for Health and Safety:
Of more than 3,000 employees and
2,000 partners, suppliers and
distributors.
Innovation:
Active in new product development,
providing customers with a package of
innovative products (Super Block for
the Block Factories sector, enhanced
bulk cement for RMX customers and
Sulphate Resistant Cement for major
contractors involved in infrastructure
works) to ensure desired quality
and reliably contribute to the
reconstruction of Iraq.
Acting locally and leveraging
global expertise:
Improving delivery and distribution
services, offering reliable technical
advice to the customer.
Partnering with communities:
Listening to their needs and actively
becoming involved in their education,
health and economic development.
TECHNOLOGY & PRODUCTION
State of the art Greenfield plant and
reliable investments with a capacity
of more than 6 million tons annually,
from high quality Ordinary Portland
Cement (Bulk Bagged) and High Early
Strength Cement (Bulk Bagged),
compliant with international and
local standards.
Tasluja Plant
With investment of close to US$200
million, the capacity increased from
200,000 tons to 2.3 million tons per
annum. The plant is producing
Ordinary Portland Cement (OPC) used
for different applications and High
Early Strength Cement (HESC)
developed for block manufacturing.
Bazian Plant
Production capacity of 2.5 million tons
per annum. Producing Ordinary
Portland Cement - OPC and High
Sulphate Resistant Cement (SRC).
Karbala Plant
Under rehabilitation with a target
capacity of 1.8 million tons per annum.
www.lafarge.com
Lafarge
was established in France 1883,
becoming the world leader in building materials.
With 78,000 employees in 78 countries, Lafarge has more than 2,000 production sites in
Cement, Aggregates, Concrete & Gypsum production businesses.
Harlow International, is a UK engineering company set up to
establish an active presence in Iraq, supporting clients through the
provision of contracting services from facilities in the International
Zone, Baghdad and the Command Operating Base, Basrah. The
company has become a respected member of the Iraqi and
international business community, having successfully carried
out a number of key contracts during a difficult and testing
operating period.
The headquarters of Harlow is located within the International Zone
and encompasses a self sufficient facility enabling them to provide
the necessary secure business infrastructure required to operate
in Iraq.
To deliver the business support expected from a quality company,
Harlow has brought together a group of international companies,
specifically chosen to provide a one-stop-shop of engineering
services, carrying out infrastructure, oil & gas and power projects
for clients.
The companies are chosen to add a significant depth of experience
and strength to the established engineering capabilities of Harlow.
In addition, each member of Harlow staff has extensive experience
of working in the Middle East and Iraq, with a number of engineers
providing a direct service to Harlow’s existing and current projects.
Currently, Harlow has been awarded a US$56 million Engineering,
Procurement and Construction (EPC) contract to refurbish the
prestigious Al Rasheed hotel in Baghdad. This contract is a fast track
project to bring the hotel standard to a 5 star rating ready to receive
the Arab Nations Summit in March 2011.
Strength in cooperation
Harlow has the credibility and the capability to deliver successful
projects in chosen market sectors within Iraq. More significantly,
Harlow has the legacy assets critical to that success, namely country
experience, market knowledge, cultural understanding, distribution
channels, project management, established distributor networks,
scalability and liquidity.
Our international partner companies include: Sinopec in China, STX
in Korea, Honeywell and UOP in the US along with MCE plc and KPPS
in the UK.
The strength of the partner team lies in the ability to meet project
requirements both locally and regionally within Iraq.
As a team we are able to:
• Make more effective management decisions through wider
knowledge and experience of techniques and processes from a
range of organisations
• Manage change and uncertainty through an understanding of
best practice
• Understand why and how systems and processes are applied in a
variety of projects
• Identify relevant learning points and decide how to use them in
their own situation
Building on excellence
While many teams offer strength in individual services, few have the
resources and global perspective to provide excellence across a wide
range of disciplines. With a globally diverse but complementary set
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Constructi on & Ci vi l Engi neeri ng
Harlow International - Builds on Iraq experience
Case study: Harlow International
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of services, Harlow can deliver sustainable solutions to meet the
aspirations of clients and their projects throughout Iraq.
By integrating tools, techniques and the vast experience of our
partners from different disciplines and areas, Harlow is able to
provide innovative solutions for the most demanding of problems
and environments.
Integrating resources to meet client needs
Over many years the company has learned that the most robust
ideas come from sharing different perspectives. As a consequence,
Harlow directs the strengths of partner organisations towards the
different market and project requirements, alongside a deep
awareness and understanding of local business values.
Within this approach, team culture has become an essential
ingredient of the company’s success. Partner companies are given
scope to exercise flair and judgement but Harlow ensures that their
collective skills are utilised to benefit all clients and all projects.
Quality based operations
Harlow is committed to continuous improvement and as such, the
company’s Quality Management System is based on the
requirements contained in ISO 9000:2000, with a common structure
based on standard management processes and supplemented by a
series of supporting procedures specific to each operating division.
This ensures continuous improvement within the overall business,
resulting in greater efficiency and strengthened capabilities when
responding to clients’ needs and expectations.
Harlow establishes particular Quality Assurance Plans for each
project ensuring that design, construction process, products and
installation of equipment conform to client specifications.
The quality plan includes details of procedures and practices that
will be implemented during project execution and integrates the
final operational performance of plant and equipment inspection
and testing. When implemented in conjunction with the
overall Quality Assurance Programme, this ensures full compliance
with approved drawings, specifications and applicable codes
and standards.
Typically, Harlow’s defined procedures and practices comply with the
contractual requirements for the following activities:
• On site inspections of delivered material and equipment to ensure
product conformance to the specification requirements
• Assessment of subcontractors and suppliers
• Day to day control and monitoring of engineering processes that
directly affect quality, ensuring that processes are carried out in
compliance with approved drawings and contract documents/
specification
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• Review of shop drawings and material submittals
• Off site inspections at the point of manufacture and supply of
various products
• Field testing and sampling as required by the project
specifications or applicable building codes
• Maintenance of daily records of as-built drawings
• Maintenance of daily records of all Quality Assurance activities
Harlow expertise
Experience tells us that the traditional design-bid-build approach is
the most popular delivery method for construction projects in Iraq.
As a general contractor, Harlow organises a given project by scope
and speciality then engages the appropriate experienced manpower
in the following areas:
• Site work • Project resource logistics - manpower and plant/
equipment delivery • Foundations/concrete • Building erection
• Heating, ventilation and air conditioning • Mechanical systems
• Power plants engineering • Electrical systems • Process piping
and plumbing • Control systems - process plant and buildings
• Oil & gas services • Fire detection and protection safety systems
• Plant, equipment and system installation and commissioning
• Finishing work • Landscaping •
Harlow implements turnkey, design and build contracts where the
company assumes responsibility and accountability for the delivery
of complete projects. Harlow commits to clients in a partnership
approach and simplifies coordination of project information streams
between the design and construction. The company internally
manages all stages of the project to successful completion. As such,
the following services are provided:
• Feasibility analysis • Cost monitoring and control • Schedule
development and control • Subcontractor management • Field
engineering and site management • Quantity surveying • Quality
management system • Safety assurance • Project accounting
• Change management • Shop drawings and review of submittals •
In summary
Harlow in-country credentials include:
• Extensive experience in Iraq • Established, secure bases in both
Baghdad and Basrah • Direct experience in working in hostile
environments • Experience in delivering successful projects in
difficult operating circumstances • established supply chains for
materials and labour • International partner companies • In-house
security on all projects • Proven track record on major projects •
“With a globally diverse but complementary set of
services, Harlow can deliver sustainable solutions to
meet the aspirations of clients and their projects
throughout Iraq”.
Constructi on & Ci vi l Engi neeri ng
HARLOW
I N T E R N A T I O N A L
• Site work • Foundations/Concrete • Building erection •
• Heating, ventilation and air conditioning • Mechanical systems •
• Power plants engineering • Electrical systems • Plumbing and pipework •
• Fire detection and protection • Control systems • Oil & gas services •
• System installation • Finishing work • Landscaping • Specialities •
Our services include:
Harlow International is an established company specialising in
managing and delivering complex building and infrastructure projects
in challenging environments. In conjunction with its partners and
associates, Harlow International has the proven expertise and
credibility to deliver success, specifically within Iraq. We are confident
in being able to deliver this success because of our country experience,
market knowledge, and crucially because of our understanding and
appreciation of local culture. Our established distributor network add
significantly to the company’s ability to fulfil all project requirements
either locally or regionally within Iraq.
Iraq Tel: +964 790 1947 690 UK Tel: +44 (0) 777 5588 815 Email: info@harlowinternational.com
Iraq is under pressure to increase its ports’ capacity with much of the
country’s imports and exports now passing through the ports of
Turkey, Jordan, Syria and Kuwait and then transported overland
into Iraq.
Modernisation and expansion of the country’s port infrastructure are
vital to help provide for the growing imports of materials and
equipment for economic development as well as to allow for a
substantial increase in oil exports.
The most ambitious aim is to develop a new port at Al Faw, which
could involve investment of up to US$6 billion. Italy’s Impregilo is
leading a consortium to carry out design work for the planned new
port, providing up to 100 berths and able to handle the world’s largest
container vessels.
The project may take decades to fully evolve but could change global
trade patterns when linked with the country’s ambitious railway
developments. As a result, officials believe that Iraq could eventually
compete with the Suez Canal for the transit of cargo between Asia
and Europe.
For the immediate future the focus is on Umm Qasr, which at present
is Iraq’s only deep sea marine terminal. Around 80% of Iraq’s imports
and the bulk of its oil exports flow through the port, which is located
at the southern end of the Shatt al-Arab waterway.
After years of neglect and lack of investment, improvements are well
underway to enhance the port’s handling capacity with a number of
foreign specialist companies brought in to rehabilitate, enhance
facilities and manage berths. These operators include the French
shipping group CMA CGM and Sharjah based port operator Gulftainer.
There is no doubt that the whole of Iraq needs the investment
and reconstruction activity that is already beginning to gather
considerable momentum.
The Gulftainer Group is fully engaged in the country, aiming to provide
the port, transport and logistics links so necessary to assist in
efficient redevelopment – right the way from Zakho and Erbil in the
North to Umm Qasr in the South (in all these places they have
offices/operations).
Everyone including the Iraqi Government is acutely aware that Umm
Qasr needs to be in a position to cope with the rapidly increasing
volumes – and this is why Gulftainer have been awarded the
concession to operate the existing all purpose berth 8, where they are
installing container handling equipment and gradually ramping up
operations over the coming months. Moreover, they have been
awarded the long term concession to build and operate berths 10 and
11, which will be named the Iraq Container Terminal (ICT) – this will
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Transport - Ports
Ports improvement is vital
be a dedicated container terminal, able to handle larger ships in a
more efficient way than the all purpose berths. It is the largest
concession awarded by the Iraq Ports Authority and the Iraq Ministry
of Transport. The ICT will be operational in 2011.
In addition to the terminal facilities in Umm Qasr, Gulftainer are
investing in logistics cities/Inland Container Depots (ICDs) throughout
Iraq, both in the south near Basrah and in the Kurdistan Region,
providing storage and distribution facilities linked with transport
opportunities, to allow all customers, particularly those in oil & gas,
to service their activities.
Work has also now begun on the Sulaymaniyah Cargo Village Project
at Sulaymaniyah International Airport and the project, awarded to
GulfMar Ltd (a collaboration between Gulftainer and Sulaymaniyah
based Azmar Air), will provide a dedicated cargo facility for carriers
flying into the Kurdistan Region to support the huge growth in the
region, including the expanding oil & gas industries and major
investment projects.
The site covers 250,000 square metres and will eventually contain an
aircraft apron capable of supporting every type of cargo aircraft, a
domestic and international cargo warehouse, freight forwarding units,
truck parks and office space for rent by aviation support companies
and freight carriers.
Work started on the site on 19 May 2010. The tender process is
expected to be completed in a very short space of time so that work
can begin on the apron and taxiway construction.
Construction is planned over several phases with phase 1 providing an
aircraft apron capable of parking three B747 freighter variants, a cargo
warehouse with integrated office space, a single block of freight
forwarding units and a truck park.
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“KBR is a world leader in programme and project
management in challenging and austere environments. In
Iraq we have developed a robust and fully integrated service
model that is tailored to contract with any number of local,
regional and international suppliers, contractors and
supporting entities. There is real value and coherence in
this approach as it addresses all of our client’s
requirements on cost, quality, time and performance in a
fully coordinated manner. The overview we have of an entire
project, efficiency of delivery and depth of support provides
significant savings over the full lifecycle of our projects”.
Davey Ki rk, Busi ness Devel opment Di rect or, KBR
Davey is responsible for supporting the petroleum, energy
and infrastructure sectors in and around Basrah, Iraq.
To discuss you requirements in Iraq contact Davey Kirk:
Tel: +971 56 68 38167 Email: davey.kirk@kbr.com
We deliver
www.kbr.com
KBR has been playing a significant role in the rebuilding of Iraq since 2001. Working side by side with the petroleum, energy and infrastructure sectors in
Iraq, we deliver fully integrated construction, infrastructure and logistics support, facility operation and maintenance and life support services.
WORLD CLASS CAPABILITIES
As one of the world's premiere engineering, procurement and construction companies,
KBR offers a suite of world class capabilities spanning the entire lifecycle of a project
from design and engineering to supply chain management, construction and project
management, facility operation and maintenance and infrastructure development.
FACILITATION ON THE GROUND
We have extensive experience and credibility in Iraq and strive to make the running of
your operation as easy as possible. We can provide a range of solutions from renting
secure accommodation in Basrah to the operation and maintenance of facilities and
bases across an entire region.
INTEGRATED APPROACH
We have an integrated approach which adheres to a simple project delivery strategy:
innovation; on time; on budget - regardless of the size or complexity of the programme.
During the programme we manage a wide range of activities and contractors including
security, logistics, transactional support, training, operating, maintenance and essential
life support services.
SUSTAINABLE SOLUTIONS
We work in partnership with all stakeholders involved in a project to develop coherent
and sustainable solutions that balance infrastructure investment with local requirements.
This, together with our constant focus on quality and health and safety, enhances the
competitive advantage of a project.
HELPING TO BUILD TOMORROW’S IRAQ TODAY
Iraq’s railway story had a glittering start more than 100 years ago
when Imperial German engineers built a trunk line stretching from
Istanbul through to Baghdad and into Arabia. While the First World
War saw this crumble into decay and ended big projects, further
lines were built during the twentieth century.
In particular, substantial investment was made during the 1970s and
1980s. This resulted in a system of almost 2,000 kilometres of
track, 300 locomotives and extensive rolling stock served by some
12,000 employees.
However, Iraq’s railway system, ravaged by war, deferred
maintenance, international sanctions, theft and sabotage, had
ground to a virtual stop by 2003. With its signalling defunct, barely
5% of its locomotives serviceable and staff unpaid the system was
a sad epitaph to Iraq’s wasted decades.
A fully operational railway system has been recognised by all as a
key component of Iraq’s economic recovery and future
development. Putting the system back into service has been one of
the country’s success stories since 2003, with both passenger and
freight traffic reinstated between the north and south of the country.
Iraqi Republic Railways has seen substantial investment made in
new telecommunications, computerisation, auxiliary power systems,
track maintenance, staff training as well as refurbishment of rolling
stock and locomotives.
A new phase is now planned that will expand and transform the
network into one of the Middle East’s most important railway
systems with links to Turkey, Iran and beyond.
Some US$60 billion worth of rail projects have been outlined, that
will see connections from the Gulf to Europe through Syria and
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Turkey, as well as into Pakistan via the Iranian rail network. This year
has already witnessed the start of services between Mosul and
Gaziantep in Turkey.
The strategy envisages extensive new track, forming links between
established and new communities through Iraq’s heartland. These
will connect Salahaddin province in the north through Baghdad, Al
Kut and Al Amarah to Basrah.
One of the new lines is intended to link the capital with Baquba,
Kirkuk, Erbil and Mosul, while another line is planned to link Musaib
to Samawah via Karbala and Najaf.
Karbala and Najaf will be connected by rail with phosphate mines in
Akashat. A new line will also link the planned new Basrah Grand
Port at Al Faw with the national rail network.
Plans for a 284 kilometre loop line to serve Baghdad include a new
central passenger station as well as a new station on the east side
of the city, rail bridges across the Tigris and Diyala rivers, inland
container depots as well as twin track high speed lines.
The ambitious plans for a circular network and the eventual
implementation of metro and monorail projects will see Baghdad
transformed into a much more liveable urban environment as the
capital’s and country’s heavy goods traffic is redirected from
road to rail.
Much faster and efficient transit times will also permit containers to
be transported from the Gulf to Europe overland. Iraq’s railway story
started with big aspirations. After a long dormant period those
ambitions are being rekindled.
Transport - Rai l ways

A new phase is now planned
that will expand and transform
the network into one of the
Middle East’s most important
railway systems with links to
Turkey, Iran and beyond”.
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Automotives
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Land Rover, a premium SUV manufacturer, has expanded into Iraq.
The company appointed Sardar Trading Agencies Ltd. as the
exclusive representative of the Land Rover brand; this venture marks
the SUV manufacturer’s first official entry in Iraq. Whilst the
appointment of Sardar Trading Agencies will heighten Land Rover’s
market presence with premium sales and after service, it will also
tap into the potential of luxury car sales in the Kurdistan Region and
the rest of Iraq.
“We are already present in 19 markets in the Middle East and North
Africa region and now with Sardar Group, a name which is
synonymous with trust and customer care, we will be better poised
to service the northern region of Iraq“, commented Robin Colgan,
Managing Director of Jaguar Land Rover, Middle East and North Africa.
Speaking at the motor show in Erbil in January 2010, Robin
continued “We are bringing a strong Land Rover products portfolio
to the market and the motor show and we expect the vehicles to
be well received by consumers here just as they have been across
the globe and the Middle East region”. As part of its commitment
to the brand, Sardar Trading Agencies has invested in a new state of
the art facility for Land Rover vehicles.
The 2,400 square metre showroom and 1,700 square metre after
sales centre is located on Gulan Street in the city of Erbil and marks
the first integrated facilities that showcase the Land Rover and
Range Rover vehicles and provide after sales support for existing
fleets as well as new sales; other such facilities are expected to be
inaugurated within 2011 in different Iraqi cities.
Sardar Trading Agencies is a member of Sardar Group, which started
in 1980 and was envisioned in 2005 to utilise the synergies of the
existing operations, covering various business activities and to
diversify these activities in a systematic and streamlined manner.
With 30 years of experience in the automotive industry, Sardar
Group became the most valued name in its field, not only in the
local Iraqi market but also across the region.
With ten showrooms and three aftersales service centres inside Iraq,
two branches in Jordan, a state of the art showroom in Dubai and
one on the border of Syria-Jordan Free Zone, Sardar Group covers the
diversified needs of the Iraqi market, where a substantial number
of vehicles and equipment have been supplied throughout Iraq.
The Group’s automotive business to date is one of the leading
suppliers of new vehicles in Iraq. The demand of its customers for
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fully fledged vehicle sales, service and spare parts facilities has led
the group to expand its operations to now include these disciplines
in various cities all under one roof.
With a great desire for presence in every area of the automotive
sector, ranging from spare parts, accessories, batteries, lubricants
and tyres to fitment centres with integrated workshops, the
automotive business group is committed to support its existing
and future customers. “Through these businesses, we aim
to provide customers with the most complete automotive
product portfolio in the industry” said the Group’s Chairman,
Mr. Sardar H. Hasan.
Sardar Group’s most valued asset are the professional teams whose
passion for the automotive industry, product knowledge and
customer focus are second to none, in addition to the various
facilities that are fully equipped with the latest machinery from
industry leading manufacturers.
Sardar Group is also the official dealer for Jaguar, Nissan, Volvo
Construction Equipment, Mitsuoka and Rida in Iraq.
As more and more companies look to setup operations in Iraq and
with international staff moving in and out of the country on an
increasingly regular basis, Baghdad International Airport (BIAP) is
poised to become a central hub of activity for the Middle East.
Certainly that is the hope of the Iraqi Ministry of Transport.
Since G4S assumed responsibility for security at BIAP in January
2010, Terminal C – known as Babylon, has reopened and is now
utilised on a daily basis, in addition to Terminal D – known as
Nineveh. Adding to this success, are the international airlines now
offering flights into and out of Baghdad. As well as Gulf Air’s regular
service from Bahrain and Royal Jordanian’s service from Amman,
Etihad commenced a daily service in April 2010 and a number of
European airlines such as Lufthansa, are planning to follow suit.
Although there continues to be the occasional security incident
across Iraq, BIAP is now seeing 1,800 passengers per day pass
through its doors, equating to nearly 650,000 passengers each
year. With 42 flights on average arriving and departing every day,
this represents a significant volume of traffic. As investment in Iraq
increases, particularly from the oil & gas industry, these
passenger numbers and volume of daily flights are set to
increase significantly.
Aside from the number of passengers arriving and departing from
the airport, there are approximately 800 G4S staff providing security
at the facility. Another 2,000 people work at the airport providing
services such as catering, cleaning and staff operating retail outlets
as well as representatives from government agencies.
Iraq’s Ministry of Transport (MoT) and National Civil Aviation
Authority (NCAA) are working towards achieving the International
Standards set out by the International Civil Aviation Organisation’s
(ICAO) Annex 17 Standards and Recommended Practices (SARPs).
Annex 17 sets out that each individual airport shall write and
implement their own Airport Security Programme (ASP), which G4S
has worked closely with the MoT and NCAA to develop. The hope is
that achieving this standard will lead to more international airlines
flying into and out of Baghdad. This will in turn increase the number
Transport - Ai r Travel

In choosing G4S to secure BIAP,
the Iraq Government was placing
its trust in an organisation that has
an unrivalled knowledge of the air
transport industry
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Air travel security
Case study: G4S Risk Management
of passengers arriving in Iraq via BIAP and eventually lead to the
reopening of Terminal B – known as Samarra.
With the aim of increasing the number of airlines and establishing
BIAP as an internationally recognised transport hub, achieving the
ICAO standard is the ultimate goal. The key to achieving this standard
is the development and implementation of the ASP, which includes
the organisation of the airport, access control to restricted zones,
security passes, security screening of passengers and their cabin
baggage, contingency and business continuity plans and security
training. Beyond simply achieving the standard, the MoT and ICAA
hope to exceed this standard and provide the Iraqi people as well as
local and international passengers, with a safe and secure experience.
All of this is achievable through the hard work and dedication of the
six different agencies who work together, ensuring the smooth
operation of the airport on a daily basis.
Whilst security is tight, with only passengers holding valid tickets and
travel documents being able to enter the terminal buildings, G4S’
predominantly local staff work tirelessly to move passengers through
the various checkpoints and screening areas as quickly as possible.
G4S rely heavily on the cooperation of passengers, members of
airport staff and representatives from other agencies to make this
happen and ensure the facility runs as smoothly as possible.
It may take many years before BIAP rivals the 180,000 passengers
or the 1,260 flight arrivals and departures that London’s Heathrow
Airport faces every day. However, with the desire to achieve the
ICAO’s Annex 17 standards, BIAP is well on its way to becoming an
internationally recognised facility. The combined efforts of the Iraq
Government and associated agencies, businesses such as G4S and
the number of international organisations that are looking to build
their businesses in Iraq, are all helping to achieve this.
In choosing G4S to secure BIAP, the Iraq Government was placing its
trust in an organisation that has an unrivalled knowledge of the air
transport industry. Securing over 74 airports and 81 airlines across
the world, G4S provides a level of expertise that is vital to helping
achieve the ICAO standard. However, G4S is able to offer more than
just knowledge of the air transport industry. Operating in Iraq since
2003 and employing over 80% local Iraqi nationals, G4S offers a
thorough understanding of the local operating environment as well
as a vested interest in the future success of both the country and
the airport itself.
As Iraq becomes a more stable operating environment and more
and more businesses look to contribute to the economic
development of the country through establishing and growing
their operations, BIAP will increasingly become a focal point
for facilitating the success of these activities. Through the
accomplishment of providing a safe and secure environment
for all, the Iraqi people and their Government will ensure their
future triumphs.
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How will you protect your people, assets and
property whilst building a successful business in Iraq?
How will you manage your ‘Duty of Care’
responsibilities for your staff, as well as your risk
and security planning? How will you develop local
partnerships and understand local trading conditions?
G4S, a blue-chip multi-national with a footprint in
over 115 countries, understands the requirements of
entering a new market – especially in a country with
limited infrastructure.
G4S – a trusted partner for a successful operation.
G4S Secure Solutions (Iraq)
Operating in Iraq?
Is your business safe?
For more information contact us
Tel: +964 (0) 7905 993616
Email: securesolutions@iq.g4s.com
Or visit: www.g4siraq.com
Royal Jordanian has been flying to Iraq since 1975 and was the first
airline to relaunch services there in 2003. The airline currently offers
daily flights to Baghdad and Erbil and operates direct flights to
Basrah and Sulaymaniyah. Royal Jordanian Airlines was established
by a Royal Decree issued by His Majesty the late King Hussein in
1963 as Jordan’s national carrier and is today one of the leading
airlines in the region. Royal Jordanian’s vision is to be the airline of
choice connecting Jordan and the Levant with the world. Its
headquarters are located in the Jordanian capital Amman and its
home base is Queen Alia International Airport, Amman.
Royal Jordanian was transformed from a public to a private sector
company at the end of 2007 and has a capital of JD84.4 million. The
airline carried 2.7 million passengers in 2009 and registered a net
profit of JD28.6 million. Royal Jordanian has won awards in
the fields of strategic transformation, technology and service as well
as excellence.
Fleet
Royal Jordanian operates one of the youngest fleets in the world,
with a fleet comprising 30 modern Airbus A330, A340, A321, A319,
A310 as well as Embraer 195 and 175 aircraft. The airline is
committed to providing optimal comfort to its passengers in terms of
seat pitch and legroom as well as the latest in-flight entertainment.
Route network
Royal Jordanian flies to 57 destinations on four continents from
Chicago in the West to Bangkok in the East. The airline inaugurated
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Royal Jordanian
How will you protect your people, assets and
property whilst building a successful business in Iraq?
How will you manage your ‘Duty of Care’
responsibilities for your staff, as well as your risk
and security planning? How will you develop local
partnerships and understand local trading conditions?
G4S, a blue-chip multi-national with a footprint in
over 115 countries, understands the requirements of
entering a new market – especially in a country with
limited infrastructure.
G4S – a trusted partner for a successful operation.
G4S Secure Solutions (Iraq)
Operating in Iraq?
Is your business safe?
For more information contact us
Tel: +964 (0) 7905 993616
Email: securesolutions@iq.g4s.com
Or visit: www.g4siraq.com
a direct service from Amman to Medina in Saudi Arabia in May and
resumed direct service to Kuala Lumpur in June 2010.
Royal Jordanian is a member of the oneworld airline alliance and has
code share agreements with several international airlines.
Services
In addition to its use of the latest in technical systems to conduct its
core activities, Royal Jordanian is continuously updating and
adopting systems to simplify the passengers’ travel experience such
as e-ticketing, internet booking and self service check-in system
(CUSS). The airline’s 24 hour call centre offers customers from all
over the world reservation services, information regarding its
Royal Plus frequent flyer programme, flight schedules as well as
fare information.
Future plans
As part of its endeavour to ensure that it has one of the youngest
fleets in the industry, Royal Jordanian has 11 Boeing 787 dreamliners
on order and will introduce seven new A320 and A321 aircraft to its
fleet to replace six of the current Airbus fleet.
For more information about Royal Jordanian, please visit our website: www.rj.com
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Tel ecommuni cati ons
Telecommunications revolution takes off
Development of telecommunications is one of the big business
success stories of post war Iraq. “Modernisation of Iraq’s
communications infrastructure is as important to us as the contracts
Iraq has recently signed with international companies to develop
the oilfields,” says Farouq Abdelqadir Abdulrahman, Iraq’s Minister
of Communications.
The Iraq telecoms market has undergone much repair and
development since 2003, with the restoration of telephone switches
and international gateway communications via satellite. New digital
switches have been installed as well as 1,300 kilometres of high
capacity fibre optic cable.
The emphasis is now on developing the network, with the national
regulator launching a tender for wireless local loop licences. The
latter provides for reliable telephony via wireless from dense urban
environments to trunk exchanges obviating the complicated and
expensive need to excavate and install cable connections.
The biggest innovation and catalyst has been the establishment and
rapid growth of mobile services. It is a technology only made
available to the trusted elite under Saddam Hussein but since the
dictator’s overthrow the market has boomed. At the end of
2009, there were an estimated 20.3 million mobile phone
subscribers in Iraq.
The nurturing of the telecoms sector has been assisted by the
restructuring of the regulatory system. The Ministry of
Communications and the Communications and Media Commission
oversee telecommunications licencing in Iraq.
The latter is the country’s first independent media and telecoms
regulator. It is charged with defining regulations, promulgating
policy for frequency management and licencing wireless and
telecommunications services.
The Ministry of Communications operates two state owned
companies, the Iraqi Telecommunications and Post Company (ITPC)
and State Company for Internet Services (SCIS).
Undoubtedly access to mobile services is a huge benefit to business
and ordinary Iraqis. For the three main providers, who each agreed
to pay US$1.25 billion for their 15 year licences, the investment has
proved to be highly successful.
Zain, the largest mobile provider in the country and the first to offer
the Blackberry device in Iraq announced a 10% increase in revenue
to US$723.9 million for the first half of 2010, while revenues for
2009 went up 4% to US$1,342 billion.
Emad Makiya, CEO of Zain Iraq is quoted as saying the company
intends to invest 16% - 20% of revenues into expanding its network
in Iraq over the next three years. The next step he says is
introduction of third generation (3G) services.
“The Iraq telecoms market has
undergone much repair and
development since 2003, with the
restoration of telephone switches and
international gateway communications
via satellite”.
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All providers are aiming at further increases in their subscriber base.
Zain is looking at an increase of 1.2 million when it starts operations
in Kurdistan in 2011. Asiacell, owned 30% by Qatar’s Qtel, expects
to have increased its subscriber base from 7.5 million to 10 million
by the end of 2010. Korek, based in the Kurdistan Region, aims to
expand its subscriber base to 3 million from 2.5 million.
However, it has not all been plain sailing. All of the operators have
faced considerable difficulties in terms of security issues, power
needs and not least official criticism and contentious fines for
interrupted services.
Cellular providers have blamed the reception problems experienced
by customers on the jamming of their frequencies, particularly by US
forces in the strategy to prevent bombs detonating.
Nevertheless, the mobile market continues to expand. In July 2010,
the Government approved a plan for a fourth cellular operator. The
plan for the Ministry of Communications to have a 35% shareholding
in the venture has, however, raised questions of whether a conflict
of interest arises in regulation.
It is not just voice traffic that is being aided by mobile telephony.
The advantages of advanced mobile messaging technology are
already apparent. During the summer, Info2Cell launched three new
SMS-based services for its subscribers in Iraq via Zain Iraq.
According to Info2Cell’s CEO, Bashar Dahabra, “Iraq’s mobile market
segment is currently experiencing excellent growth rates,
accompanied by a rapidly increasing mobile subscriber base”.
There is still much to be done to expand and modernise the
country’s wider telecommunications. Opportunities include; projects
to repair Iraq’s legacy network, expand the existing network and
supply and construct new telephone exchanges. There are
considered to be particularly good prospects for implementation of
wireless local loop technology.
The internet in Iraq is still a tool of the privileged few. Only 1% of
the population have access, the lowest in the Middle East but
penetration is growing.
Wireless internet provider Itsaluna saw its subscriber base double in
2009 to 256,000.
Kalimat Telecom says it aims to provide a nationwide fixed wireless
network providing broadband, wireless internet and internet
telephony services in 2011.
There is significant potential for broadband growth in Iraq as the
security situation gradually improves and businesses, the
Government and universities demand greater speed and capacity.
Residential demand will not be far behind these institutions and is
likely to expand considerably once competition drives prices down.
Links to more developed networks in the region are also likely to
accelerate introduction of advanced services. In January 2010, a
US$445 million deal was signed with Qatar based Gulf Bridge
International for a landing party agreement providing Iraq’s first
international fibre optic cable connection. This is expected to
significantly improve telecommunication speeds across Iraq.
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35 years ago, Iraq was looked on as one of the Middle East’s leading
healthcare providers. Sanctions, compounded by military conflict,
led to a steady deterioration and by 2006, the World Health
Organisation rated health outcomes in Iraq amongst the poorest in
the region.
The system’s collapse is reflected in the country’s number of doctors.
Around 34,000 physicians were registered with the Iraqi Medical
Association in the 1990s. By 2008, that number had dwindled to
16,000, a trend that has yet to be reversed.
A decline in nursing personnel and technicians has been as
dramatic, with a huge number of professional people from all
sectors leaving the country for economic and security reasons during
the years of conflict.
Substantial increases in salaries for physicians has helped to draw
some back but it will take time to fully reverse the loss of medical
skills over the last three decades.
Conditions in the country’s 208 state run hospitals vary but by 2003,
many institutions were extremely run down lacking medicines,
equipment and personnel. Iraq’s healthcare provision has been
bolstered to some extent by 80 privately administered hospitals and
some 2,000 clinics.
In addition, there are hospitals exclusively serving military
personnel, police and senior civil servants. The Ministry of Health’s
(MoH) focus is on developing capacity and infrastructure as well as
seeking to build relations between the private and public sectors
and encourage the participation of private doctors in state
run institutions.
The Government recognises the priority of reversing the decline in
standards for the bulk of the population through investment across
the board in new hospitals, training and organisational reform. This
commitment was reflected in the increase in the MoH’s budget
allocation to some US$4 billion in 2009.
A steady increase in funding commitment is continuing. The news
agency Aswat al-Iraq reported in September that the country’s 2010
federal budget allocates 6.9% to the health sector, an increase of
2.5% on the previous year.
There has been a tangible improvement. A new specialist paediatric
hospital has been completed in Basrah to accommodate 94 beds.
Turkey’s Acarsan Group is discussing building five new hospitals to
be located in Karbala, Basrah, Babil Hillah, Missan and Nasiriyah,
providing a total of 2,000 beds at a reported cost of US$750 million.
The UK’s MJ Medical is designing hospitals planned for Diyala
and Diwaniyah.
A new trauma hospital including a burns unit has been completed
in Erbil equipped with nine operating theatres, X-ray, CT-scan and
MRI facilities. The US$12.5 million project, built by the US Army
Corps of Engineers, is now the primary emergency unit in the area.
It also has its own power and water supply and is equipped with a
helicopter landing pad.
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However, much more is needed. The number of beds in specialised
areas such as intensive care and dialysis is still very limited, while
shortages of experienced nurses and paramedical staff mean that
some hospitals continue to rely on relatives to provide care to
patients and obtain drugs.
A sustained and huge commitment is required to build facilities,
equip them with modern diagnostic equipment together with
auxiliary power supplies. There is also a need to ensure stocks of
reliable medical supplies, to train managers, laboratory technicians
as well as provide many more nurses in addition to doctors and
specialist physicians. Iraq also requires coordinated emergency
response and ambulance support services.
The MoH is keen to promote private sector involvement in the
running of healthcare facilities as well as pharmaceutical and
medical device manufacturing and to attract consultancy providers
to assist in this.
Modernisation, for example, is needed for the State Company for
Importation and Distribution of Drugs and Medical Appliances
(KIMADIA), a highly centralised organisation which operates a
distribution network of specialised central, governorate and
district warehouses.
There is also a long term need to re-establish pharmaceutical
manufacturing in Iraq, which would have export potential and help
to meet domestic requirements. In the 1980s about 30% of the
country’s pharmaceutical needs were produced domestically,
principally from five plants operated by Samarra Drugs Industries.
A more immediate need is an up to date nationwide logistical
system for pharmaceuticals and medical equipment and other
supplies. A lack of properly managed inventories allows widespread
pilfering of drugs in hospitals that end up in the black market.
Most medicines in pharmacies that are run by unqualified
people are not analysed or registered to check for corrupt and
contaminated supplies.
Iraq’s health facilities have not seen any development for 35 years
and the process of developing them to reach international standards
is a long and complicated one, observes Iraq’s Health Minister, Salih
al-Hasnawi.
However, modernisation of the system is underway and the Minister
believes the country’s health system has turned a corner and that
after contracts already awarded are fulfilled, the standard of Iraq’s
health system will not be too far from others in the region.
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Heal thcare
www.britishiraqi.co.uk
For all enquiries please contact:
British Iraqi Friendship Society
PO Box 572
London KT17 9GQ
Email: info@britishiraqi.co.uk
The annual subscriptions are
as follows:
Individual Membership £20.00
Joint Membership £30.00
Corporate Members £150.00*
*Corporate members may nominate up
to four employees as Society members.
The British Iraqi Friendship Society’s objective is to inform the British public
about all aspects of Iraqi life and culture, including its history, heritage, art,
performing arts, language and traditions.
Membership of the Society is open to anyone interested in learning about
Iraq and its association with Britain or with specific commercial, cultural or
other interests. Commercial and other organisations may become
Corporate Members.
The Society arranges a programme of events, including a variety of cultural
presentations and talks by well-known and experienced speakers, who
specialise in their fields.
Membership gives inclusive access to a programme of regular events
throughout the year and advance notice of any special events which may be
of interest to members.
Whilst global tourism contracted by 4.6% in 2009, Iraq’s visitor
economy grew by 31%. Every month between the middle of 2009
upto the summer of 2010, another airline announced additional
capacity or another route into Iraq; British Airways is expected to
return in 2011. In November 2010, the Tourism Board of Iraq will for
the first time ever exhibit at World Travel Market (WTM) in London.
Across the country new hotels are being built, ancient monuments
are being restored and entrepreneurs are recognising the
opportunity offered by tourism.
When Hammurabi adopted Babylon as the capital of his empire in
1782 BCE, this was just another chapter in the history of a
settlement that had been established at least five millennia earlier.
The proud and hospitable people of Mesopotamia have been
building and rebuilding their magnificent cities since before
Stonehenge and Skara Brae appeared. The last few decades have
been but a blink in the story of a land that is rightly known as the
‘Cradle of Civilisation’; its 10,000 years of history is the History of
the World.
Although some of the airport security measures remain laborious,
there is no shortage of airlines to get you to Iraq. There is a growing
number of international flights to Mosul and Najaf but the four main
gateways remain Baghdad, Basrah, Erbil and Sulaymaniyah. Airlines
already offering connecting flights between the UK and Iraq include:
Air Berlin, Austrian Airlines, Etihad, Gulf Air, Lufthansa, Middle East
Airlines, Royal Jordanian and Turkish Airlines. With the demise of
Iraqi Airways and the imminent entry of leading European airlines,
tour operators and independent travellers will find fares becoming
more competitive, especially with the new Global Distribution
System being established for Iraq by Sabre Travel Network in
partnership with Kanoo Travel.
In 2009, Iraq received 1.3 million visitors. This figure excludes
military and diplomatic personnel, civilian support staff and official
trade delegates. The vast majority (92%) were pilgrims from Iran,
eager to reach the Shia shrines to which access was denied
throughout years of war; the numerous sites include those in Najaf,
Karbala, Kufa, Samarra and in and around Baghdad, all of
which are also extraordinary destinations and deserve to be on
every tourist’s radar.
Even though the number of Western visitors remains only a small
proportion, this volume of business has produced some very
experienced and capable local tour operators. These operators have
the capability to become destination management companies and
key partners for groundbreaking operators from Europe and North
America. Iraq’s Rafidain Travel & Tourism is heading up Iraq’s private
sector delegation to WTM 2010, which will also comprise leading
hotels and some of the 494 tourism companies operating in
Baghdad, Najaf and Karbala.
Several operators in the UK and across Europe are exploring
opportunities and some are already taking groups to the Kurdistan
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Travel & Touri sm
Building recovery on 10,000 years of history
Region of Iraq, which promotes itself as ‘The Other Iraq’ but
Yorkshire based Hinterland Travel is the only European tour operator
with a full Iraq programme. A leading authority on Iraq, Hinterland’s
Geoff Hann has pioneered the return of tourism and in 2008
co-authored Bradt’s Iraq Then and Now: A Guide to the Country and
its People, which remains the only current guide to Iraq, remarking,
“tourism is in its infancy after the problems of recent years but the
sites are worth seeing and this really is where civilisation began”.
Following his most recent tour, he commented, “the mood in Iraq
was upbeat, vibrant and improving daily. The security situation
ensured that we could see almost all of the important sites
but for the foreseeable future all visitors should pack some patience
and flexibility!”
Apart from pilgrims and the vast Iraqi diaspora, Iraq’s immediate
target markets are ‘Young Adventurers’ and ‘Culture Vultures’. An
important future market will be veterans and their families, whilst
the ethically complex phenomenon of ‘Dark Tourism’ attractions is
already apparent, perhaps best exemplified by two sites associated
with Saddam Hussein: the town of Halabja and his grave in Al-Awja.
With more than 3,000 historic sites in the Kurdistan Region alone,
visitors are spoilt for choice. United Nations Educational, Scientific &
Cultural Organisation (UNESCO) has so far only inscribed three World
Heritage Sites: Ashur, Hatra and Samarra (although two of these are
on the World Heritage in Danger list) but at least nine more
candidates have been identified – an overwhelming list that
includes Babylon, Erbil, Nimrud, Ninewah, Ur and the Mesopotamian
Marshes. Iraq’s Minister of Culture observes that, “All Iraqis have
pride in our shared heritage” confirming that it has a role in
reconciliation. It should be remembered that UNESCO
is not primarily a heritage organisation but exists to promote peace;
its Constitution drafted in 1945 declared “That since wars
begin in the minds of men, it is in the minds of men that the
defences of peace must be constructed”. Cultural heritage, science
and education are tools to support this vision, much like post-
conflict tourism.
All tourism development is about communication, embracing
national identity and celebrating heritage; in a post-conflict
situation, It is also about helping to establish a common
understanding and supporting sustainable livelihoods.
Both the Tourism Board of Iraq and National Investment Commission
are focused on the sustainable development of tourism. Airport
projects have been a first priority to facilitate access. Renovating
some of the 794 hotels and interpreting the thousands of cultural
and natural heritage sites will ensure tangible tourism product that
can be marketed.
Cruise operators are devising plans to return to Basrah, the city from
which the legendary Sinbad set sail in The Thousand and One Nights
and which has temporarily lost its moniker ‘Venice of the East’.
Security companies are considering options for transforming their
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Tigris River in Baghdad © Dunira 2010
Travel & Touri sm
networks of secure villas into comfortable guesthouses. Oil & gas
companies are exploring how supporting community based tourism
can contribute to their corporate social responsibility plans. The
Tourism Board is keen to speak to investors who share its vision
and ambition and is also seeking assistance with hospitality and
other training.
Tourism is a very open industry and Iraq wants its fair share of the
220 million jobs supported internationally by the US$9 trillion of
global annual travel and tourism activity.
British expertise in the field is well recognised. The British Museum
has for some time been leading the way in supporting the research
and interpretation of Iraq’s cultural heritage, which is such a key part
of the country’s emerging tourism product. Dunira Strategy was
commissioned to arrange the Tourism Board’s fact finding mission to
WTM in 2009, which achieved global network coverage and led to
Iraq’s decision to exhibit in 2010. Board Chairman Hmud al-Yakobi
commented, “we decided to come to London because we recognise
that WTM is the world's premier travel fair and we already know
how much expertise there is in the UK”, adding “we look forward
to sharing our hospitality with visitors from Europe and working
with British tour operators and experts to help realise Iraq’s
tourism potential”.
104
“The last few decades have
been but a blink in the story of a
land that is righty known as the
‘Cradle of Civilisation’; its 10,000
years of history is the History of
the World”.
Roof of the ‘Tomb of Ezekiel’ at El-Khifal © Dunira 2010
Many potential visitors are concerned by the UK Government’s
Travel Advice, which (with the exception of the Kurdistan Region,
which is considered safe and received 60,000 visitors in 2009) is
almost invariably “against all but essential travel” and assume that
it is not possible to get insurance. In fact, fully comprehensive
insurance (including war and terrorism cover) can be arranged for a
modest premium for travellers that choose to travel responsibly
against official advice. The insurance market is even becoming
more competitive and user friendly. Emerging markets specialist
AAIB Insurance Brokers has launched the first online travel insurance
service for professionals and individuals travelling to Iraq and
needing instant and reliable cover. William Wakeham, CEO of
AAIB said, “There has been a marked increase in incoming
business traffic but we must not forget leisure travel, religious
tourism and VFR (‘Visiting Friends & Relatives’) are growing
segments. Whilst we don’t expect to see huge numbers of
holidaymakers flocking to Iraq for some time to come,
more adventurous travellers will not be able to resist the
opportunity to visit”. With sensible planning, all of Iraq’s most
important sites are accessible.
Recalling his most recent visit to Baghdad, Benjamin Carey of Dunira
Strategy commented, “Security remains the greatest challenge but
tourism in Iraq has the potential to be transformational, contributing
to national identity, helping to rebuild confidence, tackle some of
the sectarian scars and creating enduring social and economic
opportunities, especially for young Iraqis. Although Iraq will for
some time be for specialists and intrepid travellers, it is a
destination waiting to be discovered by tour operators and
individual tourists.”
Tourism in Iraq represents an outstanding opportunity for
investment and development.
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Rock formation outside the city of Najaf © Dunira 2010
Dunira Strategy has a focus on the sustainable development and
environmental management of tourism with vast international
experience, especially in less established destinations, including those
emerging from conflict. Clients include public and private sector as well
as international agencies such as UNDP, UNEP, UNESCO, World
Bank, World Tourism Organisation and WWF
Our services include:
• Feasibility studies and master plans
• CSR strategies for international companies
• Market access and representation
• Strategic plans and product development
• Capacity building and training
• Project management and implementation
Contact: Benjamin Carey; benjamin@dunira.com; +44 (0) 845 370 8076
www.dunira.com
Sustainable Business Solutions in Tourism
DUNIRA STRATEGY
107
Featured contacts
A
AAIB Insurance Brokers: www.aaib-insurance.com
Acarsan Group: www.acarsan.com.tr
Al-Bawaba: www.albawaba.com
Al-Mada: www.almadapaper.net
Al-Mansour Bank: www.mansourbank.com
Al-Mashriq: www.al-mashriq.net
Al-Moosawi Group: almoosawigroup.com
Al-Sabah: www.alsabaah.com
Al-Zaman: www.azzaman.com
Alsumaria: www.alsumaria.tv
Air Berlin: www.airberlin.com
Allurentis: www.allurentis.com
AMEC: www.amec.com
ArcelorMittal: www.arcelormittal.com
ArmorGroup Iraq: www.armorgroup.com
AsiaCell: www.asiacell.com
Aswat al Iraq: www.aswataliraq.info
Atconz Real Estate Development: www.atconz.net
Austrian Airways: www.austrian.com
Avicenna Capital: www.avicenna-capital.com
Azmar Air: www.azmarairline.net
B
Baghdad Tonight: www.baghdadtonight.com
Bank of Baghdad: www.bankofbaghdad.org
Basrah Gas Company: www.basrahgas.com
BP: www.bp.com
British Airways: www.britishairways.com
British Iraqi Friendship Society: www.britishiraqi.co.uk
C
Central Bank of Iraq: www.cbi.iq
Chartis Insurance: www.chartisinsurance.com
Chevron Business Development Inc.: www.chevron.com
China National Offshore Oil Corporation: www.cnoocltd.com
China National Petroleum Corporation: www.cnpc.com.cn
CMA CGM: www.cma-cgm.com
Commercial Bank of Iraq: www.ahliunited.com
Communications & Media Commission: www.cmc.iq
Consilium Risk Strategy: www.crsworldwideinc.com
Consolidated Contractors International: www.ccc.gr
Control Risks: www.controlrisks.com
Crescent Petroleum: www.crescent.ae
Credit Bank of Iraq: www.kubba-group.net
D
Dahuk Chamber of Commerce: www.duhokchamber.com
Dar Es Salaam Investment Bank: desiraq.com
Dayen Dis Ticaret: www.dayen.com.tr
Department for International Development: www.dfid.gov.uk
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Deutsche Bahn: www.deutschebahn.com
Dijla & Furat Bank: www.dfdi-bank.com
DLA Piper LLP: www.dlapiper.com
Dunira Strategy: www.dunira.com
E
Economist Intelligence Unit: www.eiu.com
Embassy of the Republic of Iraq: London: www.iraqembassy.org.uk
Eni: www.eni.com
Erbil Chamber of Commerce: www.erbilchamber.org
Erbil International Airport: www.erbilairport.net
Ergo: www.ergo.net
Erinys: www.erinys.net
Ernst & Young Iraq: www.ey.com
Etihad: www.etihadairways.com
Exxon Mobil: www.exxonmobil.com
F
Foster Wheeler: www.fwc.com
G
G4S: www.g4s.com
Gazprom: www.gazprom.com
Gulf Air: www.gulfair.com
Gulf Bridge International: www.gulfbridgeinternational.com
Gulf Insurance Institute: www.giionline.net
Gulfsands Petroleum: www.gulfsands.com
Gulftainer Group: www.gulftainer.com
H
Harlow International: www.harlowinternational.com
Honeywell: www.honeywell.com
Hinterland Travel: www.hinterlandtravel.com
HSBC: www.hsbc.com
I
IBBC-Iraq Britain Business Council: www.webuildiraq.org
IGI Insurance: www.igi.co.uk
IKB Travel & Tours: www.youshouldtravel.com
IMF: www.imf.org
Impregilo: www.impregilo.it
Info2Cell: www.info2cell.com
International Civil Aviation Organisation: www.icao.int
Iraq Business News: www.iraq-businessnews.com
Iraq Civil Aviation Authority: www.iraqcaa.com
Iraq Daily: www.iraqdaily.com
Iraq Net: www.iraq.net
Iraq Republic Railways: www.iraqrailways.com
Iraqi Insurance Diwan: www.iraqinsurance.org
Iraq Stock Exchange: www.iraqstockx
Iraq Travel Insurance: www.iraq-travelinsurance.com
J
Japex: www.japex.co.jp
K
Kalimat: www.kalimattelecom.com
Kanoo Travel: www.kanootravel.com
KBR: www.kbr.com
KCA Deutag: www.kcsdeutag.com
Khoshnaw Company: www.khoshnawgroup.com
108
Kier Construction: www.kier.co.uk
KIMADIA: www.kimadia-iraq.com
Kogas: www.kogas.or.kr
Korek Telecom: www.korektel.com
Kurdistan Board of Investment: www.kurdistaninvestment.org
Kurdistan Regional Government: www.krg.org
Kurdistan TV: www.kurdistantv.net
Kurdsat: www.kurdsat.tv
Kuwait Energy: www.kec.com.kw
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Lafarge: www.lafarge.com
Land Rover: www.landrover.com
Lukoil: www.lukoil.com
Lufthansa: www.lufthansa.com
M
MCE plc: www.mceplc.com
MerchantBridge: www.mbih.com
Middle East Airlines: www.mea.com.lb
Ministry of Agriculture: www.moagr.com
Ministry of Communications: www.iraqimoc.net
Ministry of Construction & Housing: www.moch.gov.iq
Ministry of Culture: www.ministryofculture.gov.iq
Ministry of Displacement & Migration: www.modm-iraq.net
Ministry of Education: www.moedu.gov.iq
Ministry of Electricity: www.moelc.gov.iq
Ministry of Finance: www.mof.gov.iq
Ministry of Foreign Affairs: www.mofa.gov.iq
Ministry of Health: www.moh.gov.iq
Ministry of Higher Education & Scientific Research: www.moheiraq.org
Ministry of Human Rights: www.humanrights.gov.iq
Ministry of Industry and Minerals: www.industry.gov.iq
Ministry of Interior: www.moi.gov.iq
Ministry of Labour & Social Affairs: www.molsa.gov.iq
Ministry of Municipality & Public Works: www.mmpwirq.com
Ministry of Oil: www.oil.gov.iq
Ministry of Planning & Development Cooperation: www.mop-iraq.org
Ministry of Science & Technology: www.most.gov.iq
Ministry of Trade: www.mot.gov.iq
Ministry of Transport: www.motrans.gov.iq
Ministry of Water Resources: www.mowr.gov.iq
MJ Medical: www.mjmedical.com
Mott MacDonald: www.mottmac.com
N
National Bank of Iraq: www.nbirq.com
National Investment Commission: www.investpromo.gov.iq
O
Olive Group: www.olivegroup.com
Occidental Petroleum Corp.: www.oxy.com
OPEC: www.opec.org
P
Parsons Brinckerhoff: www.pbworld.com
Penspen Group: www.penspen.com
PricewaterhouseCoopers: www.pwc.com
Petronas: www.petronas.com
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Q
Qatar National Bank: www.qnb.com
R
Rafidain Bank: www.rafidain-bank.org
Rafidain Travel & Tourism: www.al-rafidain.com
Rasheed Bank: www.rasheedbank.net
Rotana: www.rotana.com
Royal Dutch Shell: www.shell.com
Royal Jordanian: www.rj.com
S
Sabre Travel Network: www.sabretravelnetwork.com
Sardar Group: www.sardargroup.com
Saracen Trade & Investment Inc: www.saracen-inc.com
Schlumberger: www.slb.com
Sheraton: www.sheraton.com
Sinopec: www.sinopec.com
SKA Air & Logistics: ska-arabia.com
Sonangol: www.sonangol.co.ao
South Oil Company: www.sociraq.com
State Company for Agriculture: iraqiscas.com
Statoil: www.statoil.com
Swagelining Limited: www.swagelining.com
T
Tata Steel: www.tatasteel.com
Technital: www.technital-spa.com
Total: www.total.com
Trade Bank of Iraq: www.tbiraq.com
Turkish Airlines: www.turkishairlines.com
Turkish Petroleum: www.tpao.gov.
Turkish Petroleum International Company: www.tpic.com.tr
U
UK Trade & Investment: www.uktradeinvest.gov.uk
UNESCO: www.unesco.org
UOP: www.uop.com
V
Vitol: www.vitol.com
W
Weatherford: www.weatherford.com
World Bank: www.worldbank.org
World Heath Organisation: www.who.int
Z
Zagros Company: www.zagros-group.net
Zain: www.zain.com
110

All information accurate at the time of publication, November 2010.
© Published by Allurentis Limited (www.allurentis.com) All rights reserved.
Acknowledgement: Allurentis would like to thank all our supporting organisations for their kind contributions.
Photos courtesy of: Essam al-Sudani for the Department for International Development www.istockphoto.com www.dreamstime.com Angus Beaton Contact: +44 (0) 796 616 6981 email: angusbeaton@me.com

in association with

NIC: www.investpromo.gov.iq

UKTI: www.uktradeinvest.gov.uk

Introduction Iraq 2010 budget allocations Map - cities, oilfields, international airports & borders Messages Dr. Sami Al-Araji, Chairman of the National Investment Commission John Jenkins, the British Ambassor to Iraq Baroness Nicholson of Winterbourne, Executive Chairman, IBBC Business Landscape & Regulatory Environment Huge opportunities but guidance is needed - PricewaterhouseCoopers Legal considerations for doing business in Iraq - DLA Piper LLP Finance Iraqi banking sector - Huge opportunity for growth - HSBC Foreign Investment in Iraq - MerchantBridge Iraqi insurance market - AAIB Insurance Brokers Iraq’s golden investment opportunity - National Investment Commission Iraq: market of potential - UK Trade & Investment Oil & Gas Oil bonanza will fuel engineering boom Education & Training Training the next generation of oil & gas engineers - Penspen Risk Management A fresh perspective on growth in Iraq - Consilium Risk Strategies Security is a challenging area but not insurmountable Securing Iraq - Erinys Infrastructure Infrastructure review Utilities Rebuilding a nation - it’s more than just projects - Parsons Brinckerhoff Turning the tide - Mott MacDonald Construction & Civil Engineering Construction market will be region’s largest Harlow International - Builds on Iraq experience Transport Ports improvement is vital Future of track in Iraq Automotives - Sardar Trading Agencies Ltd. Air travel security - G4S Risk Management Royal Jordanian Telecommunications Telecommunications revolution takes off Healthcare Healthcare needs are immense Travel & Tourism Building recovery on 10,000 years of history - Dunira Strategy Featured Contacts

4 6 7 8 9 10 13 16 21 26 32 37 39 42 45 53 56 58 60 64 69 74 78 82 85 87 90 93 96 99 102 107

2011 Discovering Business
3

Contents

Diyala.000) The 2005 constitution guarantees Iraqis basic rights with an independent judiciary.3 million) Erbil (1. After his demise. Following the end of the First World War and the end of Turkish Ottoman rule.8 million) Kirkuk (1. Iraq’s population is estimated at 30 million with an average age of 20. In 1932. Thi Qar and Wassit.8 million) Sulaymaniyah (1. Iraq is composed of 18 governorates or provinces. Saddam Hussein took control in 1979.6 years. These are Anbar. the country became a parliamentary democracy following ratification of the country’s constitution on 15 October 2005. Bahai. Basrah. the area achieved independence as a kingdom with Britain retaining military bases and rights of transit for its forces until the overthrow of the monarchy. Sulaymaniyah. 4 Principal Cities (by population) Baghdad (capital) (9. A Republic was declared in 1958 after a military coup. Turkey to the north. he is nominated by the Council of Representatives.5 million) Mosul (3 million) Basrah (2. The Head of State is President Jalal Talabani since 6 April 2005. Assyrian. Kuwait and Saudi Arabia to the south and Iran to the east. Baghdad. Babil. The President protects the constitution and unity of the state. Iraq has a land area of 432.000) Tal Afar (450.000) Dahuk (600. Najaf. The region is thought to contain the legendary Garden of Eden and is where Ur.2 million) Ramadi (700.000) Kut (450. Iraq was placed under British administration in 1920 by a League of Nations mandate.000) Zubayr (600. Muthanna.000) Najaf (800.000) Fallujah (850. Kirkuk. Salah al Din. Karbala. Armenian. Ninewah. Syria to the northwest. Qadissiya. Erbil. The Head of Government is Prime Minister Nouri al-Maliki since 20 May 2006.Introduction Introduction Iraq was known as Mesopotamia (from the Greek between the rivers) until the end of the First World War. Chaldean. The population is 97% Muslim. Main ethnic groups are Arab and Kurds but Iraq also has distinctive Turcoman. Mandean and Yazidi communities.000) Al Hillah (510.000) Baquba (410. Missan. Negotiations for a new coalition government have been Main Religion: Islam (60-65% Shia and 32-37% Sunni) approx .000) Amarah (450. Babylon and other historic and religious sites are located.000) Karbala (800. while the Prime Minister is the direct executive authority and Commander-in-Chief. Dahuk.162 square kilometres and borders Jordan to the west.

the Iraqi National Movement coalition led by former PM Ayad Allawi won 91 seats. estimated natural gas reserves 3.com Iraq.operated by Kurdistan Democratic Party Kurdsat . Italy (9.2%).a private satellite TV broadcaster Al-Iraqiya .com. won 57 seats. The main industry is the production of crude oil with an estimated 2.10 billion barrels.851 kilometres of paved roads Rivers and waterways of 5.Baghdad private daily Al-Manurah .2%). Other industries include production of chemicals and fertilisers. The country cultivates wheat. Radio: Two public and three private stations Source: CIA World Fact Book. Khor Az Zubayr and Umm Qasr Telecommunications: International Dialling Code: 964 Cellular services based on three nationwide GSM networks Press: Al-Sabah .1%) Principal import partners comprise Syria (26. tobacco and paper. The Kurdish bloc.Baghdad private daily Al-Mashriq . processed foods.8%) and South Korea (7.net Iraq-daily.4%) and China (6%) Transport: 19 principal airports Railroad network of 2. India (12. pharmaceuticals. metal products. US (10.Basrah private daily Television: Alsumaria.6%).operated by Patriotic Union of Kurdistan Internet news services: Aswat al Iraq Al-Bawaba. coffee and also farms sheep and poultry. Prime Minister al-Maliki’s State of Law coalition won 89 seats.Dubai based private satellite TV channel Kurdistan satellite channel .6%).state sponsored Al-Sharqiya . The elections were based on an open list system that elected the members of the Council of Representatives.272 kilometres standard gauge track 37.000 square kilometres is irrigated. Jordan (6. BP Statistical Review of World Energy.Baghdad private daily Al-Dustur . textiles.com Iraq-businessnews.899 kilometres) 58 kilometres of coastline located between Umm Qasr and Al Faw Main Ports: Basrah. dates.state sponsored Al-Zaman . cotton.com (part of wn network) sustainableiraq. rice.ongoing since national parliamentary elections on 7 March 2010.482 million barrels per day (bpd) in 2009. Approximately 13% of Iraq is arable and some 35.815 kilometres) and Tigris (1.6%).com baghdadtonight. IMF and the BBC 5 Introduction . The Iraqi National Alliance led by Muqtada al-Sadr have 70 seats and other parties 18 seats. Turkey (19.private London based daily printed in Baghdad and Basrah with English language pages Al-Mada . barley. who will elect the President and approve the next executive branch appointments. construction materials. led by Kurdistan Democratic Party President Masoud Barzani and Patriotic Union of Kurdistan. Estimated oil reserves 143. vegetables. Iraq’s main export trading partners are the US (38.279 kilometres including Euphrates (2. President Jalal Talabani.17 trillion cubic metres.

180 300 1.759 5.290 960 664 646 627 543 445 441 316 316 294 269 228 202 143 119 95 30 IQD68.786 4.890 5.060 700 500 550 450 15 7 92 22 300 58 24 15 28 30 14 25 10 IQD18.496 354 1.234 7.930 billion Capital Budget IQD billion 3.254 2.530 1.556 3.Introduction .188 6.127 445 500 68 2.127 1.Budget Iraq 2010 budget allocations Ministry or Institution Kurdistan Regional Government Interior Electricity Health Care Defence Education Trade Agencies independent of ministries Oil Higher Education and Scientific Research Municipalities and Public Works Council of Ministers Water Resources Construction and Housing Industry and Minerals Youth and Sports Transport Justice House of Representatives State Supreme Judiciary Council Communications Planning and Development Co-operation Labour and Social Affairs Displacement and Migration Culture Science and Technology Presidency of the Republic Environment Human Rights 6 Appropriation IQD billion 10.341 1.734 5.507 billion Source: Ministry of Finance Total: .104 350 1.493 4.544 4.549 2.

oilfields.Map 7 Map .Tur key DAHUK Dahuk ERBIL Erbil NINEWAH Kirkuk SULAYMANIYAH Sulaymaniyah KIRKUK Syria Tikrit SALAH AL-DIN DIYALA ANBAR Ar Ramadi Iran Baghdad BAGHDAD Jordan Ira q KARBALA Karbala BABIL Al Hillah WASSIT Al Kut Najaf Diwaniyah MISSAN Al Amarah QADISSIYA THI QAR NAJAF Sa u d i Ara bia Basrah MUTHANNA BASRAH International airport Major oil/gas fields Kuwait The Gulf Introduction . international airports & borders .cities.

industry. We work on a national and provincial level.700 projects worth up to US$186 billion. Sami Al-Araji economy is quite possibly the biggest global investment opportunity to emerge in the last 50 years. agriculture. The same Law exempts foreign companies from tax for up to ten years as well as import fees for a period of three years. The sky is the limit for investors.Messages Message by Dr. We are committed to creating mutually beneficial relationships with investors from all parts of the world and encourage you not to miss out on Iraq’s unique investment opportunity. financial services and tourism are among the many areas in Iraq steadily opening up. 8 . As Chairman of Iraq’s National Investment Commission (NIC) my mission. is to help foreign companies and investors become involved in this massive reconstruction opportunity. The rebuilding of Iraq’s Dr. land and manpower to become one of the region’s richest and most successful economies.1 billion is earmarked for capital projects. The plan includes more than 2. with every sector open for investment.7 billion of projects are planned to support the reconstruction effort and a third of the country’s 2010 budget expenditure of US$72. incentives and guarantees available to foreign investors under Iraqi law. housing. infrastructure renewal. Our Five Year National Development Plan for 2010-2014 targets economic growth of 9. Sami Al-Araji. acting as a one-stopshop to assist foreign companies enter and operate efficiently in Iraq and to help investors to obtain licences.4% per year. In the industrial sector alone. tax exemptions and land. transportation. With a largely untapped market of up to 30 million consumers. We at the NIC are here to help you and your business and look forward to welcoming you to Iraq. Iraq’s economy has lain dormant for decades. The National Investment Law 13 of 2006 has been amended to allow non-Iraqis to own land for housing projects as well as investment partnerships with State Owned Enterprises. recently restated high oil & gas reserves (among the highest in the world) and a strategic location. Iraq has the oil. food processing. with the support of my team. Indeed. Chairman of the National Investment Commission Welcome to the second edition of The New Iraq – Discovering Business. US$10. making a number of exemptions. the country’s infrastructure needs are enormous and as part of the Government’s commitment to diversifying the economy away from oil. manufacturing. an invaluable resource providing background on Iraq’s economic and cultural landscape together with expert insights into the country’s key economic industry drivers. We have taken several steps to facilitate this. the water.

There are opportunities to seize now. And business needs a government that takes tough decisions for the right reasons and enables them to do the work that will underpin reconstruction and sustainable economic progress. in spite of uncertain security and attempts to derail the electoral process. lacking capacity and with poor communications infrastructure. Not only those multinationals that are household names but also an increasing number of less well known companies. Insh’allah. Indeed during the celebrations for the Queen’s Birthday Party held at the Embassy in June 2010. But all Iraqis need a government that provides the services and enables the jobs that underpin a decent life. John Jenkins I have been Her Majesty’s Ambassador to Iraq since December 2009. Christopher spoke about Ministries working in very difficult conditions. The length of the intervening period has been intensely frustrating for the people of Iraq. Christopher Prentice. In the Middle East patience is the essential virtue……. So much still needs to be done here and any delays often affect the most needy disproportionately. I hope that we shall see a new Iraq that is truly open for business and with an environment that is welcoming to those who want to trade and invest here. With the promise of a new Government. I saw the last days of the previous Government and have waited since then – with many others – in eager anticipation of the sort of new government which would deliver the reconstruction that Iraq urgently needs. in construction. And. the government department that help British companies do business overseas. it’s easy to wonder how much Messages 9 . We need clarity. When I reflect on the message my predecessor. I was able to talk to our assembled guests about the progress being made across a range of sectors by British business in Iraq. The breadth of engagement is impressive. in banking and finance. Companies active in project management. Our trade officers are here to help and support more British companies to do business in what is a challenging and rewarding market. I am pleased that this continues to be the case for British companies. progress has been made in that time. stability and transparency. It would be nice to think that such a government will have been formed by the time you pick up this publication. Many of these problems undoubtedly continue to exist. That is why UK Trade & Investment. wrote for this publication a year ago.. has expanded its presence in both Baghdad and Erbil. And in my time here I have been pleased to see a growing interest from British businesses wanting to come to Iraq. seven months after the 7 March 2010 Elections. there can only be increasing opportunities in the years to come. we still await the formation of a new government.Message by the British Ambassador to Iraq As I write this foreword. who showed their commitment to democracy by voting in large numbers in March. in software. and in business services were given as examples. He talked of the lack of a regulatory framework for business and of corruption. But there is also no getting away from the fact that business continues to be done here. whatever the current difficulties.

the fight against corruption. AMEC. I am confident that strong government. prosperous and diverse Iraq. enjoying high level support from both Governments. ArmorGroup Iraq. We in IBBC are proud to support those goals. the separation and the balance of powers together with the rule of law are steadily making the headway necessary to enable the Federal Republic of Iraq to flourish and to succeed. IBBC (Iraq Britain Business Council) provide the talent pool for the future generation of Iraqi managers and leaders. as well as the all important workforce of today. is more than a business initiator. IBBC. however. has become the premier membership-led organisation promoting business. in coordination with the Iraqi Government. Consolidated Baroness Nicholson opening an IBBC Trade Conference in Basrah As a long term friend of the Iraqi people. In the short time since its formation. industry. Executive Chairman. Avicenna Capital. Asia Power Capital. IBBC. IBBC is committed to a free. it also aims. trade and investment with the Republic of Iraq. to promote best practice and international standards as a means to facilitate business in Iraq. Iraq is now building on her present achievements by reviving and expanding her economic base in order to bring economic security and prosperity to her people. The following companies are Founder Members of IBBC: Al-Moosawi Group. One result is the exceptionally high unemployment and lack of skills and qualifications amongst the young who must 10 . and through the identification and fulfilment of their mutual interests and common goals. Chevron Business Development Inc. a not for profit company registered in the UK. At the same time. democratic representation. which brings together Iraqi and British companies and public sector bodies by giving them a joint platform. In June 2009 I co-founded IBBC (Iraq Britain Business Council) to assist the growth of Iraq by linking UK businesses with their Iraqi counterparts. the obstacles that are inhibiting the full establishment of the free market pose continued and strong challenges to both inward investment and the steady growth of local businesses. It is a powerful network of the most important Iraqi and British business organisations.Messages Message by Baroness Nicholson of Winterbourne.

HSBC. while the Sector Tables meet bi-monthly. as IBBC implements its headline statement. having its first campus inside Basrah University at the invitation of the Chancellor of Basrah University. Amongst these. Applications for membership are reviewed by the Founder Member Board which meets every month. Control Risks. Penspen Group. “Together we build Iraq”. Other major work will flow from these events. Vitol. On similar lines to the OGST IBBC has established a Financial and Professional Services Table led by HSBC and the Trade Bank of Iraq. Dahuk Chamber of Commerce. Mamnoon Limited. IBBC will also organise with the City of London an Iraq Day at Mansion House in May 2011. Kuwait Energy.IBBC Trade delegation with Iraqi Businessmen in Baghdad Contractors International. started in October 2010 as a private public partnership with the Iraqi Ministry of Higher Education. PricewaterhouseCoopers. SKA Air & Logistics. Zagros Company and Zain. Basrah and Erbil in 2010/11. in order to expand the skills base at every level of Iraqi society. DLA Piper LLP. Tata Steel. led and financed by its membership. supported by Executive Manager. Christophe Michels and Assistant Executive Manager. Erbil Chamber of Commerce. that will work to assist and support the promotion of a strong and prosperous business environment in Iraq as well as a Construction and Infrastructure Sector Table chaired by Kier Construction and Consolidated Contractors International. Fursan Security. KCA Deutag. Korek Telecom. Gulfsands Petroleum. Foster Wheeler. IBBC is continuing to organise high level trade delegations to Baghdad. IBBC has accepted the kind invitation from the Governor of Basrah to hold an Investment Conference in January 2011 and from the Government of Iraq to do likewise in June 2011. Rafidain Construction and Engineering. The future After a highly successful first year. IBBC will achieve this through its University programme. Olive Group. Mott MacDonald. TRC. The Full Council meets twice yearly. Philip Lewis. Sulaymaniyah Chamber of Commerce. IBBC Sector Tables IBBC has formed the Oil & Gas Sector Table (OGST) under the Chairmanship of the Penspen Group in order to assist Iraq in the effective and sustainable development of its petroleum reserves to allow Iraq to enjoy the best possible economic and social development that such wealth will bring. IBBC has decided therefore to establish and implement substantial educational and vocational training initiatives in Iraq in all fields of business and industry. Messages 11 . Khoshnaw Company. Ernst & Young Iraq. Saracen Trade & Investment Inc. Swagelining Limited. IBBC University IBBC believes strongly that the key to Iraq’s long term prosperity and strength can only be found within the Iraqi people. Kier Construction. Trade Bank of Iraq. IBBC is a wholly private sector organisation. Exxon Mobil.

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challenges. Nevertheless. potential investors need expert advice General investment conditions do however.PwC 13 . remain tough and challenging . As a consequence. Investing in Iraq has started to become very attractive. Ismail Maraqa. The nation’s richness in natural resources makes it potentially one of the wealthiest countries in the world.Huge opportunities but guidance is needed For the past 30 years. Senior Partner in the country for PwC. which carries out a variety of advisory. Iraq and guidance through Iraq’s sometimes complex commercial environment by those with in depth knowledge of the country’s economy. There are however. Mr Maraqa believes. the World Bank ranked Iraq in 153rd place out of 183 on the ease of doing business. prospective investors remain apprehensive about security and are more likely to name regulatory barriers and other practical obstacles to doing business as their main concerns. burdensome and obscure procedures regarding business visas or new business registration. PwC. Iraq’s economy has been distressed by costly militarisation. PwC Country Senior Partner. and sometimes untrustworthy. recognition of investor appetite has encouraged Iraq’s Government and its private sector to take extensive steps towards developing the business and investment environment.particularly for small and medium investors. believes Ismail Maraqa. In its 2010 Doing Business Report. with the production and export of oil putting it on the road to prolonged economic growth and long term affluence. up to now. following significant enhancements to its security status in the last year. As Iraq gradually rebuilds its relations with the international community. tax and audit work for clients in Iraq from offices located in Baghdad and Erbil. of sufficient investment. Despite this. particularly due to the lack. Prospective investors need to allow for substantial security costs. Claims of corruption are still prevalent and the inheritance of central planning and immature state owned entities still restrains economic development. sees opportunities developing in every industry and governorate – opportunities that will help build Iraq and support its endeavour to operate a diversified economy. regulations and ways of doing business. three wars and over ten years of international sanctions. Business Landscape & Regulatory Environment . delays in payment for some Iraqi Government contracts. However. There are big opportunities for business development within Iraq’s private sector as the country steadily breaks free from the shackles of its past. aligned legislation and business practices. it is vital that those wishing to enter the Iraqi market develop a deep understanding of the country and its specific business attributes. nontranslucent dispute resolution systems. things are changing for the better and faster than the outside world sometimes appreciates.

This can be seen clearly in its enhanced security situation. Laws – Until recently. companies must apply for and receive a project specific investment licence from either the National or a regional Investment Commission to benefit from the incentives. you will find tremendous prospects for profit. The Kurdistan Regional Government has passed its own Investment Law which includes a few additional incentives.Business Landscape & Regulatory Environment . Investment licence – Iraq’s National Investment Law incorporates incentives for foreign companies to invest. in order to fully assess the risk to their business ventures. the Status of Forces Agreement came into effect this year and put an end to any exemptions. both financially and morally. substantial cracks remain and it is crucial that foreign companies develop a good understanding of the political environments of the different provinces in which they do business. However. foreign companies should include arbitration clauses into their contracts to benefit from more common settings 14 . Under this law. additional work is needed to integrate international standards for regulating business and settling disputes. As soon as you become at ease with the security situation. However. including an exemption from taxes and fees and a guarantee that foreign investor capital will be treated by the same token as the domestic investor capital. companies working in Iraq under contracts with the US Government or other coalition countries benefited from exemption from the laws of Iraq. Whenever viable. Although some contemporary notions have been introduced.PwC Even though Iraq is not yet entirely stable. Political risk – In general. Indeed. the risk of political instability can be disruptive to business activities of foreign firms but in Iraq the risk is multifaceted. reconstruction and development needs across all sectors of its economy. after many years of war and sanctions. Imposing contracts – Iraq’s legal system goes back generations and has deep rooted conventions. Below are a few key things to be aware of if you are considering doing business in Iraq. it presents a window of opportunity for companies willing to invest in one of the world’s most significant emerging markets and be part of the process of rebuilding a country from the ground up. This means that foreign companies and individuals are not only subject to criminal and civil liability in Iraq but must also comply with all regulatory and legal requirements for doing business there. The country has made much progress since it hovered on the brink of civil war three years ago. Iraq has recovery.

You should not act upon the information contained in this article without obtaining specific professional advice.it’s truly rewarding work. the major treaty that guarantees implementation of foreign arbitral awards. PricewaterhouseCoopers does not accept or assume a liability. Normally. companies should bear in mind that Iraq is not yet a signatory to the New York Convention. All rights reserved.000 people in 154 countries in firms across the PwC network share their thinking. Foreign companies should however. Trade representative office – The simplest way to establish a commercial presence in Iraq. This process can be speeded up by obtaining a letter of approval from an Iraqi representative office. with the production and export of oil putting it on the road to prolonged economic growth and long term affluence”. experience and solutions to develop fresh perspectives and practical advice. Operating in Iraq is about making a difference on the ground and seeing the impact on a daily basis . Iraqis and non-Iraqis living in Iraq must pay tax on income that originates there.PwC 15 . By doing so. Entry and exit – The Status of Forces Agreement. up until 2009 it did not permit property ownership. Property ownership – Although the Central Government of Iraq allows long term leases for foreign companies. seek expert advice on how their businesses will be dealt with under Iraq's tax laws and how to track and convey income. in reliance on the information contained in this article or for any decision based on it. In November of that year. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. Although such offices face some constraints on what they can do. ‘PwC’ is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. The most popular structures of incorporation for foreign owned entities are the Limited Liability Company and Joint Stock Company. this is the fastest way to set up an office to engage in commercial activities in Iraq and is less restrictive than a trade representative office that can engage only in business development activities. The visa procedure is lengthy and can sometimes take weeks or even months. a foreign company gets the right to conduct business development and to negotiate for contracts with Iraqi ministries. Businesses looking to get involved in rebuilding Iraq have to conduct a large amount of due diligence and weigh up the risks and rewards. tax and advisory services to enhance value for their clients. Business Landscape & Regulatory Environment . PwCIL does not provide any services to clients. Branch office – Non-Iraqi companies may operate through the formation of a branch office. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. Nonetheless. Visas must now be obtained from an Iraqi embassy before travelling to Iraq. they should not be put off as Iraq offers huge potential for businesses to invest in a key emerging market and contribute to programmes that are shaping the country’s future. responsibility or duty of care for any consequences of you or anyone else acting. which removed immunity. an amendment to the Investment Law provided for foreign investors to own land in Iraq if such land is to be used for housing projects but it excludes hotel construction.“The nation’s richness in natural resources makes it potentially one of the wealthiest countries in the world. made all foreign company employees subject to Iraq's visa processes. This article has been prepared for general guidance on matters of interest only and does not constitute professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this article and to the extent permitted by law. especially for foreign companies seeking contracts with the Government. Together. Additionally. The Kurdistan Regional Government has an Investment Law that allows property ownership within its three Northern provinces. these firms form the PwC network. any foreign company that obtains an investment licence must have a guaranteed entry and exit for its employees. and laws for resolving disputes. PwC firms provide industry focused assurance. Tax – Foreign companies doing business in Iraq are often mystified by the tax system as its tax rules are often vague. or refraining to act. Copyright 2010 PricewaterhouseCoopers. More than 161. is to register as a trade representative office. However.

faster pace. Prior to that. the Central Government withdrew from the Kurdistan Region which allowed the Kurds to develop their own government and economy. successive Iraqi governments only partially began to implement these laws and in certain instances reverted to Saddam era laws. In order to understand the economic transition in Iraq. and putting in place institutions that were intended to create transparency such as the Public Integrity Commission. the Iraqi economy faced a debilitating series of international sanctions that had a massive negative effect on the Iraqi economy and the buying power of Iraqis. These obligations had led to a large number of judgments and attachments on Iraqi assets all over the world. This article highlights the legal foundations for economic transition. after the CPA was dissolved. • The security agreement between the US and Iraq went into effect on 1 January 2009. become heavily centralised and therefore. • In 1991. Iraq has been in a period of rapid transition. especially with respect to the development of oilfields in the Kurdistan Region. Iraq had massive debts to the international community. 16 . since the early seventies. After the agreement went into effect. It intended to lay the foundations for a western style economy and attempted to quickly integrate the Iraqi economy into the world economy. pursuant to CPA Order No. foreign companies carrying out business in Iraq with the coalition were exempt from complying with Iraqi law. Coupled with this was an economy that had. This immunity continues to be in place.Business Landscape & Regulatory Environment . by 2003. the United Nations Security Council established the Development Fund for Iraq into which all Iraqi oil revenue was to be deposited and introduced immunity for the fund’s account. It was therefore difficult for Iraq to engage easily in international trade. though tied to that of the rest of Iraq. • Following the removal of Saddam Hussein from power in 2003 and the subsequent establishment of the Coalition Provisional Authority (CPA). In due course. this economy. one needs to consider the following key matters: • Between 1990 and 2003. establishing the Trade Bank of Iraq to finance Iraq’s trade needs. as the Iraqis were more familiar with them. such companies had to comply with Iraqi law. has been able to evolve at a different. In late 2003. both politically and economically. • In 2003. In many ways. Examples of this include.DLA Piper Legal considerations for doing business in Iraq Since 2003. As a result of the politico-economic developments in the Kurdistan Region.17. relations with the Central Government have encountered tensions. although it is extended solely through the discretion of the UN and the US. which was somewhat alien to the Iraqis. introducing new legislation such as an investment law that opened Iraq to foreign investment and Western type intellectual property laws. the latter attempted an aggressive economic liberalisation campaign. as well as compensation to be paid to Kuwait following the Iraqi invasion of Kuwait in 1990. there was a weak private sector.

on many executive matters. a permanent Constitution was adopted in Iraq by a referendum. especially its deadlines – or at least only comply with it when it suited their needs. • When the suggested amendments were introduced – they require a referendum to be implemented – they included the establishment of a Federal. Another critical requirement of the Constitution was that Iraq hold a referendum by the end of 2007 relating to Kirkuk and other disputed areas. On the other Business Landscape & Regulatory Environment . who is the Head of State and the Prime Minister. for a number of reasons.DLA Piper 17 . • The Federal structure divides powers between those that are exclusively of the Federal or Central Government. The principal aspects of the Constitution are: • That it basically provides for a Federal State. no other regions have so far been formed.“Since 2003. the Executive powers are divided between the positions of President. A brief overview of the constitutional framework In 2005. In turn. Legislature and Judiciary. who is also the Commander-in-Chief of the Armed Forces. • One of the principal purposes of the Constitution was to introduce checks and balances on the Executive. such as on the Prime Minister’s powers as Commander-in-Chief. For example. It replaced the Transitional Administrative Law. factors that continue to strongly affect doing business in Iraq in 2010. shared powers and those exclusively of the Regional Government. which played the role of a temporary Constitution and laid the foundations of the permanent Constitution. there have been no checks and balances. There has been a large influx of foreign companies that have entered Iraq”. there has been tremendous interest by foreign commercial organisations in conducting business in Iraq. especially the position of Prime Minister. this has not been done and continues to be a hotly debated matter. There have been a number of developments with respect to the Constitution after its adoption that need to be kept in mind when conducting business in Iraq. Although the Constitution allows for the establishment of other regions. however. This background is intended to provide an overview of the problems faced by Iraq after the fall of Saddam Hussein. with both a Federal Government and at this stage. In practice. On the one hand. the Constitution provided for amendments to be introduced within four months by the first parliament elected under it. acting through the cabinet. the Kurdistan Regional Government. These proposed amendments were not introduced until 2009. the various political actors have not chosen to necessarily comply with the provisions of the Constitution. To date. These include: • From almost the beginning. • The Constitution divides powers between the Executive. higher assembly to effectively make Iraq a bicameral state. one Regional Government. two inconsistent consequences have resulted. at the end of the term of that Parliament.

• As a result of the extremely tense political atmosphere between different political factions. However. Accordingly. Companies can have one of three types of registration: hand.DLA Piper business with the coalition forces immunity from complying with Iraqi Law.17. The principal laws affecting these companies include: 1. There has been a large influx of foreign companies that have entered Iraq. carry out business in Iraq are subject to Iraq laws. Those carrying out business with Iraq include companies that sell goods to Iraq. whether to the Government or to companies doing business in Iraq by way of tender or otherwise. Parliament has not acted effectively as a check on the executive and in terms of legislation. coupled with the relative inexperience of certain MPs. there has been tremendous interest by foreign commercial organisations in conducting business in Iraq. At the time of writing. these companies were exempt from paying Iraqi taxes. These companies are not subject to Iraqi Law. mainly service providers. which continued in force until 31 December 2008. did not attempt to comply with Iraqi Law by. if a company is carrying out business in the Kurdistan Region. registering their companies or by otherwise complying. other than the laws relating to the implementation of tenders. provided companies that carried out 18 . anti-corruption laws and importation laws. however. Iraqi Companies Law of 1997 (as amended): This law basically provides that any company doing business in Iraq must be registered with the Companies Registrar Office at the Ministry of Trade. In particular. CPA Order No. most of these companies. for example. the current framework for conducting business in Iraq effectively divides businesses into those carrying out business with Iraq and those carrying out business in Iraq. most of these were involved in providing services and goods to the coalition forces.Business Landscape & Regulatory Environment . Legal framework for conducting business in Iraq Since 2003. the checks and balances that have been effective have resulted in deadlocks that have tended to weaken the ability of the State to act cohesively. These companies are not subject to taxes. with laws including key laws like the budget being held up for long periods. it must register with the Ministry of Trade of the Kurdistan Regional Government. This only applies to companies doing business outside the Kurdistan Region. Companies that.

although it may take some time to complete. the security agreement between the US and Iraq provides tax exemptions for companies carrying out business in Iraq through a contract with the US Government. Establishment of a branch of the parent: a foreign company can establish a branch in either Federal Iraq or in the Kurdistan Region. b.13 of 2006. The process is relatively simple. However. as well as termination provisions. A prerequisite for this exemption would therefore be a contract with the US Government. 2. There are. Other benefits include the right to import. 4. if a company is investing in Iraq and obtains an investment licence (issued pursuant to the Investment Law No. A subsidiary would be a stand alone entity with limited liability and could transact the businesses it was incorporated to carry out. Currently. the Investment Law provides certain benefits to foreign investors.DLA Piper 19 . Salem Chalabi DLA Piper. It must contain certain provisions relating to health and safety and training. the general rate is 15% of net income. as amended). the requirements for establishing a branch differ between Iraq. Employment Laws: With few exceptions. whereas in the Kurdistan Region there is no such requirement. Iraq Business Landscape & Regulatory Environment . It is also important to note that a foreign business entity in Iraq must enter into a contract. A branch would be able to carry out the business activities of its parent. the National Investment Commission will look for 50% of the labour force comprising Iraqi labour. The activities of a representative office are limited to marketing and support services and it cannot transact business or enter into contracts. First. however. Iraqi Law does not have a requirement against the use of foreign labour to work on projects in Iraq. 3. which period is extendable for an additional five years upon meeting certain criteria. Second. Taxation Laws: Companies that are carrying out business in Iraq must generally pay taxes to the Ministry of Finance. Investment Law: As stated above. where a foreign investor seeks to obtain an investment licence. for a period of three years. There are usually capital requirements depending on the type of business the subsidiary is conducting as well as requirements for renting space and hiring legal representatives and accountants. provided that such labour has the requisite skills. governed by Iraqi Law with its employees and the contract must be in the Arabic language. equipment and machinery for use in their projects without paying customs duties.a. where the key requirement is that a company have a contract with the Iraqi Government or an instrumentality thereof. Establishment of a subsidiary: a foreign company can establish an Iraqi subsidiary in both Federal Iraq or in the Kurdistan Region. c. Representative office: a company can establish a representative office in either Iraq or the Kurdistan Region. including a tax break and the right to own land if such land is to be used for building housing in Iraq. then it is exempt from Iraqi taxation for ten years. two significant exemptions that companies must be aware of. yet there would not be any limitation on the parent’s liabilities in Iraq.

com info@avicenna-capital. makes Avicenna ideally suited for complex and crossborder transactions.webuildiraq. Avicenna's modus operandi is to utilise its internal skills in identifying strategic opportunities. focusing on basic fundamental sectors creating building blocks for the Iraqi economy. our experience in originating.com London Office: Tel: +44 (0) 20 7866 6071 Fax: +44 (0) 20 7866 6070 Istanbul Office: Tel: +90 (0) 212 290 72 92 Fax: +44 (0) 212 292 72 90 • Banking • Insurance • Oil & Gas • Aviation • Telecom • Energy • . insurance & stockbrokerage). Avicenna Capital is the founding board member of The Iraq Britain Business Council (www. telecoms.avicenna-capital. executing and exiting investment deals. Avicenna Capital's private nature and broad reach ensures that it is exposed to proprietary deal flow from a unique perspective. pharmaceuticals. along with best of breed strategic partners. oil & gas. Avicenna's direct investment targets include opportunities primarily in financial services (banking. financial institutions and governments. food & beverages. Avicenna is able to leverage strong global and strategic relationships with top tier global corporations.Avicenna Capital is one of the leaders in Iraq's private investment market. aviation. structuring.org). infrastructure (electricity & housing). www.

Similarly. that it will be the privately owned banks which will support growth in the wider economy in the years ahead. For the Iraq economy to prosper once again. account for approximately 90% of all Iraqi banking assets and a similar proportion of deposits. In order to achieve this economic growth objective. This will create a better standard of living for all Iraqis and create employment. Milestones in the development of the privately owned banking sector are as follows: 1890/1 Entry of Ottoman Bank 1922-1964 Establishment of a series of privately and government owned banks* 1941 1964 1992 Rafidain Bank formed Nationalisation of banking system Re-establishment of private sector banks approved 1992-2002 Private sector banks established but prohibited from international transactions 2003 Private sector banks allowed to process international transactions. eg. had branches in Baghdad and Basrah after World War I. however. HSBC which. As such. similarly its financial services industry has a long and varied history. While there is no question that the banking sector has a bright future. It is estimated that the two largest state owned banks.Banking 21 . is currently the largest private sector bank in Iraq by market capitalisation (see table). The banking industry in Iraq is currently dominated by the Government sector.Iraqi banking sector . Finance . charting a clear roadmap is not straightforward. It is very clear. The privately owned banks therefore play a vital role in the future development of Iraq. HSBC Iraq Much as Iraq is a country with an extraordinarily rich and cultured past.Huge opportunity for growth James Hogan – Chief Executive Officer. their progress can be seen as a proxy for the well being of the wider economy. through Dar Es Salaam Investment Bank. The private sector is therefore currently small. cross border payments and letters of credit * A number of the privately owned banks active in Iraq today previously operated in the country. For example. being able to take a long term perspective is essential. Rafidain and Rasheed. there is a clear dependency on sustained growth in the private sector. the country needs a modern banking sector which will allow the means for Iraqi entrepreneurs and multinational investors to build profitable businesses in Iraq.

1 million. in four or more years. This compares to around US$20 billion for Jordan and approximately US$250 billion for Saudi Arabia. Iraq requires a network of around 3. as this table illustrates: Leading private sector banks by market capitalisation Private Sector Bank Majority Shareholder Date Established Paid Up Capital 30 June 2010 US$ Million 57 86 86 56 Market Capitalisation 30 June 2010 US$ Million 315 170 169 98 Entrance to the Baghdad Branch of the Imperial Bank of Persia. In summary. at an industry level. has over 600 branches. It is likely this trend towards improving services and capabilities will accelerate as the sector consolidates in the short to medium term. the privately owned banking sector is less than ten years old. The Central Bank of Iraq advises that total bank loans amounted to US$5. It is also positive that the larger of the private sector banks have a reasonable product capability to benefit both corporate and consumer customers. A key role for foreign banks entering Iraq is the ability to provide access to training resources in such vital areas as Risk Management and Finance. Another relevant comparison is the volume of bank lending. the potential upside is clearly huge. It is therefore understandable that the sector is still small and underdeveloped. This will require an increase of three to four times for even the larger private sector banks.1%) KIPCO Group/Burgen Bank (55%) National Bank of Kuwait (75%) Iraqi Shareholders (100%) 1998 1992 1998 1993 . Jordan. Iraq will have around ten to fifteen well capitalised private sector banks. Looking at employees of private sector banks. with a population of 6. Either way. over the coming years include: Education – there is a considerable need for investment in training. Its neighbour. by as soon as 2015. Other key changes that are likely to take place. The Central Bank of Iraq requires all private sector banks to have a minimum capital of IQD250 billion by 2014 (US$214 million). there are 36 private sector banks of various shapes and sizes.Banking In its present form and in the context of international banking standards. they have had no opportunity to learn modern banking techniques.000 branches to support its population of near 30 million. Including the state owned banks. It is inevitable we will see consolidation and some estimate that. By this same measure.8 billion as at June 2010. 1926 It therefore follows that. despite the current size of the banking sector. Currently. Iraq has around 900 branches across the country. Dar Es Salaam Investment Bank Bank of Baghdad Credit Bank of Iraq Middle East Investment Bank 22 HSBC (70. many either entered the industry before the early 1980s (when the period of war/embargo commenced) or have joined very recently. the private sector bank industry will comprise a smaller number of banks than the current 36.Finance .

for banks wishing to lend. It is likely Iraq will see the emergence of a strong accountancy and audit profession in parallel with the growth of the banking sector. Credit infrastructure – to also facilitate greater bank lending at an acceptable level of risk. there is a whole host of other industry “reforms” under consideration and discussion. Already. This applies both to retail and corporate borrowers. will lead to better banking services for both corporate and consumer customers. in turn. other retail and wholesale banking products will also become available. such as Profit & Loss Accounts or Balance Sheets. it is difficult to obtain accurate financial information from potential borrowers.Banking . To this end. At some point in the future. they will further increase the ability of Iraqi consumers to have confidence in the banking sector. is limited. it is likely there will need to be a single regulator to ensure a consistent approach across the wider Iraqi banking industry. as the quality of the banking infrastructure improves. 1960 “In the not too distant future. Independent regulation – a strong and independent central bank is a prerequisite to growth of the banking sector. When implemented. External audit standards – currently. the privately owned banks have little involvement in meeting the banking needs of government ministries and offices. easy access to information about borrowers’ past records is important. Currently. Furthermore. Corporate borrowers will also benefit from the establishment of a syndicated lending market”. as the industry matures. 23 Finance . It is expected the private sector will take a proportionally larger role in the future. Currently. The ability for borrowers to prepare basic financial statements. In addition. It is positive that all the above changes are already at various stages of progress. the public sector currently accounts for around 90% of the total banking industry. The establishment of a Credit Information Bureau or similar will be helpful for all banks as it will allow transparent access to historical borrowing records.Greater balance between government and privately owned banks – as mentioned earlier. This is likely to change which will lead to greater competition which. the Central Bank of Iraq has regulatory responsibility for private sector banks and the Ministry of Finance for government owned banks. so too does the range of available banking products. there are only a very small number of suitably qualified external auditors which can provide third party verification of such financial statements (where they are prepared). many The Baghdad Branch of British Bank of the Middle East.

as the industry matures. US dollar. where banks jointly support a single borrower and effectively share the risk. the industry holds considerable potential but is not for the faint hearted. just as the private sector banks have evolved over the past one to two years. it is likely this speed of change will continue and allow the banking industry to play an ever increasing role in Iraqi economic development. In the not too distant future. ATM and internet. Euro and a host of other currencies • Transfer of funds within Iraq – paper based and electronic transfer • Inward and outward cross border payments – same day processing capability • Trade finance – import and export financing through both Letter of Credit and Open Account • Payroll – processing of salary payments for employees • Treasury and foreign exchange – buying and selling of Iraqi dinar against other currencies • Lending – short and longer term financing • Leasing – cars and other consumer products • Mortgage – property financing • Insurance – distribution of life and non life insurance products • Stockbroking – purchase and sale of shares listed on the Iraq Stock Exchange Some banks already support the above products through a variety of delivery channels such as telephone. other retail and wholesale banking products will also become available.Finance . The Head Office of Dar Es Salaam Investment Bank. To conclude. But this trend is already starting to emerge to the benefit of the wider banking industry – another example of such collaboration will become evident through the development of interbank foreign exchange or lending markets (which do not currently exist).Banking of the larger private sector banks provide the following products and services: • Local and foreign currency accounts – Iraqi dinar. Such initiatives require the close collaboration and cooperation of banks. Various challenges and risks remain. Located in central Baghdad 24 . Corporate borrowers will also benefit from the establishment of a syndicated lending market. However.

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Lebanon. • Private Iraqi banks will only provide credit to Iraqi companies. MerchantBridge is the most active private equity investor in Iraq. Today. when ministries were effectively shut for business. Bureaucracy is to blame and is unlikely to improve. oil & gas.48 million bpd in 2009. However. banking. Despite these attributes. all the ministries have continued to work without interruption. this is because several milestones must be achieved to invest in Iraq: • Invariably. low extraction costs and abundant reserves. an Iraqi registered company is required to channel investments. No one knows this better than MerchantBridge. Most of these require corporate guarantees from the shareholders. an ‘instruction’ from the Central Bank of Iraq requires the private Iraqi banks not to accept guarantees from foreign entities. Iraq is open for investments. Sectors ripe for investments MerchantBridge is currently increasing its investments in the sectors they regard as the leading areas for investment. Investing in Iraq requires both the public and private sector to be fully functional. the UAE and UK. This file must be presented by an Iraqi registered company. with current investments totalling over US$1. Amongst others. Despite this multitude of challenges. unless they are foreign banks lending in Iraq.Investment Foreign Investment in Iraq Case study: MerchantBridge Despite all the uncertainty concerning the appointment of the Prime Minister and the new government since March 2010. The Iraqi oil sector benefits from premium quality oil. subject to filing with the National Investment Commission (NIC). it takes up to five months to register a company with foreign shareholders. • Tax exemption and holidays are available.5 billion in debt & equity. the country ranked ninth among world producers at 2. MerchantBridge is an international private equity group with diverse interests operating from offices in Iraq. However. which has made several successful headline investments in Iraq in communications.1 billion barrels and given the limited exploration over the past two decades. this figure can increase by up to 215 billion barrels including probable and possible reserves. It has been present in Iraq since 2003 and its first assignment was to advise the Ministry of Industry and Minerals with its Programme of Lease of 35 State Owned Enterprises. these are: Oil & Gas Iraq boasts a recent 24% increase in proven reserves to 143. This is in stark contrast to the previous election time. 26 . manufacturing and very recently.Finance .

Country rank 1 2 3 4 5 6 7 8 9 Saudi Arabia Venezuela Iran Iraq Kuwait UAE Russian Federation Libya Kazakhstan Oil reserves billion barrels 264.21 2.79 3.83 37.5 TCF production rate.20 4.20 44.000 bpd) Targeted additions (1. on the other hand is under-developed.59 211. average demand in the second quarter of 2010 reached 9.441MW compared 10 Kuwait Source: British Petroleum.27 39. Active oilfields in Iraq 3. This has triggered the Ministry of Oil to consider establishing the Basrah Gas Company to capture the flared gas from four fields.0 million bpd by 2017.03 9.500 2. Power The power sector suffers from a supply demand mismatch.80 74.48 Targeted production (1.000 bpd) Source: Petroleum Contracts & Licencing Directorate As the oil majors start to develop the fields.31 143. approved local contractors shall be required to undertake all the services they require.60 2.000 2.22 3.48 2. MerchantBridge Research Finance .Investment 27 .71 7. as well as its refining capabilities.50 97. with almost half the daily production lost due to flaring.10 101. The gas platform.000 1. Furthermore. the increase in production shall prompt investments in Iraq’s storage and transportation infrastructure.500 1. the Government has scheduled two bidding rounds allowing foreign companies to develop Iraqi oilfields with ambitious targets of expanding production to circa 12.20 Since 2009.98 2. from drilling to pipes and life support.000 500 0 Total production to reach 12 million bpd by 2017 10 Nigeria Country rank 1 2 3 4 5 6 7 8 9 Russian Federation Saudi Arabia US Iran China Canada Mexico UAE Iraq Oil production million bpd 10.17 150.5 trillion cubic feet (TCF) per year within ten years from the current 0. It also targets the expansion of production to 2.

8 billion in June. Three further hotels are confirmed to come online within the next three years. They also have an acute need to upgrade their systems and the quality of their staff. is accepting bookings on its website from 15 December 2010 onwards. The banking system is highly liquid with total deposits amounting to US$33 billion in 2009. Rafidain and Rasheed Bank. Total outstanding lending amounted to US$5. the Rotana. Regardless of the Central Bank requirements.000MW in generation capacity. In 2010. of which seven have significant foreign ownership. The next few months should see some consolidation between the private sector banks. Additionally. there are 43 banks operating within the country. facilitating future investment and lending in the economy. growing from 15 companies at its re-launch in 2004. especially as the oil majors are establishing bases in the country. KIPCO. the installed capacity is insufficient at around 9. gas sector on its own.000MW.9% Acquirer Foreign Ownership % 70% 52% 85% 72% 75% 23% 35% Dar Es Salaam Investment Bank HSBC Bank of Baghdad Credit Bank of Iraq National Bank of Iraq Commercial Bank of Iraq Source: Ministry of Electricity Al Mansour Bank Dijla & Furat Bank KIPCO/Burgan Bank National Bank of Kuwait & IFC Capital Bank of Jordan Ahli United Bank Qatar National Bank Aayan Leasing Banking In total. the banks have an urgent need to upgrade their capital in order to increase their lending limits. Zawya Hospitality The National Investment Commission (NIC) estimates that up to US$145 billion in foreign investments is needed over the next five years within the hospitality industry. To meet domestic demand.1% Engineering procurement and construction 52. a fraction of the future investments envisaged in the oil & Source: USAID.9 trillion and 28 . the Central Bank set a minimum capital requirement for banks of IQD250 billion to be achieved within the next three years. the Central Bank took the initiative and reduced the required reserve ratio to 15% from 25% as well as its key interest rate to 6%. conceivably those without foreign partners and hence outside the following list: Target Independent power project 47. In August 2010.202MW. Iraq is currently utilising floating power stations and has offered for investment 16 power plants adding more than 10. sector assets remain controlled by the two state owned banks. Despite the large number of private banks.Finance .Investment to a supply of 6. They will expect similar levels of banking services to those they are accustomed to in their country of origin. The newest hotel in Erbil. Several hotels have already taken the initiative: the Sheraton in Baghdad opened on 19 September 2010. The birth of capital markets The ISX currently has 84 listed companies. the total market capitalisation and monthly turnover reached IQD2. Even if the country was to operate at full potential and eliminate the frequent outages.

Since 2008. the exchange launched its Electronic Trading System provided by Nasdaq-OMX.IQD16. respectively.6 billion. the banking sector’s combined market capitalisation represented more than 70% of total market capitalisation. With 45 licenced brokers. MerchantBridge Aug 2010 29 20 Finance . In early 2009.Investment . Historically. 140 120 Iraq Kuwait Dubai Qatar Abu Dhabi Muscat Bahrain Saudi Arabia 100 80 60 40 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008 Sep 2008 Oct 2008 Nov 2008 Dec 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Dec 2009 Jan 2010 Feb 2010 Mar 2010 Apr 2010 May 2010 Jun 2010 Jul 2010 Source: ISX. Of the various constituents of the ISX index. Trades are settled at T+1 for share transactions with a price change limit of 20% of the previous day’s price. the exchange operates five days a week for three hours daily. The exchange suspends companies from trading 15 days prior to any general assemblies. the ISX index outperformed several of its regional peers. the services index registered the most significant uptake.

At present. 30 Aug 2010 Apr 2008 Apr 2009 Apr 2010 0 . with a minimum participation of US$250. MerchantBridge For investors with a one to three year investment horizon. would trigger a rapid pick up in international investor appetite. The fund aims to identify investment opportunities based on solid financials. foreigners contribute to around 20% of the market. The new securities law anticipated privatisation of the telecoms sector and the mandatory increase in capital for the banking sector could drive dramatic capital market expansion.Finance .Investment 350 Banking Investments Industry Agriculture Insurance Services Hotels & Tourism ISX 300 250 200 150 100 50 Sep 2008 Dec 2008 Sep 2009 Mar 2008 May 2008 Aug 2008 Nov 2008 Mar 2009 May 2009 Aug 2009 Nov 2009 Dec 2009 Jan 2008 Feb 2008 Jun 2008 Jul 2008 Oct 2008 Jan 2009 Feb 2009 Jun 2009 Jul 2009 Oct 2009 Jan 2010 Feb 2010 Mar 2010 May 2010 Jun 2010 Jul 2010 Source: ISX. sufficient stock liquidity and strength of the management team. in 2010 MerchantBridge launched one of the few funds investing solely in the ISX. The market’s low correlation with global peers. the ISX portrays attractive valuation multiples. coupled with full foreign ownership. The Iraq Mesopotamia Fund is a US$ denominated open ended fund. To seize this opportunity.000.

whose credit rating is currently one of the worst in the world. is triggered. It is within the reach of Iraq. a corresponding increase in GDP and the credit environment. Correlatively. take time and Iraq is unlikely to see as fast a transformation as Qatar. to which the returns are inversely linked. “In early 2009. the exchange launched its Electronic Trading System provided by Nasdaq-OMX”. Investors must therefore take a long term view. following the increase in gas exploration. Qatar credit ratings went from strong (“A”) in 2002 to very strong (“AA”) recently.Perceptions versus realities For the handful of private equity investors who took the risk to establish themselves in Iraq in the early days after the fall of the previous regime. however. skyscrapers now dominate the city of Doha. experience from other countries reveal that. to see similar improvements as oil & gas revenues drive growth in the construction. While it is likely to remain so in the near future. when the general perception was that it was impossible to do business.Investment . real estate. As an example. 31 Finance . as the major oil companies start their operations. the reality is that the returns have been commensurate with the risks taken. It will. trade and hospitality sectors.

The Law gives the Diwan various powers to govern areas of licencing. reserving.a disastrous state of affairs for Iraq. AAIB Insurance Brokers Iraq’s insurance evolution Iraq’s insurance market has shown great resilience and ability to cope with unique pressures over the last two decades. 10 of June 2005 and various regulations made subsequently to the enactment of the legislation. legal and political environments. by identifying key trends in the industry: 32 . Most of these objectives behind the Law have been achieved and the Regulator has worked conscientiously to implement the Law and supporting regulations. AAIB Insurance Brokers operates on the basis that the local market should be involved whenever possible. when it was one of the strongest insurance markets in the Middle East. It clarifies the process for setting up an insurance company and so allows a greater degree of competition. Wider issues have also negatively impacted on market growth and insurer options. solvency. however. investments. However. We find that most of the big multinationals are opting for local placement and then 100% reinsured in the international markets. capitalisation. These are still evolving in Iraq. sanctions. a great deal of hard work has been done and progress made on many fronts. The insurance regulator (the Iraqi Insurance Diwan) assisted in bringing in the Law that regulates insurers operating in Iraq. intervention. It also needs suitable and supportive economic. These companies want to be compliant in advance of any change in the legislation. an insurance market requires investment in infrastructure. As an Iraqi registered and licenced international broker.Insurance Iraqi Insurance Market William Wakeham – Chief Executive Officer. Measuring performance There is little industry data available to see how the industry has fared over the last five years as it is not obligatory for all companies to make results publicly available. as the country rebuilds. which includes regulatory and market institutions. It is hoped that in the near future local placement of insured risks will be mandatory. All of this acts as a further brake on investment and business development. There is also a perception of widespread corruption in the country as well as the ongoing security concerns. there is no requirement for local placement of insured risks . under the 2005 regulation. The Law meets international standards and made important changes bringing in greater transparency. However. however. We can draw some conclusions. A major step forward was the introduction of the Insurance Business Regulation Act No. its insurance industry faces key challenges and requirements in order for it to return to its pre-1980 glory days. inspection. financial security and consumer protection. Regulatory environment To perform well and to grow. We advise our clients of the situation from a legal perspective as well as highlighting considerations such as potential changes to future legislation as well as the importance of contributing to the redevelopment of Iraq.Finance . While I write this article there continues to be a lack of a political consensus with no formation of a Government following the elections in March 2010. technical resources and business capacity. Ultimately the decision is down to the client. accounting and auditing. which has lost the country an awful lot of insurance premium when you look at the trillions of dollars which have been spent in the Rebuild Iraq effort.

in order to strengthen the ability of insurers to withstand financial and other events. construction and energy related projects.00 = IQD1. Insurance on these types of projects is invariably required contractually and by prudent managements. AAIB Insurance Brokers held dozens of meetings with insurers who were looking to write business and who were seeking information on the practicalities of doing business in Iraq. the international and regional markets will take a larger share of this business. The legal minimum capital requirements are as follows: IQD1 billion for companies transacting Reinsurance. IQD750 million for companies transacting both Life and General. Limited capitalisation and retention capacity prevent local insurers from taking lead positions on key accounts and stops them from Finance . It was clear that areas such as conventional business processes. If local insurers are unable to cater for these requirements. Note: US$1. National Insurance and Iraq Reinsurance that continue to play a central and hugely influential role in the market. An argument exists for further regulation to raise these requirements.50. This hampers the ability of insurers to absorb risk. Regional insurers such as Chartis and IGI are increasingly looking to write exposures in Iraq on the back of contracts signed by multinational companies with operations in Iraq or supplying equipment and goods to Iraq. The London Market is becoming more attracted and focused on Iraq. especially for the sizeable infrastructure. Iraq Insurance. 1 October 2010 Recently. They will need to be flexed to meet the needs of clients and to accommodate local players. as illustrated in the expanding list of registered insurance organisations on the Insurance Diwan website. as investors in large projects attempt to transfer risk. It is the state companies. a growing number of companies have entered the market.168. There is clearly a growing interest in Iraq and its potential. market capacity overall has increased but not markedly.Insurance 33 . At the General Arab Insurance Federation (GAIF) meeting held in March 2010 in Jordan. Capacity Capital requirements for insurers are still modest by international standards. However. IQD500 million for companies transacting General insurance. IQD750 million for companies transacting Life insurance.Competition Locally. Competition has increased from outside Iraq. approaches to underwriting and product design will need a degree of modification. these companies are small and have not really changed the status quo.

However. The lack of experience and exposure to the international market means there has unfortunately been little innovation in domestic product design or service delivery. Considering future prospects: supply and demand Iraq’s private sector will certainly not be the driver of Iraq’s insurance growth. providing cover for inpatient and day-patient hospital treatment. 34 . claims handlers and trainers from the Gulf Insurance Institute participated in the workshop. In today’s culture of Corporate Social Responsibility. Within the corporate sector. drilling facilities. field operations to overhaul. A lack of experience is one of the biggest factors holding back the industry. AAIB Insurance Brokers takes its role in helping to develop Iraq’s insurance industry very seriously. Insurance is still not properly understood and insurers do not enjoy a high degree of trust. both local and international. oilfield support and service companies. In response to this. Iraq’s insurance industry has never really recovered from the loss of high calibre people who left Iraq under the former regime to manage insurance companies in the Gulf and Europe. according to United Nations statistics. The recent awards of technical service contracts will result in major oil companies. with oil accounting for 95% of exports and 98% of government revenue. The growth of this sector will help deliver improvements in the wider economy and the Government is forging ahead with challenging expansion targets for oil production. the Regional Health Plan provides companies. including injury and illness resulting from acts of war. conditions and rates. vision and flexibility are the key elements to its continued success. The industry underpins the entire economy. Also. The way forward I am optimistic about the prospects for the Iraq insurance market. 23% of Iraqis are living below the income poverty line threshold of US$2. the non oil & gas industries are being stimulated and insurance is sometimes purchased for areas such as marine cargo and construction. terrorism and kidnap. evidence suggests that many Iraqi companies prefer to self insure.Finance . the opportunity to provide their local employees with the best possible employment benefits and practises. dictating the terms. Last year. This major initiative offers a unique opportunity for Iraq’s insurance industry. Indeed. refurbish and expand production. we actually launched the first dedicated medical insurance policy for local employees in Iraq and the Kurdistan Region. Iraq’s oil industry is where the insurance market can significantly contribute. We organise an annual two day workshop to which all Iraqi state owned and private insurance companies together with regulatory officials are invited. indicating that insurance is likely to remain a low priority. making huge investments in the country. In my mind approach. a number of Lloyd’s underwriters. refining and distribution capabilities. and earning potentially larger profits.Insurance “Companies in Iraq and those coming into Iraq must take the long term view”. In this regard. Huge sums will be spent establishing depots. which saw the sharing of best practice as well as addressing various issues and concerns.20 per day. Products The products supplied by local insurers are largely based in traditional wordings.

3. Working together is certainly a potent and powerful combination. Certainly for AAIB Insurance Brokers. It has engendered a lot of goodwill both in Lloyds and other international markets. The questions are how quickly and what are they prepared to invest in the local market? William Wakeham is the Founder and Chief Executive Officer of AAIB Insurance Brokers. The importance Iraqis place on relationships cannot be underestimated. Approach Establishing mutually beneficial relationships between local insurers and international brokers and insurers will play to the strengths of both parties. vision and flexibility are the key elements to its continued success”. emerging countries like Iraq but the country is turning a corner and there has been a gradual but noticeable improvement in the security situation in Iraq. In my mind approach. Iraqi insurers have distribution channels. brokers have access to a range of markets and can play a key facilitation. 35 Finance . 2.Insurance . regional and international insurers will come to work in Iraq. by working on the ground in Iraq over the last five years. I also believe that after many years in the wilderness. local market knowledge and valuable contacts in commercial and government networks. We have been feeding information on Iraq to those who are eager to know more for some time now.1. Vision Companies in Iraq and those coming into Iraq must take the long term view. Iraq’s insurance industry will gain more and more exposure to the international market. What’s more. The Iraqi insurance market continues to rebuild its reputation. pricing and risk management expertise. has proved resilient in the face of considerable challenges and is positioned to grow larger and stronger. we have been able to forge important relationships. it has a proud history. placement and servicing role and foreign insurers have the capacity and underwriting. if it can improve its integration and access to the international insurance market. Understandably there is apprehension about moving into high risk. In turn. a company specialising in high risk and non standard insurance cover for emerging countries. “I am optimistic about the prospects for the Iraq insurance market. Flexibility Based on the commendable tenacity and adaptability demonstrated by local insurers and their flexible approach in overcoming obstacles. I have no doubt that they will continue to flourish.

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The project to build Al-Rasheed City (previously Al-Rasheed camp) in Baghdad for US$21 billion This project includes building a complete city containing 65. Defaf Karbala City project for US$30 billion This includes building a complete city containing 40. sewerage systems. Coordination has been finalised with three Iraqi Banks (Rafedain. Signing the contract will be announced in the near future once all project details have been finalised. Housing projects had the lion’s share with 36%.000 for each 100 square metres. the picture is going to shift dramatically and the investment scene throughout Iraq will gain an upward trend. This mega project will stimulate other sectors in the economy throughout Iraq’s provinces. The NIC have now reached the final stages of signing contracts with some of the companies. resulted in an impressive improvement in the investment projects presented to the National and Provincial Investment Commissions. National Investment Commission 37 . Rasheed and Trade Bank of Iraq) to guarantee payments to investors after finishing the projects and sell it to NIC. tourism projects at 11% and malls at 6%. Contract award will be announced in the near future once all the details of the project have been finalised. water.000 housing units.Iraq’s golden investment opportunity The improvement of the security situation in 2009. Each housing unit will sell for a maximum of US$50.6 billion from US$2 billion in 2008. malls. famous for its religious tourism. hotels at 14%. power. industry projects came second with 28%. subject to increase. City of the Future project in Baghdad for US$12 billion This project includes building a complete city containing 35. with a variety of investment activities which will include. The value of the projects that have been granted investment licences in 2009 also increased by 230% reaching US$6. The remaining projects were in the agriculture. These include: Building 1 million housing units throughout Iraq for US$50 billion This includes 1 million housing units throughout Iraq with distribution is based on population size in each province.000 housing units as a first stage. This project will have a positive impact on Karbala province. transportation and communications sectors amongst others. As for launching the one million housing project within the upcoming period. This is shown by a 427% increase in the number of investment licences issued from 33 in 2008 to 174 in 2009. along with all required services at Mu’askar Al-Rasheed area as a first phase. communications.000 housing units as a first phase which can be increased later along the banks of Al-Razaza lake. the pilgrimage route and the strategic line for transporting crude oil. On the strategic investment level. the National Investment Commission (NIC) is negotiating with a number of investment companies to execute several strategic projects. commercial and entertainment centres.

Electricity projects The NIC in direct and ongoing coordination with the Ministry of Electricity and through a joint committee is leading the investment efforts in this sector. except: • Oil & gas extraction and production • Banking and insurance All investors have the right to repatriate capital brought into Iraq and any profits derived from that investment in convertible foreign currency. the picture is going to shift dramatically and the investment scene throughout Iraq will gain an upward trend”. Amara and Thi Qar. Karbala. The NIC is promoting investment in the units supplied by GE and the establishment of new power plants. in coordination with the Ministry of Oil. Tax Exemptions – With the approval of the NIC. Stock Exchange – Investors can trade in shares and bonds listed on the Iraq Stock Exchange (ISX) and create investment portfolios. These opportunities were presented in a conference designated for this purpose in June of 2010. allows foreigners to own land for housing developments. An amendment to the Investment Law passed in October 2009. excluding hotel projects. Guarantee – There shall be no seizure or nationalisation of a covered project. has also received several direct investment applications and joint venture proposals to establish refineries in the provinces of Kirkuk. a project is exempt from all taxes and fees for a period of ten years from the date of operation.National Investment Commission “As for launching the one million housing project within the upcoming period. Based on the technical and the implementation value of these projects they are estimated by the Ministry of Oil to total US$25 billion. The NIC. 38 . The NIC can extend the period to 15 years if Iraqi investment in the project is more than 50% of the initial investment. Currently.000MW for a gross value of US$30 billion. Overview of Iraq Investment Law (13) 2006 Opens all sectors and areas of investment to foreign and Iraqi investors. Insurance – Investors may insure projects with any licenced foreign or national insurance company. the NIC is focusing its efforts to invest the GE units in four select locations according to the fueling plan provided by the Ministry of Oil. Land – Investors may rent or lease land for the term of the project. depending on conditions. not to exceed 50 years. except by order of the courts. The NIC has received applications from investors to produce 27.

In addition. Some companies. This organisation. with the UK Trade & Investment 39 . it will take time for the situation to ‘normalise’. This will help bring the skills and technologies they need to succeed at home and increasingly in international markets too. We need to recognise that in a post conflict society such as Iraq. New democracy is still working to reform the inefficient and bureaucratic practices that had become ingrained in many of the ministries here: and every business needs to deal with one ministry or another. are doing good business in Iraq but they still face a number of hurdles such as securing a licence to operate. whilst the opportunities undoubtedly exist. Much of the economy is still dominated by the activities of a very large number of State Owned Enterprises. British ones among them. finding a reputable partner. so unfortunately do the obstacles. it’s the sheer scale of the opportunity that continues to exist here in Iraq from healthcare to education. former Head of UK Trade & Investment operations in Iraq reflects on his twelve months in Baghdad. Gary Soper. the small but growing private sector in Iraq is largely inexperienced in dealing with international business. The Iraqi Government has identified corruption as a major problem in all areas and has set up bodies and developed programmes to tackle it but these are in their early stages. The GoI has made huge efforts over the past 18 months in particular to encourage higher levels of Foreign Direct Investment (FDI). Many of the private sector medium sized Iraqi companies I have met. dealing with day to day difficulties of the poor communications infrastructure. which can be brought by the rather simpler extension of existing trading relationships. are eager to get into partnership arrangements with overseas companies. a huge amount of central Government of Iraq (GoI) funds remain unspent at the end of the year. registering a company. and from communications to life support services. which is a great pity in a country that still has around 23% of the population living below the poverty line. Potential investors are keen to see a more joined up approach across the ministries. especially where it can improve the delivery of its public services. that will continue to dominate the economy for many years to come. Whilst improvements have been made to the Government’s planning and budget execution processes. it is changing slowly. from construction to power. Whilst that is changing. Iraq still needs more investment in these sectors. But why should that be? There are some positive and not so positive reasons. However.Iraq: market of potential In this article. Business: the potential remains… It will likely be some while before Iraq loses its ‘market of potential’ label if for no other reason than its potential is unlikely to be fulfilled for some time yet. It is right that they should but I believe there needs to be a greater recognition of the wider benefits. On the positive side. from hydrocarbons to manufacturing. I was heartened to see the formation of the Iraq National Business Council (INBC) at the tail end of 2009. or simply getting around.

Many of the country’s leading businessmen are members. Whilst security related issues are never to be under stated in this market. representing companies operating both on and off shore. in others a private sector company. that obtaining a validated list from UK Trade & Investment is not a substitute for undertaking your own due diligence. It is not cheap but there are a number of excellent companies (many of whom are British) who can help in this regard and who offer a broad range of business facilitation services – some of whom will be advertisers in this publication. In my time here. one key to the success of any foreign business looking to operate in Iraq is being able to identify and work with a trustworthy local partner. One way to get this information would be to commission UK Trade & Investment’s Overseas Market Introduction Service (OMIS).. In many cases that partner may be a State Owned Enterprise.UK Trade & Investment “There are good opportunities for companies willing to invest time and money. and help reduce corruption.. It should be noted 40 . Hopefully with the INBC now in place we will see a valuable contribution to Iraq’s economic recovery in the coming months and years. the private sector is growing and indeed the UK Trade & Investment team is compiling an expanding list of what we believe could be suitable partners for British companies. for many companies this is simply another cost to be taken into consideration. So the message remains: there are good opportunities for companies willing to invest time and money in building up the contacts and getting a good understanding of the market. some things are worth the wait”. I have hardly mentioned security. increase foreign investment in Iraq. But some things are worth the wait…. there are specialist companies who are happy to undertake that work for you. aims to promote the Iraqi private sector. Source: World Bank/COSIT/KRSO Iraq Household Socio Economic Survey 2007 blessing of the Government. bespoke events and identification of potential business partners. But it’s unlikely to be a place where you’ll get a quick return on your investment. This can include arranging meetings with key contacts. Whilst company information here is not always easy to come by. which can provide market advise and support during a visit from the embassy. analysis of market entry strategies. As I have said.

ukti.gov. please visit www.Fresh ideas for those fresh out of ideas. For further information.uk . UK Trade & Investment is the government department that helps UK-based companies succeed in international markets. We assist overseas companies to bring high quality investment to the UK’s dynamic economy.

These are huge. providing for domestic power needs and for exports. As a result. 42 . Drilling contracts for the latter. Iraq’s Ministry of Oil is confident it can achieve an increase in the country’s crude production to 4. with a figure of US$20 billion reported for Rumaila alone. Some estimates conclude that the country’s oil output could rise to around 7 million bpd by 2015 and as much as 12 million bpd by 2017.Oil & Gas Oil bonanza will fuel engineering boom With the signing of a deal in May 2010. In addition. The plan envisages capturing the gas currently flared and exporting part of the volume in the form of liquefied petroleum gas. predicts that “Iraq will become a regional player in the gas sector and an exporter to the region and the world”. The focus for the moment is on potential oilfield investments. Hundreds of kilometres of pipelines as well as pumping stations need to be built from the oilfields to the coast. with a consortium comprising China National Offshore Oil Corporation and Turkish Petroleum for development of the Missan field in southeast Iraq. New York based consultant Ergo estimates that if all the deals from the licencing rounds proceed as planned. Royal Dutch Shell signed a heads of agreement with the state owned South Oil Company to form a joint venture to capture and sell natural gas. It is the first serious development of Iraq’s oil resources in several decades. At the same time. gas output has the potential to rise considerably. The contract’s reportedly valued at US$800 million.5 million barrels per day (bpd) by 2014 . the US’ Schlumberger and Weatherford. which has estimated reserves of 17 billion barrels. pumping stations and processing plants will also be required. the Government finalised negotiations for all 11 oilfield development licences it offered in an international bidding round in 2009. Pipelines. Work will lead to big increases in demand for equipment. Mounir Bouaziz. In 2008. floating oil terminals. Iraq could become the region’s petroleum sector leader. Extremely substantial supplies of water for reinjection into wells are also going to be required as well as power generation. Iraq Drilling Company and Turkish Petroleum International Company. a more than 80% increase on 2009. paved roads will need to be built in order to bring in vast amounts of equipment and supplies to remote areas. Iraq’s hydrocarbon vision is widening.a result that would represent a near doubling of existing production rates. particularly rigs. There will also be a growing demand to connect the new and expanded oilfield operations with export facilities. If all goes according to plan and this prediction is fulfilled. The implementation phase is now beginning for the technical service contracts awarded for the development of Iraq’s oilfields. As oil production increases. have been awarded to China’s Daging Oilfield Company. the value of the oil services sector in Iraq will increase to US$8 billion by 2014. Shell’s Vice President for New Business in the Middle East. have already been let by the development consortium comprising BP and China National Petroleum Company.

Petronas Estimated reserves 17 billion barrels West Qurna-2 12. procurement and construction work is opening up. In spite of uncertainties.7 billion barrels Halfaya 4. which adds to political and commercial risk. At present. In addition. Kogas. companies from around the world are seizing the moment to participate in a unique and unlikely to be repeated opportunity to develop the world’s greatest untapped proven hydrocarbon resources.58 billion barrels West Qurna-1 8. Petronas (Malaysia) ExxonMobil (US). TPAO (Turkey) Japex (Japan). The status of oil development contracts signed by the Kurdistan Regional Government with foreign oil companies also has to be clarified. a similar figure to Iran’s. China National Petroleum Corporation (CNPC) Lukoil (Russia).1 billion barrels Zubair 4 billion barrels Missan 2. Iraq’s oilfield development licences Oilfield Rumaila Developer British Petroleum. Occidental (US). Petronas Sonangol (Angola) Sonangol Gazprom (Russia). Not least. there are many difficulties still to overcome. Total (France) Eni (Italy).88 billion barrels Majnoon 12. Statoil (Norway) Royal Dutch Shell. as the country’s crude production is increased. there is no comprehensive and regulatory framework for the petroleum sector. Petronas. considerably more expansion is going to be required since the port is struggling to accommodate current export volumes. Other difficulties include inconsistent customs procedures and problems concerning visas for non-Iraqi skilled and non skilled workers. Kogas (South Korea) China National Offshore Oil Corporation.While US engineering company Foster Wheeler is building three pipelines and offshore moorings to serve the port terminal at Umm Qasr. While an array of engineering. difficult discussions are likely to lie ahead in agreeing a new oil production quota for Iraq within OPEC. This is a production level that has not been reached for years but seems likely to change within the near term. After decades of under utilisation and production in its oilfields. This legal vacuum makes the Government of the day the only guarantor of any deals struck with foreign companies. Some of these are procedural such as inadequate entry points for oil industry equipment and cargo. observers believe though that Iraq has a convincing argument to be allocated a much higher figure in future by the cartel. progress is also awaited on a proposed new oil law codifying the position of those firms participating in the sector. The last agreement was nearly 20 years ago when Iraq was allocated a quota of 3 million bpd. Royal Dutch Shell CNPC.5 billion barrels Gharraf Najmah Qayarah Badrah 1 billion barrels 850 million barrels 800 million barrels 50 million barrels 43 Oil & Gas .

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Depending on the political and security situation and the price of oil. The oil & gas business relies on engineers for everything from safety to profits and as a country expands its oil & gas business.6 billion a day business. Iraq needs to start planning to develop its people and skills to allow its oil & gas business expansion. as there is always a hope that ‘market forces’ will produce the required workforce. It is also worth noting that it is believed that Iraq has significant untapped natural gas resources. it must expand its workforce and ensure employees have the necessary skills.Training the next generation of oil & gas engineers Case study: Penspen INTRODUCTION 1. Hence.2 million bpd (2008). This article gives an outline of the strategy needed to achieve this development. There will also be a need for huge infrastructure investment: the World Bank estimates that at least US$1 billion each year needs to be invested in the oil industry. just to sustain current levels of production [5]. crude oil export revenues represent over 75% of GDP and 86% of government revenues in 2008. Unfortunately. as there is already a major skills crisis in the oil & gas industry and it is expected to worsen. to building the new infrastructures to accommodate the increased flows.1 million bpd being a government target [3]. These skills are needed for rehabilitation of existing infrastructure. Currently. There will be a need for men and women with the skills and abilities to drive Iraq forward into this oil & gas future.3 million bdp by 2035 [2]. An expansion in the industry will need an expansion in the workforce – both in terms of numbers and in terms of skill. Education & Training . this obvious need for people and skills is usually overlooked. At US$60 per barrel.1 Iraq and the oil & gas business The oil & gas business is big and will become bigger: the US Energy Information Administration (EIA) [1] predicts that world energy demand will grow by 49% between 2007 and 2035 with fossil fuels remaining the primary sources of energy. with 11. Iraq could be producing 8. this is a US$6.4% of the world’s total reserves and is producing 2.1 billion barrels. Politics and security are obvious challenges facing Iraq if she is to fully develop her vast petroleum resources. Iraq will have a key role in meeting this demand: Iraq currently has proven oil reserves of 143. according to the International Monetary Fund (IMF) [4]. Liquid petroleum demand will be 111 million barrels per day (bpd) by 2035. There is one other area that will need heavy investment – people. This will not happen [1]. which is 10.Penspen 45 .

Their average age is about 50 and their average retirement age is 55.Education & Training .Penspen 2 DEMAND FOR SKILLS IN THE INDUSTRY The oil & gas industry requires many differing skills and many of these skills can take decades to master. This ageing workforce will be called upon to help with any rebuilding or expansion of an oil & gas business and it will be called upon to assist in Iraq’s future but clearly. but the new. as more than half the experienced workforce will leave the industry. Brazil’s Tupi field is equal to all the reserves in Norway. to the new discoveries in places such as Canada. Hence. the global oil & gas industry is already Photo © PwC 46 . 2. much of this workforce will be retired as the demand increases. Why is the workforce so old? It is because of the ‘missing generation’ in the oil & gas industry. two major reasons are explained. the shift from the rapidly depleting older fields in the Middle East. “Faced with one of the biggest periods of expansion in its history. young generation attracted to the industry by the boom and huge salaries of the past ten years are still too young to replace the retirees. will create a global recruitment problem. 2. Replacement takes time: it takes about 3 years for new staff to become familiar with the industry and about a further ten years to gain a professional discipline [6]. these skills are disappearing and there are a number of reasons for this [1]. it is obvious that the sector faces a major skills crisis in the next five to ten years. This is because new oil & gas finds will require huge workforces.2 Increasing global demand for skills There is a skilled workforce in the oil & gas business. Increasingly. Reference 5 quotes. The workers who trained in the 1960s and 1970s are approaching retirement. for example. albeit ageing but they are in great demand.1 Ageing workforce in the industry [1] The oil & gas industry workforce is old: a ‘young’ worker is about 43 and an ‘old’ worker is 55. Below. Also. we need to replace the missing generation. plus introduce another generation to meet the increased demand for skills. Iraq will need to compete with these other regions. therefore.

being held back by its failure to attract, recruit and retain highly skilled staff. This is true from rig workers to senior scientists and engineers. Through short term thinking and a belief that required staff can be bought, the oil & gas industry has stretched its resource base to breaking point”.
The oil & gas industry will also face fierce competition from other industries; for example, the demand for skilled staff in the renewable energy sector has increased by 60% over the past two years [7]. 3 DEVELOPING SKILLS IN THE OIL & GAS BUSINESS There are two approaches (or combinations of these approaches) to supplying skills in the oil & gas business in Iraq: • ‘Buy-in’ skills via expatriates and foreign providers • Grow skills in-country Clearly, the first option is a short term fix with considerable risks, as this foreign workforce is already in great demand, ageing and

may not be attracted to countries such as Iraq while security is a problem. Hence, the only realistic, long term solution is to grow skills in-country.

3.1 Growing skills in-country State run companies in the Middle East and Asia have already identified the reliance on ‘ageing’ expatriate workers and the need to develop their own skills base. These countries and companies are now systematically employing nationals, with the intention of replacing the existing foreign and ageing workforce.

This means organisations have to make large numbers of new recruits ‘job ready’ quickly [6] but this influx of inexperienced, albeit able staff require training, mentoring, etc., by the older, existing expatriate workforce. These latter workers are overworked, short staffed and many may be looking forward to retirement; therefore, they are unlikely to be able to help.

‘Push’ by Middle East and Asian Countries to Replace the Expatriate Workforce with Nationals [6].

Nationals Expatriates

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31

33

35

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49

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It is not sufficient to ‘hope’ that skills can be grown in-country. There needs to be a strategy to guarantee skills development. 3.2 Oil & gas education and training – a new strategy Countries such as Iraq will need to rapidly produce staff with oil & gas skills but this will not be easy. Therefore, there needs to be a focused, aggressive, fast track strategy put in place to create and nurture these skills. This will require both use of the existing incountry learning centres and external providers. To ensure we have the necessary skills for the expansion of the Iraq oil & gas business we need to: • Increase industry involvement in universities and technical training colleges • Change to modular learning • Use the internet and distance learning • Change how we learn • Change industry mindsets 3.2.1 Universities and industry working together Industry and academic organisations must work together to bring both young and older engineers to attractive, tailored courses that satisfy skill shortages. Industry must take the lead and invest in

learning organisations willing and able to offer oil & gas engineering education. We need to be extremely careful in these learning initiatives – academic organisations may well try and put forward training packages that they already have, rather than bespoke courses and industry may not give the necessary technical leadership and effort. Without a common goal and resolve, all this learning will fail. Students also appreciate ‘hands on’ and industry involvement in courses [8] and it is unlikely that universities will be able to produce and deliver the intense, focused courses the industry now needs. There is a good example of the oil & gas industry working with universities in the UK: Newcastle University has set up two Masters programmes in oil & gas engineering topics [9]. UK companies such as Penspen Ltd., are taking a leading role in the development of these courses and are committed to their delivery and success [1]. It may be that the industry has to finance its own institutions to meet its education and training goals but rapid reviews of universities and colleges in Iraq will determine if new resources and facilities are needed and how much external assistance is required. The oil & gas industry and academia need to work together to produce and offer ‘modular learning’: modules related to current and future industry issues should be on offer. This is a major change for both academia and industry.

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The key factor in this changing approach and academia/industry partnerships, is resolve. 3.2.2 Modular learning Engineering is rapidly changing and engineers need to keep pace with all technical changes. This is not possible without life long learning. Additionally, all engineers need to be highly trained, to be able to move between jobs and countries. Structured modular training courses can provide this learning and these can complement or replace traditional qualifications such as degrees. Globalisation, fierce commercial competition and changing technologies require engineers to be quick to react. Similarly, engineers need to have easy and quick access to new knowledge. This is becoming increasingly important: staff no longer want to spend long periods away from home and workplace; they would rather embark on modular learning where they select suitable training packages from a comprehensive list and participate in that learning programme in their own time. Structured modular learning packages need to be offered to existing staff to allow continuous professional development. Traditional courses can still be undertaken but they will be spread over many years – focused, modular courses, will additionally allow a rapid but structured and systematic development of skills. 3.2.3 Harness the internet The internet offers unlimited facilities for learning - today’s students and existing staff expect modern learning. It is a ‘now’ generation: going to a library is time consuming and a chore. The internet and intranets can offer instant access to information and knowledge. This is an important point: the current baby boomers in the business have benevolent temperaments that want to transfer all their knowledge to younger staff but today’s younger generation has a ‘just in time, just as you need it’ outlook [1]. This may not be ideal but all learning packages must recognise this. 3.2.4 Distance learning (e-learning or Virtual Learning Environments) The security situation in Iraq currently deters visitors. Hence, it will be difficult to attract learning providers to the country in the short

term. This means in-country resources will need to be used extensively but distance learning can fill in any gaps.

Universities and colleges, both in Iraq and worldwide, need to offer distance learning packages for all their possible students. A flexible, distant learning approach is in line with the changing work place and the expectations of both the young and old today. It will appeal to both young engineers wishing to enter the oil & gas sector and existing staff in the industry. The internet offers the platform for both modular courses and distance learning. Distance learning formats can be easily produced, albeit at a price but the distinction between campus learning and distance learning is fast disappearing with the advent of ‘Virtual Learning Environments’ (VLE).

VLEs are internet based ‘platforms’ – software that organises all the information needed for distance learning. The platforms can be commercial and paid for or open access and free which allow staff and students to log on and access all course materials, bulletin boards, chat rooms, information updates, announcements, libraries, etc., in an easy user friendly web page format. There are a number of commercial VLEs [10]: we now have the technology to offer distance learning to the oil & gas industry. Now we need to: • Produce the learning modules • Produce experienced staff to supervise the modules and students • Place the modules on a suitable platform • Manage and maintain the learning Distance learning will be essential for all the oil & gas business but particularly in Iraq. Again, there needs to be a major investment in this area as very few distance learning packages exist and many will need to be newly developed. 3.2.5 Learning strategy The industry is entering a period of great technological challenges: the world’s new oil & gas reserves are in difficult (deepwater and

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It will be learning. Then. such as Iraq. The University will work as a private/public partnership between the IBBC and the Iraqi Ministry of Higher Education. They are a fraction of the price. Kazakhstan. training and transfer of technology and ‘know how’ into the Republic of Iraq. where she has received the full support of the Rector and the Vice-Rectors of the KBTU for the establishment of an IBBC University in Iraq. training and development. finance or technologies. has recently returned (2010) from a visit to Almaty. change. Baroness Nicholson of Winterbourne. Prime Minister Nouri al-Maliki and through him the National Investment Commission. The IBBC has as a core goal. This is an important point: our limitations in the oil & gas industry and the pipeline sector. develop and expand into new skills areas. These challenges require the industry and its staff to adapt. as it is when buying new IT systems. 50 . These challenges will not be simply solved by new university and college courses. human resources. experience. the mission to search out and implement increased cooperation in the fields of tertiary education and vocational training in all fields of business and industry. We all know that a raw engineering graduate is of little use in a company. 4 THE START OF A NEW ERA OF PARTNERSHIP IN EDUCATION IN IRAQ The Iraq Britain Business Council (IBBC) [11] is an organisation which facilitates business. over the next ten years will not be computers. It seeks to bring together Iraqi. laid the foundations for the establishment of an IBBC University. in order to achieve technological transfers and to expand the skills base at every level of Iraqi society. shale gas. they require training. in partnership with the Iraqi Ministry of Higher Education and with the University of Basrah. The IBBC University will be partially modelled on the successful establishment of the Kazakh British Technical University (KBTU) in Almaty. There is no excuse not to. Also. During recent months the IBBC has. This means the industry must invest and invest heavily. better value and attractive to all staff. 3. The solution rests in a coordinated approach to staff education. The IBBC’s Executive Chairman.Education & Training . The first campus will be initiated in Basrah University this academic year (2010-2011).6 Industry mindsets Developing skills rapidly is not a cheap exercise and learning should always be of the highest quality. British and international companies and public sector bodies by giving them a joint platform and identifying their mutual interests and common goals. The essential development steps for engineers. An engineer is ‘ready’ for unsupervised decision making after an intense period of on the job training and organised mentoring. when there is a clear gap to fill and a healthy flow of oil revenue to finance it. values and information: the successful companies will be investing in these. communications. or bespoke modular training courses. etc. trade & investment. or gleaming HQ buildings. ‘trained’ is not enough: an old army saying is ‘trained doesn’t mean ready’. Educate Relevant academic/trade qualifications The oil & gas industry needs to be as enthusiastic about developing and buying training and learning packages. Train Industry specific training Field experience & mentoring Mentor Ready Continuous professional development The above is a life long learning journey: there is no ‘finish’ with education and training.) requiring new technologies and new skills.Penspen arctic) environments and our existing reserves may be in regions of conflict. fully support IBBC in its goals.2. the increasing cost of conventional oil will take us into unconventional sources (oil sands.

11 April 2010. 9. 4. www. Anon. ‘International Energy Outlook 2010’. 7. Reference 595. Davidson.. Journal of Pipeline Engineering. Energy Information Administration.org. Z. Energy Information Administration (EIA).Staff Report. 2008. 2. www/eia. 51 Education & Training . V. US. Booz Allen Hamilton.11. 2006. Daly.2. UK. We are looking forward to establishing a fully fledged Technical University which will be combined with Business and Project Management related faculties”. ‘Extra Credit’.32-35. Higher Education.ac. A. N. www.gov. Hopkins. Staff Supplement’. Winters. Private communication. p. S. December 2008.webuildiraq. ‘Universities adapt to a shrinking world’.Baroness Nicholson has said: “The IBBC has already set up a range of IT and English language classes in Basrah University. UK. Republic of Iraq. Mechanical Engineering. “The internet and intranets can offer instant access to information and knowledge”. International Monetary Fund (IMF) Country Report No. Letter to G Raynes. 6. Energy World. July 2010. 08/383. ‘Iraq: Second Review Under the Stand By Arrangement and Financing Assurances Review .ncl. These skills will need to be rapidly developed and this will require a partnership between industry and academia.. 3.htm 10. Anon. One key element will be the skills of its people. which will be complemented by oil & gas sector related classes. Clark. ‘The challenge to staff renewable projects’.. Guildford ‘Labour and skills crisis could stall oil & gas boom’. The Guardian. 8. July/August 2008. Hoare.uk/marine/postgrad/taught/subsea/ and www. p. as led by Professor Phil Hopkins of Penspen Ltd. modular learning packages. ‘The Skills Crisis in the Pipeline Sector of the Oil & Gas Business’. The need is real and the start time is now.ncl.uk/marine/postgrad/taught/pipeline. Parry.Penspen . J.doe. 5 CONCLUSION The success and growth of the oil & gas industry in Iraq is dependent on many things. 5. Ministry of Oil.ac. P. Penspen Ltd. ‘Independent Statistics and Analysis – Iraq’. REFERENCES 1. P. 7 March 2006. p. distance learning and heavy financial investment. November 2007. Anon. 11.

integrity and maintenance to the oil and gas industry for pipelines. production.penspen.Pe n s p e n G r o u p Oil & Gas Lifecycle Services Penspen is a leading independent group of companies providing studies. Concept • Feasibility • Front End Engineering Design (FEED) • Detail Design • Project Management • Operations & Maintenance • Integrity Penspen Group Head Office 3 Water Lane Richmond upon Thames TW9 1TJ United Kingdom Tel: +44 (0) 20 8334 2700 Fax: +44 (0) 20 8334 2701 www. transportation and storage facilities both onshore and offshore worldwide. operations. engineering. 3rd Floor (Office Block) Abu Dhabi (PO Box 46562) United Arab Emirates Tel: +971 2 679 2526 Fax: +971 2 678 0913 .com Penspen International Limited Al Yasar Tower (Micco Building) Flat 303.

In keeping with this philosophy. oil and energy or security. CRS recognise that as the country rebuilds and improves its infrastructure. providing a full range of integrated business and security solutions. ‘We regard people as the single greatest source of competitive advantage. have conducted research with Iraqi businesses and the results are clear: they want to make their businesses more efficient and more capable of competing on a world stage. This may all sound obvious but how does it translate into tangible actions? Following the Invest Iraq conference in 2009. the National Investment Commission (NIC) and UK Trade & Investment (UKTI). comments. they are forced to do what they have always done’. ‘If Iraqi managers intend to Risk Management 53 . such as construction. In effect. which are unique to Baghdad and Iraq. They also want to attract foreign investors and to make it easier for them to operate and establish successful new businesses in Iraq. CRS’ Chief Executive says.A fresh perspective on growth in Iraq Case study: Consilium Risk Strategies Consilium Risk Strategies (CRS) is playing a pioneering role in the development of Iraq’s business infrastructure and is increasingly optimistic about the country. which encompasses four distinct programmes and deals with the four most common challenges faced by managers: Management Development Programmes: • Recruitment Skills Programme • Performance Management Programme • Coaching Skills Programme • Team Leadership Skills Programme CRS is also launching the CRS Commercial Skills for Managers initiative. Andy Edwards. CRS were the first Private Security Company to open a fully equipped business centre in the heart of Baghdad. which give stakeholders access to world class training and development. CRS has developed two Human Capital Development programmes. As Ian Hearne. This included. This type of approach has been warmly welcomed by the business community. organisations wishing to work there also need to address how they operate. to launch two new initiatives. legal services. This includes the CRS Management Development Initiative. Over the past eighteen months. As Ian Hearne explains. CRS has gained considerable commercial experience in Iraq and remains the premier ‘complete solution’ provider in its field. ‘The situation is slowly improving and is now dramatically better for business than when we first began’. Director. CRS is now combining this experience with its findings from the business community. CRS by contrast. Middle East & Asia for CRS Worldwide Inc. that they have become monolithic and have difficulty in responding to different situations. due diligence and consultancy and 4 star luxury accommodations. that is why we regard people as Human Capital and not simply as Human Resources’. These include: 1) Human Capital Development Is there sufficient internal resource to maximise a return on investment within Iraq’s new infrastructure? This question underpins the Human Capital Development (HCD) initiative and reflects a period in which investment in building skills is becoming as important as investment in building structures. office and meeting facilities. ‘Many organisations are so large and entrenched in the provision of one service. Andy Edwards continues.

‘CRS aims to seek.Risk Management compete with managers from the US. Some are now trying desperately to reinvent themselves as providers of ‘business services’ without actually understanding what it means or how to do it. visas Ian Hearne continues. customers. training. please contact: Ian Hearne . we will provide a full assisted business development service to those same incoming investors’. the UK. who simply do just that. Japan and Europe. ‘there are a number of prominent international Private Security Companies (PSC’s) operating in Iraq today. then they should be as well trained and supported as their competitors’.Director. provide security. In essence that is the main CRS differential and the thinking behind the ‘Assisted Proactive Business Development’ initiative’. through our relationships with affiliation bodies and commercial organisations based outside of Iraq. Supermarkets sell a lot of ingredients but they don’t show you how to bake a cake.com Web: www. embassies • Support Services – accompanied travel. suppliers.000 people. This key initiative provides programmes that have been tried and tested in more than 25 countries and successfully delivered to more than 20. Services included: • Business Consultancy – due diligence • Finance – international frontier investment facilities • Legal services • Connections and links to ministries • People – recruitment.com 54 . For more information regarding CRS and their services.hearne@crsworldwideinc. They recognise that simply providing business services it not enough. Middle East & Asia Email: ian. Thereafter. trade affiliations. meet and attract foreign investors into Iraq.crsworldwideinc. These include: Commercial Skills Programmes: • Marketing Skills Programme • Tele-selling Skills Programme • Selling Skills Programme • Presentation Skills Programme • Negotiation Skills Programme • Account Management Skills Programme 2) Assisted Proactive Business Development Initiative CRS also believe that organisations can do more to aid Iraq’s development. talent management • Security – including full life support (secure 4 star accommodations) • Contacts – translators. as Ian Hearne explains.

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US military combat forces began to withdraw from all major Iraqi cities including Baghdad. The US has allocated more than US$22 billion in training and equipping Iraq’s security forces since 2004. to help the Iraqi Government improve its police department and other civil agencies. can be a challenging experience for the uninitiated with apprehensions fuelled by a lack of clear and reliable advice. improvements are being made. while a bilateral agreement between Iraq and Washington calls for the withdrawal of the remaining 50.Risk Management Security is a challenging area but not insurmountable Travel to so many emerging market areas around the world. It represents a major challenge for Iraq. Most of the EIU’s respondents even expected the security situation for foreign executives and their employees to improve over the next two years. The last US combat mechanised units left in August 2010. One of the biggest changes in the campaign to subdue terrorism in Iraq over the last 14 months has seen Iraqi government forces taking over responsibility for an increasing amount of the country’s internal security. business goes on.000 security contractors in 2011. Other areas including the capital continue to strive towards a much more secure environment. according to the New York Times. The US State Department has also said it intends to hire a further 7. with 46% saying it would improve somewhat and 9% saying it would improve dramatically. In 2009. been more stable relative to the rest of Iraq in recent years. However. A recent survey of 367 executives by the Economist Intelligence Unit (EIU) found that 64% of executives questioned believed that it was still too dangerous to do business in Iraq at the present time. with insurgents exploiting the failure to reach a power sharing agreement according to the Oil and Electricity Minister. albeit at a level well below its potential. There has been plenty of adverse news coverage to add to the pessimism with a spate of serious incidents during 2010. Sectarian and terrorist violence continues. 56 . for which they are receiving substantial support and mentoring from members of the former coalition. as long as the advice of security professionals is heeded. While a majority judged that the ongoing violence means doing business in the country will remain off limits for some time. in spite of most foreign ministry advisory notices continuing to caution against travel to Iraq due to the unresolved security situation. not helped by the time taken to form a new government following elections. Iraq is no exception and nobody can pretend it is an easy market in which to pursue business.000 American military personnel by the end of 2011. for example. particularly in post-conflict regions. Hussain al-Shahristani. Though the security situation in Iraq is still tenuous. Erbil and Dahuk governorates in northern Iraq has. One clear message emerges that it is possible and practical for visitors to travel to Iraq and inside most of the country in relative safety. The security situation in Sulymaniyah. however. Perceptions can invoke extreme caution. though at levels lower than in previous years. 38% considered Iraq to be a country with significant opportunities for those willing to accept risks in the short term.

Risk Management 57 . This can range from organising itineraries in particular sectors as well as briefing insurance companies on what cover is advisable for a visitor.While the increase in Iraq’s security forces has allowed them to take on work previously done by the American army. intelligence analysis and operational coordination. Sound expert advice is essential for visitors knowing what is safe and reliable. they do understand how Iraqi streets and communities operate in a far more detailed and sensitive way. the effort is drawing on the assistance of more than 50 private security contractors currently working in Iraq for a variety of clients including foreign governments. Nevertheless. Some security firms offer a wider remit than just securing the physical safety of people and assets. It is not a question of having the nerve to visit but rather in spending time on detailed preparation. The work includes. providing bodyguards for diplomats and top commanders as well as guards for military bases. allowing business visitors in particular to operate with much more confidence and efficiency.7 square kilometre International Zone or in private secure compounds and villas as well as protected travel in the country. private industry and international organisations. contractors and subcontractors supporting US activities in Iraq. they are not a like for like replacement. Other services include arranging accommodation in Baghdad’s 7. which augurs well for long term community protection and development. Having the right intelligence allows outsiders to be attuned to such fault lines. Some 12% of the US$50 billion that the US Government is expending on reconstruction in Iraq goes on security services provided by private companies. For the time being. including static security. personal security details. military supply convoys. They provide an array of armed and unarmed security services.

This invariably increases the clients’ operational efficiency. Erinys has employed thousands of Iraqis across the tribal spectrum and provided training and advancement for many along the way. Erinys Iraq Ltd. secure accommodation and secure transport. Erinys has launched the Bridgehead range of services including: Visa processing. including specifically commissioned surveys and reports. alongside its commercial clients and the Government of Iraq. maximising the benefit to host nation stakeholders. • In recognition of the fact that Iraq presents commercial organisations with a critically important emerging market. assets and reputation. enabling its clients to focus on their core activities and achieve their business objectives in remote and difficult areas. Erinys has witnessed many momentous changes in Iraq.Risk Management Securing Iraq Case study: Erinys The Erinys mission is to create and maintain a safe and secure environment. Erinys has provided services to the Iraqi Ministry of Oil. require a robust level of situational understanding and a finely developed sensitivity to the country’s cultural heritage. As well as contracts with both Iraqi and US Governments. part of the Erinys Group of Companies. Erinys continues to develop its range of services to suit rapidly developing commercial requirements for organisations seeking to enter and succeed in Iraq. 58 . Erinys has thus developed a deep understanding for the culture and environment. enabling Erinys to better understand their clients’ service requirements. Erinys’ hallmark is its ability to manage large and complex projects in demanding circumstances. the US Government and a host of commercial organisations engaged in the reconstruction effort. with the minimum of fuss. which may not otherwise be immediately obvious to market entrants. During that time. In the process. Erinys has also successfully supported many commercial organisations engaged in Iraq’s post conflict reconstruction efforts. Two examples of these are: • The development of the suite of Enterprise Support Services that address differing requirements throughout project life cycles from project planning to demobilisation. Both can be readily obtained by seeking the advice and help of organisations who have gone before and learnt from their experiences. The Erinys Bridgehead service is complemented by the InSight intelligence service that provides a comprehensive range of market intelligence products. allowing them to embed security by design. This is achieved with minimum acceptable risk to people. It has continually adapted and refined both its business model and approach. fully engaging with the reconstruction and rehabilitation process. Erinys is able to package services using a range of experienced capable partners. has been in continuous operation across Iraq since May 2003. These are designed to enable clients’ preparation and market entry. The ‘single face to industry’ approach not only delivers a safe and secure environment but has the additional benefit of reducing clients’ administrative and management burdens and associated costs. Foreign commercial. government and non-governmental organisations wishing to achieve their objectives in a rapidly changing post conflict Iraq. Erinys’ enterprise support services and Bridgehead are not mutually exclusive but rather complementary. Success has been achieved by working hard to anticipate and understand their clients’ requirements in dynamic operating environments and implementing jointly agreed courses of action.

net Pre-deployment briefing.www. or Write to bridgehead@erinys. pioneering foothold: a position from which further advancement can be attained SECURING YOUR FUTURE SUCCESS IN IRAQ Erinys Bridgehead services enabling your critical business planning and market entry For further information or to book your Erinys Bridgehead services: Call: +971 (0)4 609 1141. preparation and training Business intelligence & information Travel.net [brij-hed] – noun. emergency response and evacuation Host Nation liaison Communications and information systems support Logistics support .erinys. visa and immigration services Secure accommodation and offices Close protection (static and mobile) Medical.

These companies must also be prepared to commit to building long term relationships in Iraq. Iraq has the potential to become the world’s 2nd biggest producer of crude oil. commercial & industrial developments 32. Oil revenues will enable the necessary economic diversification.05%. A challenge that has seemingly appealed more to the European. The successful development of the oil sector will increase overall business confidence in the Iraqi market and endow the Iraqi Government with the resources to implement its ambitious infrastructure redevelopment plans. 11 oilfield development licences have now been awarded with an estimated potential production output of 12 million bpd.8%. This was largely due to the successful oil licencing rounds. the stalemate in the leadership contest is doing little to support the significant improvements seen in the security situation over previous months but there is still a sense of optimism as to an agreement being reached and progress continued. These long term service contracts will provide a back bone for the Iraqi economy. large international companies are now participating in Iraq’s economic growth. supporting infrastructure must be developed. The Iraqi Government has always publicly stated the need for the participation of foreign experts and investors to achieve its objectives. Oil & gas currently attracts 46. things have moved on. Oil is without a doubt the key driver of development in Iraq but in order to deliver the ambitious oil production targets. This is followed by mixed residential. possible. job creation and investment required for long term economic sustainability in Iraq. In addition to the oil & gas sector.58 per barrel (as of 1 October 2010) indicating the huge potential wealth of the country. The improved security situation has also been the basis for positive economic forecasts and over the next five years economic growth is predicted to average 5. well behind the UAE and US. most large UK companies involved in infrastructure have perceived Iraq as too high risk. At the end of 2009. 60 . Significantly improved levels of security make travelling to Iraq a more attractive proposition for foreigners and the successful staging of the elections held in March 2010 gave a signal that things were improving. Crude oil prices currently stand at US$81. However. Apart from a handful of pioneering British companies.Infrastructure Infrastructure review Iraq is emerging from its struggles and seeking to diversify its economy in order to create long term economic opportunity. Both the international and the Iraqi private sector will play a catalytic role in the redevelopment of Iraq. There have been a number of positive changes that make the reality of rebuilding Iraqi infrastructure and achieving long term goals The important challenges still facing the country also represent opportunities for organisations that view the rewards as worthwhile and believe that they can adequately manage the risks. If you consider the baseline position and look at the progress made on the previous year. The economy has shown promising signs of stability with successful policies limiting inflation and acheiving high rates of annual growth.58% of all investment in Iraq (FDI 2009). Foreign Direct Investment (FDI) had increased by almost 241% on previous years. Asian and US nations than the British. The UK was fourth in terms of FDI in Iraq.

This prompted the then Minister of Electricity to step down and the Government to take the step of appointing Hussain alShahristani the Minister of Oil. the current production of electricity in Iraq still fails to meet basic needs. With a growing population and increasing economic wealth. included a broad range of sectors and a clearly ambitious target. a development that required significant change in approach and legislation. The ability of the Government to meet basic needs is a prerequisite for a successful state. as custodian of the MoE until further notice. With the change in leadership at the MoE there is no doubt that adjustments will be made to plans to meet the increasing demand for power in Iraq. putting forward six plants for redevelopment. This year we saw rioting in the streets of Basrah due to public frustration at what was perceived as the failure to improve the provision of electricity. Iraq is aware that it needs to almost double its current electricity production in order to meet demand and is taking steps towards achieving this objective. with electricity supply averaging less than 14 hours per day. the Ministry of Electricity (MoE) put in place programmes which resulted in significant increases in power generation. Again the response from international companies was significant. However. Again the response from international companies was significant”. demand is steadily increasing. Although it remains challenging there is now a mounting body of evidence that with the right approach it can be a manageable risk and a risk worth taking. Prior to 2009. Under the previous Minister there were plans to tender a further ten power projects this year. a challenging requirement not least due to the extraordinary costs of such an overhaul and the limited resources available. The package included targets of US$25 Infrastructure 61 . What that state looks like will be determined by the Iraqis but the unequivocal truth is that a successful state will only exist with significant infrastructure development. Iraq is already considering the use of nuclear power plants to meet this demand but will also need to give serious consideration to sustainable power generation options. This was part of an ongoing process to remove some of the financial constraints faced by the sector. Infrastructure projects are key to unlocking Iraq’s economic prosperity and are essential in achieving the stability of the country. The National Investment Commission’s US$70 billion infrastructure package announced in 2009. The MoE has developed a model which stimulates foreign investment in the sector through a buy back agreement.“This year the first round of power stations were tendered. The future plans for the industry are necessarily ambitious with the sector facing many challenges. putting forward six plants for redevelopment. This year the first round of power stations were tendered. The biggest challenge is the wide ranging need for new power plants. The MoE has also engaged in discussions with the World Bank and international financiers in an attempt to develop suitable financial models for investment. Some estimate that production doubled between 2003 and 2009.

Water is perhaps the most highly political and critical issue facing Iraq. Large scale housing projects have been agreed with UAE and South Korean backing.5 million housing units are required in the next five years alone. overcrowded and rundown. airports and railways. Housing is a major priority for Iraq which already faces an acute housing shortage.900 kilometres of track. Amendments to the Investment Law which relate specifically to land possession have increased the attractiveness of physical development projects in Iraq. In 2009.000 new housing units and supporting utility and community infrastructure. In the transport sector. Iraq has an extensive railway network. the Iraqi Government is employing diplomacy and looking at ways to increase efficiency. The exciting redevelopment of Sadr city is underway. The US$500 million scheme was tendered in 2009 and received a considerable response from international consortiums partnering with Iraqi firms. everything from the Baghdad Eye to Monorails.000 spectators and also includes the development of four hotels. is the focus of a reconstruction programme. The US$70 billion infrastructure package identified an investment target of US$5. The intention is to include 75. Iraq known as Mesopotamia in ancient times. Both the track and rolling stock are antiquated and in much need of modernisation. The efficiency of the railway network has a significant part to play in supporting the Iraq redevelopment plan. In order to solve the potential water shortage crises.539 billion for the development of water resources and sewerage networks in Iraq. A notoriously deprived area of Baghdad. Ten firms were shortlisted this year to complete the Phase 1 planning and design of the programme. between two rivers surely provides an indication of the importance of access to water for the future of Iraq. The Ministry of Water Resources was one of the first ministries to start the process of privatising its state owned companies.Infrastructure “A fascinating array of projects has come to life. the subsequent housing development plan assembled by the NIC Chairman. Concerns were raised over the supporting infrastructure that would make this scale of investment possible. A number of hotels and other leisure developments have sprung up. 62 .”. including the large and ambitious Basrah Sports Stadium project. with some 1. When completed. The project was eventually awarded to an Iraq/US consortium and construction began last year. the Ministry of Transport announced signing a Memorandum of Understanding with Deutsche Bahn for the redevelopment of the railways. 3. However. the sports city project will accommodate 65. meaning. billion for housing development and US$8 billion for transport. the focus has been given to plans for the development of major transport hubs comprising of ports. Dr Sami Al-Araji has been significantly progressed.

There has been much talk about the possible development of Baghdad International Airport (BIAP) and it is rumoured that agreements are in place for its development with international partners. Email: leanne. Iraq still possesses outstanding natural resources. led by Technital that eventually won the project is a stunning example of how long term engagement can be rewarded in Iraq. So are UK companies leaving it too late? They are put off by the lack of clarity and the speed at which things progress but are they missing the point? While other international companies are in Iraq helping with the streamlining process and helping the Iraqi government take these crucial steps. they claimed that this would be the only major port development in Iraq. The Monorail was also tendered this year. At the same time the Iraqi authorities were talking about the development of the port of Al Faw in addition to Umm Qasr. Admittedly. numerous projects have been announced but have not seen the light of day falling foul of challenging financial systems or other bureaucratic difficulties. The resolve of the Iraqi’s to bring on large scale change and engage with international investors and developers should be applauded. Tenders for projects such as the Baghdad Metro. they are developing valuable knowledge and relationships that will make it difficult for British companies to catch up later. Despite these challenges. To anyone looking independently at the situation it was immediately clear that Al Faw was about to see some major change. many companies are overcoming those challenges and doing business in Iraq. However. the US was firmly focused on the redevelopment of the port of Umm Qasr. 41 station metro. an ambitious project set to ease congestion in the city with a 2 line. Leanne Case is a consultant specialising in Economic Development and Business Strategy and has been helping companies in Iraq since 2009. a rich archaeological heritage and vast human resources – with such strong foundations Iraq has every reason to succeed. developing over 39 kilometres of track. An idea that has been lying dormant for some time suddenly came back to life. Iraq’s modern history of centralised government structures has endowed it with a limited private sector and many basic systems in developmental stages. This is a clear indication that with the right knowledge Iraq is a country worth exploring. However. A fascinating array of projects has come to life. There has been a marked change in approach at BIAP in 2010 and Etihad announced the addition of Baghdad to its international flight list. The project is ongoing and the design and planning stage is expected to be completed in 2011. everything from the Baghdad Eye to Monorails. Over the last year. International engagement demonstrates that there is a way to manage the risk. Even those companies that take steps to initiate active engagement in Iraq can find it difficult to navigate the challenging environment.In 2009. In 2009. Many of the perceived risks are misconceptions. The development of the aviation sector and major Iraqi airports form a fundamental part of the transport plan. tender announcements can sometimes be more of an expression of the abstract rather than a well developed and clearly defined project need. The development of Al Faw Port and the Italian consortium.com Infrastructure 63 .case@btinternet. The resolve of the Iraqi Government to initiate major development has been clearly demonstrated in 2010 with the steady stream of tender announcements. an Italian consortium were awarded the project. This can make it difficult for international companies to grasp the real demand for goods and services in Iraq.

24 hours of power a day for all of Iraq. fuel and communications are also essential services.000MW and has peaked at 7. the target set by the Iraq Reconstruction Management Office (IRMO).It’s more than just projects Case study: Parsons Brinckerhoff Parsons Brinckerhoff (PB) has been providing programme and project management services to rebuild. 60 transmission projects and seven nationwide Supervisory Control and Data Aquisition (SCADA) projects. Additional consideration needed to be given to the 64 .an independent body established by the US Government to provide management and oversight of the US$18.000MW.000MW and in December 2008. expand and modernise Iraq’s war torn electric power system since 2004. The task ahead The amount of reconstruction work taking place in Iraq at the time was unprecedented in this part of the world.Power Rebuilding a nation . In March 2004. During the reconstruction programme. provide 24 hours of power each day. In addition.6 billion throughout Iraq’s 18 governorates.6 billion Iraq Relief and Reconstruction Fund (IRRF).400MW. PB completed 68 major power plant projects. Although output today exceeds 6. PB was supporting the US Government’s Projects and Contracting Office (PCO) . economic and social tensions. Programme Director Jeff Larkin looks back over his team’s contributions. the Government soon realised that simply restoring systems to their previous state would not achieve its ultimate objective . PB had overseen the implementation of more than 600 electrical reconstruction projects worth over US$3. nothing effectively happens without power. stimulate the economic recovery of Iraq and if possible. The reconstruction programme wasn’t just about building and handing over projects. this is still far short of the estimated 13. PB was responsible for supplying equipment. 417 distribution projects. However. PB mobilised to Iraq to support the reconstruction effort and the development of the Iraq power system and found itself in the middle of political. critical spare parts and training totalling some US$150 million. The electrical sector team awarded over US$750 million worth of projects during the summer of 2006 alone. The entire reconstruction programme increased the power generation capacity in Iraq by over 2.000MW needed to achieve 24 hours of power per day.Utilities . By October 2008. Electricity is the life blood of modern day economies and although water. daily output finally exceeded 6. it also aimed to employ thousands of local workers.

provincial cities and towns outside of Baghdad. The shortages hamper the economy by restricting local industry and commerce. Today. was bigger than anyone realised. Tackling unique challenges At the height of the insurgent activity.6 billion is a large sum but with a shortfall of 7. along with other contractors in the region. US$3. Iraq continues to face chronic power shortages. Even now. found themselves in the unique position of being able to contribute to real time discussions on how the ME were going to manage the destruction that was taking place around them. even before the war. which had never benefited from 24 hours of power. the country is still hampered by rolling blackouts from governorate to governorate and many people only have access to as little as five hours of power each day. rolling blackouts.000MW it would take closer to US$20 billion to achieve 24 hours of power for all. Striving to maintain existing facilities. The magnitude of the problem facing Iraq’s electricity system before the reconstruction programme began. Utilities . an overloaded distribution network and demand increasing at an exponential rate. hindering communications and making efficient and effective business difficult. became situation reports on which towers and lines had been taken out of service the previous day. while trying to rehabilitate and expand the electrical generation assets and the transmission and distribution networks is a constant battle for the Ministry. daily meetings with the Ministry of Electricity (ME) to discuss developing new projects. PB.Power 65 . identify network expansion needs and determine which projects would provide maximum benefit.

develop solutions and review operational data and procedures. both 160MW steam turbines. Operations and maintenance In October 2007. average production figures increased by nearly 30% from the previous year.000 unit was synchronised to the grid in August 2007.Power Milestones In 2007. which accounted for 3. PB was responsible for seven man-camps across Iraq under the OMS project.000MW or nearly 50. PB provided a full time technical team of international and local staff on every site. That August. Units 5 and 6 at Doura. PB was awarded the follow on Operations & Maintenance and Sustainability (OMS) contract to provide support to seven major ME power plants. The average daily availability of these plants reached 65% as opposed to 45% from the previous year.nearly 44% of the total daily generation. These sites made up a significant segment of the ME generation capacity in thermal and gas turbine plants. PB stepped in to take over completion of the Doura Power Plant rehabilitation. became operational simultaneously. PB had built up its team to 240 staff in Iraq with 60 staff in the UK. US and Jordan supporting the programme. PB mobilised a team to commence site assessments and commissioning supervision for the Mussayib GT power plant and the first LM6. The OMS sites increased production to the point where they produced over 2. the US Government agreed to support the ME with the completion of the Mussayib Gas Turbine Power Plant. Across all seven sites. The programme provided mentoring to the ME plant managers and support to the ME plant staff on a daily basis to investigate problems and failures. 66 . both serving Baghdad for the first time in six years – a truly great achievement for Iraq and a rewarding one for the PB team. By the summer of 2007. The work involved support and assistance to the ME to enhance the skills needed to achieve increased reliability and production of electrical generation output.Utilities .000MWh daily .410MW of generation capacity. Also early in 2007.

militia activities and warfare is not easy but to their credit.Power 67 . The 20 year masterplan includes an updated long term load forecast study. a transmission plan and a distribution plan. a generation plan. As a follow on to this initial capacity development work. systems and government will take time to mend but ultimately it will be mended. These initiatives have included a survey and study of the private neighbourhood generation market in Baghdad. The completed masterplan addressed generation. The cultural change that the ME staff are going through is a long and arduous process. PB also worked with the Ministry to develop a regulatory law which will eventually establish the framework for an electricity regulator in Iraq.Iraq Tel: +1 817 665 6350 Email: jeff. a load forecast study to determine the current demand and to develop a load forecast for the next ten years. Iraq has a long and proud history of resourcefulness and creative problem solving and the whole reconstruction programme.” The Kurdistan Region The Kurdistan Region of Iraq has struggled to meet its own power demands for many years. there are large numbers of Iraqis within the ME who have done just that. a transmission plan and a distribution plan. The team in Erbil is currently supporting the Ministry in the management of more than 90 transmission projects worth over US$650 million and the development of a 300MW thermal power plant project. The study will deliver a least cost power system expansion plan for Iraq but more importantly. Jeff Larkin. Recognising what PB was able to accomplish for the Iraq Ministry of Electricity. This was the first such analytical and comprehensive load study undertaken since 2003 and not only produced a study but trained the Ministry’s load forecasting team in preparing such studies so that the work could continue on an annual basis. In its management role. it has also provided the training and capacity development to continue the planning process into the future. The damage caused by conflict and the oppression of the Iraqi people. transmission and distribution expansion plans in an integrated manner. Carrying out reconstruction efforts in the face of continued terrorism. the Iraq Transition and Assistance Office (ITAO) has undertaken a number of capacity development initiatives and PB has been supporting some of these. Country Manager . PB is providing programme and project management support services for project implementation. which PB is proud to have supported.“The 20 year masterplan includes an updated long term load forecast study. a generation plan.com Utilities . thereby ensuring that the proposed capital investments were part of a long term structured plan for the power sector infrastructure in KRG. PB has been working on a long term electricity masterplan for Iraq over the past year. Iraq Transition and Assistance Office (ITAO) To support the goals of transition. Look into the future PB is trying to help the Iraqis regain control of their country once again. working with the ME’s Planning and Studies Dept. has helped to give the Iraqi people a renewed focus on their path to stability. the Kurdistan Regional Government’s (KRG) Ministry of Electricity (MoE) asked PB to support the management of its region wide Electricity Network Rehabilitation Programme and develop an Electricity Masterplan for the Kurdistan Region to 2030 and so PB mobilised a team to Erbil in January 2009.larkin@pb-iraq.

pbworld. The rm provides strategic consulting. PB is contributing to the growth and re-development of the nation.com www.com Buildings and Infrastructure Environment Power and Water Transportation . Parsons Brinckerhoff (PB) is a leader in the development and operation of infrastructure to meet the needs of communities around the world. and program and construction management services across a full range of market sectors—power and water. engineering. We began working in Iraq in the 1950s and remained in-country through the 1980s. PB has opened of ces in Erbil and Baghdad to support our in-country presence and to ensure our clients of our commitment to the long-term future of Iraq.Delivering the future. we celebrate 125 years of serving our clients. Tel. In 2004 PB re-established itself in-country to support Iraqis as they re-build their nation—from transportation master plans to electricity networks. buildings and facilities. PB has 14. urban/community development and the environment. (VOIP): +1 817 665 6530 E-mail: memarketing@pbworld. planning. Through delivery of these projects for our clients. This year.000 people in 150 of ces around the world. transportation.

Leaks also allowed fresh water to become contaminated by foul surface water. alongside power. according to the Ministry of Water Resources. pumping stations and pipelines. pumping stations and pipes was neglected. Grim headlines on the state of Iraq’s water and sewerage infrastructure mean that improvements made over the last seven years are often overlooked. acute power shortages meant that mechanical treatment processes and pumps frequently stopped working.Turning the tide Case study: Mott MacDonald Though there is much still to do. It is one of the leading causes of child mortality in Iraq. a global consultancy firm that has been working on relief and reconstruction projects in southern Iraq since 2003. writes Gordon Turley. Mott MacDonald. Starting with work to restore basic services in the immediate aftermath of the second Iraq war. Today. Mott MacDonald is playing a key role across southern Iraq in identifying. management and construction supervision services. Many suburban areas were developed without adequate infrastructure. Utilities . This involves working closely with municipal authorities and utilities companies on forecasting demand and assessing their existing infrastructure to identify specific needs. One of the leaders in tackling the huge challenge is Mott MacDonald. communications. The United Nations reported more than 500. Clients include the international funding agencies in Iraq as well as Iraqi government departments. Leaking pipelines resulted in massive potable water losses. fuel. The international trade embargo placed on Iraq during the 1990s meant essential parts and equipment were unattainable. Mott MacDonald develops financial models and prepares business cases for work and presents them to funding organisations to assist in securing project finance. The legacy is that. improvements to the quality and reliability of the water supply have been achieved across southern Iraq. diarrhoea is rife. health and education projects. Maintenance and repair of existing treatment works. Mott MacDonald led repairs to water treatment works. prioritising and delivering projects to improve water supply and sanitation. Regional Director. Iraq’s water and wastewater sector suffered from three decades of acute under investment. The company then provides world class design. trunk sewers and wastewater treatment works.000 cases of acute diarrhoea in 2008. today 65% of Iraq’s 30 million population are without safe drinking water and 80% without adequate sewerage. In addition. As a result. Rivers and waterways – the principal sources of drinking water – are heavily contaminated with sewage.Water 69 . On their behalf.

Mott MacDonald conducted a condition survey. the detection programme revealed widespread illegal connection to the supply network – people had drilled into pipes to take off water for everything from domestic use to crop irrigation. as a result. Over 30. Leak repair and network strengthening is now supported by programmes of public education aimed at encouraging water 70 . making a major contribution to improving water quality. with water gushing from the pipe junction. Master planning was focused not just on present needs but the future demands imposed by projected population growth and movement. Mott MacDonald led projects are making a major difference to life for thousands of people across southern Iraq. Needs assessment and master planning In 2003. helping to reduce water losses by 30% and raising water pressures by 25%. Leakage repair in water and wastewater pipes significantly reduced cross contamination of potable water with sewage. Stemming leakage A major leak detection and repair programme was among the first investment priorities. In addition to leakage resulting from war damage and age related deterioration.000 major leaks were fixed. Many connections were extremely poor.Utilities . This was followed by a master planning exercise to assess water and sewerage requirements in cities. people were rigging up pumps on their supply pipelines. In some places demand was so great it was creating negative pressure in the trunk main and. Mott MacDonald designed repair works. because mains pressure was so poor. identifying immediate investment priorities and longer term targets. This exercise was geared to matching resources to demand. oversaw selection of contractors and provided project management. dirty water was being sucked through leak holes and contaminating the clean water supply. fish farming and providing ponds for water buffalo.Water While the scale of the challenge in improving the Iraqi water and wastewater sector remains immense. set out construction methodologies. towns and villages across southern Iraq. It was also found that.

A new treatment works was delivered at Az Zubayr.000 people. Equipment had ground to a halt. removing any need for pumping. inadequate maintenance. Simple but highly effective sand filters then remove impurities. At Al Hayaniah. secure and manage investment. Owners and operators are being assisted in developing tariff charges and revenue collection strategies. For both projects. Mott MacDonald provided both design and project management. not just reactively. Salinity is a common problem with groundwater across much of southern Iraq.“Mott MacDonald led projects are making a major difference to life for thousands of people across southern Iraq”. Staff need to be able to identify immediate and long term needs. or was being nursed along with improvised parts. three new water towers and service reservoirs – the largest water storage and distribution facility in southern Iraq – were commissioned in 2009. Mott MacDonald ordered spare parts and ensured they were distributed across southern Iraq to where they were required. In 2009. The technique has been tried. was operating inefficiently. develop and implement projects and tackle maintenance proactively. Eight such treatment plants have been built to date. water quality has been poor in villages across southern Iraq. These typically meet the demands of communities of up to 5. plan. Strengthening supply In parallel with the leakage campaign. tested and proven worldwide over centuries. plus a major overhaul of tanks. This includes state of the art Geographic Information System (GIS) mapping. valves and pumps. water information centres have been set up. involving replacement of filter media. lack of funding and the unavailability of parts or chemicals. The company has equipped water industry staff with the IT hardware and software needed to operate efficiently. enabling them to improve cost recovery. Basrah. As part of the initiative. To successfully deliver treatment works with ‘low mechanical content’. Capacity building Mott MacDonald has been supporting government agencies and utilities companies in building up the necessary skills to operate infrastructure sustainably. All have been built by Iraqi contractors employing a workforce from the local community. conservation and getting people to report leaks. Enabling repair and maintenance Over a decade of trade embargos meant that replacement parts for much essential equipment could not be obtained. supply and quality were boosted further by completion of a major refurbishment of the R-Zero water treatment facility. which enables Utilities . This is being overcome in part by Mott MacDonald’s innovative design of water treatment plants that function without relying heavily on mechanical systems and chemical processes.000 people.Water 71 . Improving resilience and reliability Due to damage. Mott MacDonald has sited them so that water will flow to them from rivers or canals under gravity. Mott MacDonald has added reverse osmosis water treatment systems to remove salt. In rural communities reliant on wells or pumped groundwater supplies. supplying a total of close to 250. 160 kilometres of new water trunk main pipeline has been laid and 400 kilometres of network reinforcement has been carried out across Basrah.

Contacts developed with local consultants.com 72 . acquisitions made by Mott MacDonald have secured the company further experience of working in Iraq. significant power generation and transmission improvements are needed. Mott MacDonald’s experience and network of contacts have been of major advantage. It has over 14. providing leading edge solutions for public and private sector clients across 12 core business sectors.Water infrastructure owners and operators to compile comprehensive records of asset location and condition in a user friendly way. In the last two decades. planners.turley@mottmac. Mott MacDonald is a registered company with the Iraqi Ministry of Commerce and its offices are staffed principally by Iraqi professionals. The present intermittent supply hinders efficiency in all sectors. water. telecommunications. bridges. sanitation. helping deliver projects in the power. municipal authorities and other clients have endured to this day. Email: gordon. buildings. Upcoming priorities Among the most pressing needs is a comprehensive masterplan for sewage treatment across Basrah. Since 2003. transport. Gordon Turley led Mott MacDonald’s re-establishment in Iraq in 2003 and remains the company’s Country Director. About Mott MacDonald Mott MacDonald is a US$2 billion consultancy of unrivalled diversity. GIS mapping is a powerful tool for planning and logging maintenance. In parallel with major water and wastewater infrastructure. contractors. The company has worked in Iraq since the late 1950s. airports and oil & gas sectors.000 staff and works in 140 countries. helping the company deliver effective emergency relief and reconstruction projects and to build up a team of over 150 staff in the country.Utilities .

GLOBAL SKILLS LOCAL EXPERTISE .

rail systems and ports. A New Zealand firm. Oilfield developments already agreed. Basrah Sports City Complex is under construction to host the Gulf Cup football competition at the end of 2012. Thi Qar and Karbala have announced projects for development of industrial areas. The focal point will be a 65. Thi Qar and Diyala provinces have all announced housing schemes this year. 74 . where firms having access to new building technologies and design will be able to contribute to the rebuilding and development of Iraq’s urban environment. has described Iraq as likely to be the biggest emerging market in the region for the next 20 years. not least in the treatment of water and its distribution. Qadissiya. sports. airports. will necessitate substantial investment in access roads. Apart from the priority to build millions of new homes and repair existing buildings. Najaf. storage and pumping stations. The company’s CEO.5 million housing units over the next ten years to meet necessary demand and not just in Baghdad and Erbil. Opportunities exist in every discipline and sector. For the private sector there is major work stretching ahead for decades.Construction & Civil Engineering Construction market will be region’s largest Iraq’s construction potential has no bounds. to include real estate.000 seater stadium surrounded by water and accessed by a bridge. Muthanna. The governorates of Anbar. Dean Michael. Basrah. which when fully developed could involve billions of dollars of investment. pipelines. leisure and entertainment areas. Atconz Real Estate Development. new sewerage systems. huge infrastructure renewal is required. “So much attention is given to hydrocarbon resources that it is easily overlooked that Iraq has considerable untapped solid mineral resources”.565 homes in Erbil.000 square metre tourist city near Kut. Opportunities for investment are not limited to housing. Wassit. is working on a US$100 million project known as New Azadi to build 1. Wassit Province Investment Commission and the Ministry of Tourism have announced plans for a US$1 billion development of a 500. There will be many prospects for pioneering innovation. Maysan. roads. workers’ accommodation. hotels. Much of the initial focus is on rolling out affordable housing projects. with the Government planning to build at least 3.

including two 500 room hotels. As a result. engineers as well as providers of building materials. Once rail and other transport links are in place. So it is rather a modern legal framework”. I think the fact that we have operated in the north for a few years made us comfortable to move to the south”. Production is due to start at the end of 2011 and could increase to 500. “Iraq is a country in which we can do business. Lafarge launched a US$200 million renovation of a cement production plant near Karbala. So much attention is given to hydrocarbon resources that it is easily overlooked that Iraq has considerable untapped solid mineral resources. the world’s largest cement maker. though foreign investors are awaiting the passage of national industry and consumer protection laws to further improve the environment. he says. It is paving the road with tax and capital incentives. the mill is due to produce 250. substantial opportunities lie ahead for the extraction of iron ore. when it acquired plants near Sulaymaniyah at Taluja and Bazian. practice facilities. According to ArcelorMittal director Christophe Cornier “There are many opportunities to assist in the development of the country. France’s Lafarge Ciments has seized the opportunity and is steadily consolidating its presence in the Iraqi market. The investment of between US$100 million and US$130 million is to be jointly subscribed by the two companies. working closely with our partner Dayen and the local government in northern Iraq”. bricks. which now produce 2. In March 2010. planners. In its initial phase. In May 2010. bitumen. four shopping malls and entertainment facilities.7 million tonnes a year respectively. The firm is also planning to refurbish a steel making plant in Basrah. Construction & Civil Engineering 75 . Marcel Cobuz says he expects that the modernisation of the 27 year old factory will see its output increase tenfold within two and half years.000 tonnes a year of rebars from locally sourced scrap. the giant Luxembourg based steel maker ArcelorMittal agreed a joint venture with Turkey’s Dayen Dis Ticaret to construct a new steel mill in Sulamaniyah. has been involved in Iraq since early 2008.The 360 acre site will also contain a smaller stadium. steel and cement. copper. opportunities are opening up across the construction sector for consultants. The company. dolomite and marble as well as for production of building materials including glass. a training complex and swimming pool among other facilities. helping to reduce the country’s need for imported materials. Cobuz believes that Iraq’s investment climate is improving.3 million and 2.000 tonnes a year. “The Investment Law of 2006 is a good step forward. developers. Implementation of Iraq’s many investment projects and plans may take time but activity is gathering momentum in infrastructure renewal and housing schemes. The company’s Chief Executive in Iraq. It is guaranteeing basic industrial rights. The masterplan also calls for a commercial district to be developed. which we aim to meet. There is great demand for steel produced for the local construction industry.

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With investment of close to US$200 million. The plant is producing Ordinary Portland Cement (OPC) used for different applications and High Early Strength Cement (HESC) developed for block manufacturing.000 employees and 2. BELIEFS & VALUES Values we believe in: Caring for Health and Safety: Of more than 3. In a joint venture with Faruk Group Holdings operating the Tasluja Cement Plant (rehabilitated state-owned under lease agreement) and the Bazian Cement Plant (the largest Greenfield in the cement industry in Iraq).000 production sites in Cement. Acting locally and leveraging global expertise: Partnering with communities: Listening to their needs and actively becoming involved in their education.5 million tons per annum.com . enhanced bulk cement for RMX customers and Sulphate Resistant Cement for major contractors involved in infrastructure works) to ensure desired quality and reliably contribute to the reconstruction of Iraq.000 employees in 78 countries. With its position in the Iraqi cement industry and investments to date. In 2010.3 million tons per annum. Lafarge Cement Iraq is the largest investor in the cement industry in Iraq. Aggregates. Lafarge is the largest non-oil industrial investor in the country. Improving delivery and distribution services. with an established business in the Kurdistan Region of Iraq. health and economic development.lafarge. www. Under rehabilitation with a target capacity of 1. from high quality Ordinary Portland Cement (Bulk Bagged) and High Early Strength Cement (Bulk Bagged). becoming the world leader in building materials.000 partners.8 million tons per annum. compliant with international and local standards. providing customers with a package of innovative products (Super Block for the Block Factories sector. TECHNOLOGY & PRODUCTION Tasluja Plant Bazian Plant Karbala Plant State of the art Greenfield plant and reliable investments with a capacity of more than 6 million tons annually. Lafarge has more than 2. Lafarge signed a joint venture with MerchantBridge and undertook the Rehabilitation and Lease of the Karbala Cement Plant in Karbala Province. Lafarge Innovation: was established in France 1883. Concrete & Gypsum production businesses.OPC and High Sulphate Resistant Cement (SRC). the capacity increased from 200. Active in new product development.With 78. Production capacity of 2. Producing Ordinary Portland Cement . suppliers and distributors. offering reliable technical advice to the customer.000 tons to 2.

is a UK engineering company set up to establish an active presence in Iraq.Builds on Iraq experience Case study: Harlow International Harlow International. supporting clients through the provision of contracting services from facilities in the International Zone. In addition. Harlow has brought together a group of international companies. The headquarters of Harlow is located within the International Zone and encompasses a self sufficient facility enabling them to provide the necessary secure business infrastructure required to operate in Iraq. established distributor networks. To deliver the business support expected from a quality company. cultural understanding. having successfully carried out a number of key contracts during a difficult and testing operating period. More significantly. Harlow has been awarded a US$56 million Engineering. each member of Harlow staff has extensive experience of working in the Middle East and Iraq. Basrah.Construction & Civil Engineering Harlow International . distribution channels. with a number of engineers providing a direct service to Harlow’s existing and current projects. carrying out infrastructure. Harlow has the legacy assets critical to that success. The company has become a respected member of the Iraqi and international business community. Procurement and Construction (EPC) contract to refurbish the prestigious Al Rasheed hotel in Baghdad. Strength in cooperation Harlow has the credibility and the capability to deliver successful projects in chosen market sectors within Iraq. Our international partner companies include: Sinopec in China. STX in Korea. As a team we are able to: • Make more effective management decisions through wider knowledge and experience of techniques and processes from a range of organisations • Manage change and uncertainty through an understanding of best practice • Understand why and how systems and processes are applied in a variety of projects • Identify relevant learning points and decide how to use them in their own situation Building on excellence While many teams offer strength in individual services. specifically chosen to provide a one-stop-shop of engineering services. The strength of the partner team lies in the ability to meet project requirements both locally and regionally within Iraq. This contract is a fast track project to bring the hotel standard to a 5 star rating ready to receive the Arab Nations Summit in March 2011. few have the resources and global perspective to provide excellence across a wide range of disciplines. project management. oil & gas and power projects for clients. Baghdad and the Command Operating Base. With a globally diverse but complementary set 78 . market knowledge. Currently. namely country experience. scalability and liquidity. The companies are chosen to add a significant depth of experience and strength to the established engineering capabilities of Harlow. Honeywell and UOP in the US along with MCE plc and KPPS in the UK.

The quality plan includes details of procedures and practices that will be implemented during project execution and integrates the final operational performance of plant and equipment inspection and testing. Harlow directs the strengths of partner organisations towards the different market and project requirements. This ensures continuous improvement within the overall business. Integrating resources to meet client needs Over many years the company has learned that the most robust ideas come from sharing different perspectives. Quality based operations Harlow is committed to continuous improvement and as such. resulting in greater efficiency and strengthened capabilities when responding to clients’ needs and expectations. alongside a deep awareness and understanding of local business values. products and installation of equipment conform to client specifications. specifications and applicable codes and standards. this ensures full compliance with approved drawings. Harlow’s defined procedures and practices comply with the contractual requirements for the following activities: • On site inspections of delivered material and equipment to ensure product conformance to the specification requirements • Assessment of subcontractors and suppliers • Day to day control and monitoring of engineering processes that directly affect quality. Typically. By integrating tools. Partner companies are given scope to exercise flair and judgement but Harlow ensures that their collective skills are utilised to benefit all clients and all projects. techniques and the vast experience of our partners from different disciplines and areas. Harlow establishes particular Quality Assurance Plans for each project ensuring that design. construction process. with a common structure based on standard management processes and supplemented by a series of supporting procedures specific to each operating division. As a consequence. team culture has become an essential ingredient of the company’s success. When implemented in conjunction with the overall Quality Assurance Programme. Within this approach. Harlow is able to provide innovative solutions for the most demanding of problems and environments.of services. ensuring that processes are carried out in compliance with approved drawings and contract documents/ specification Construction & Civil Engineering 79 . Harlow can deliver sustainable solutions to meet the aspirations of clients and their projects throughout Iraq. the company’s Quality Management System is based on the requirements contained in ISO 9000:2000.

ventilation and air conditioning • Mechanical systems • Power plants engineering • Electrical systems • Process piping and plumbing • Control systems . As a general contractor. The company internally manages all stages of the project to successful completion. Harlow can deliver sustainable solutions to meet the aspirations of clients and their projects throughout Iraq”. Harlow organises a given project by scope and speciality then engages the appropriate experienced manpower in the following areas: • Site work • Project resource logistics . equipment and system installation and commissioning • Finishing work • Landscaping • Harlow implements turnkey.manpower and plant/ equipment delivery • Foundations/concrete • Building erection • Heating. the following services are provided: • Feasibility analysis • Cost monitoring and control • Schedule development and control • Subcontractor management • Field engineering and site management • Quantity surveying • Quality management system • Safety assurance • Project accounting • Change management • Shop drawings and review of submittals • In summary Harlow in-country credentials include: • Extensive experience in Iraq • Established. • Review of shop drawings and material submittals • Off site inspections at the point of manufacture and supply of various products • Field testing and sampling as required by the project specifications or applicable building codes • Maintenance of daily records of as-built drawings • Maintenance of daily records of all Quality Assurance activities Harlow expertise Experience tells us that the traditional design-bid-build approach is the most popular delivery method for construction projects in Iraq. As such. Harlow commits to clients in a partnership approach and simplifies coordination of project information streams between the design and construction. design and build contracts where the company assumes responsibility and accountability for the delivery of complete projects.process plant and buildings • Oil & gas services • Fire detection and protection safety systems • Plant. secure bases in both Baghdad and Basrah • Direct experience in working in hostile environments • Experience in delivering successful projects in difficult operating circumstances • established supply chains for materials and labour • International partner companies • In-house security on all projects • Proven track record on major projects • 80 .Construction & Civil Engineering “With a globally diverse but complementary set of services.

Harlow International has the proven expertise and credibility to deliver success. market knowledge. Our established distributor network add significantly to the company’s ability to fulfil all project requirements either locally or regionally within Iraq. In conjunction with its partners and associates.HARLOW INTERNATIONAL Harlow International is an established company specialising in managing and delivering complex building and infrastructure projects in challenging environments.com . Our services include: • Site work • Foundations/Concrete • Building erection • • Heating. ventilation and air conditioning • Mechanical systems • • Power plants engineering • Electrical systems • Plumbing and pipework • • Fire detection and protection • Control systems • Oil & gas services • • System installation • Finishing work • Landscaping • Specialities • Iraq Tel: +964 790 1947 690 UK Tel: +44 (0) 777 5588 815 Email: info@harlowinternational. specifically within Iraq. We are confident in being able to deliver this success because of our country experience. and crucially because of our understanding and appreciation of local culture.

Ports Ports improvement is vital Iraq is under pressure to increase its ports’ capacity with much of the country’s imports and exports now passing through the ports of Turkey. which at present is Iraq’s only deep sea marine terminal. After years of neglect and lack of investment. they have been awarded the long term concession to build and operate berths 10 and 11. Around 80% of Iraq’s imports and the bulk of its oil exports flow through the port. Moreover. Jordan. where they are installing container handling equipment and gradually ramping up operations over the coming months. The most ambitious aim is to develop a new port at Al Faw. enhance facilities and manage berths. officials believe that Iraq could eventually compete with the Suez Canal for the transit of cargo between Asia and Europe. which is located at the southern end of the Shatt al-Arab waterway. improvements are well underway to enhance the port’s handling capacity with a number of foreign specialist companies brought in to rehabilitate. These operators include the French shipping group CMA CGM and Sharjah based port operator Gulftainer. providing up to 100 berths and able to handle the world’s largest container vessels. Modernisation and expansion of the country’s port infrastructure are vital to help provide for the growing imports of materials and equipment for economic development as well as to allow for a substantial increase in oil exports. Syria and Kuwait and then transported overland into Iraq. As a result. The project may take decades to fully evolve but could change global trade patterns when linked with the country’s ambitious railway developments. The Gulftainer Group is fully engaged in the country. Italy’s Impregilo is leading a consortium to carry out design work for the planned new port. which could involve investment of up to US$6 billion. For the immediate future the focus is on Umm Qasr. transport and logistics links so necessary to assist in efficient redevelopment – right the way from Zakho and Erbil in the North to Umm Qasr in the South (in all these places they have offices/operations).Transport . Everyone including the Iraqi Government is acutely aware that Umm Qasr needs to be in a position to cope with the rapidly increasing volumes – and this is why Gulftainer have been awarded the concession to operate the existing all purpose berth 8. which will be named the Iraq Container Terminal (ICT) – this will 82 . aiming to provide the port. There is no doubt that the whole of Iraq needs the investment and reconstruction activity that is already beginning to gather considerable momentum.

a single block of freight forwarding units and a truck park. a cargo warehouse with integrated office space. particularly those in oil & gas. The ICT will be operational in 2011. In addition to the terminal facilities in Umm Qasr. It is the largest concession awarded by the Iraq Ports Authority and the Iraq Ministry of Transport. to service their activities.000 square metres and will eventually contain an aircraft apron capable of supporting every type of cargo aircraft. Gulftainer are investing in logistics cities/Inland Container Depots (ICDs) throughout Iraq. The site covers 250. a domestic and international cargo warehouse. awarded to GulfMar Ltd (a collaboration between Gulftainer and Sulaymaniyah based Azmar Air). freight forwarding units.be a dedicated container terminal. will provide a dedicated cargo facility for carriers flying into the Kurdistan Region to support the huge growth in the region. to allow all customers. able to handle larger ships in a more efficient way than the all purpose berths.Ports 83 . The tender process is expected to be completed in a very short space of time so that work can begin on the apron and taxiway construction. providing storage and distribution facilities linked with transport opportunities. including the expanding oil & gas industries and major investment projects. truck parks and office space for rent by aviation support companies and freight carriers. Construction is planned over several phases with phase 1 providing an aircraft apron capable of parking three B747 freighter variants. Work started on the site on 19 May 2010. both in the south near Basrah and in the Kurdistan Region. Work has also now begun on the Sulaymaniyah Cargo Village Project at Sulaymaniyah International Airport and the project. Transport .

enhances the competitive advantage of a project.kbr. construction and project management. Business Development Director.com www. facility operation and maintenance and infrastructure development. contractors and supporting entities. The overview we have of an entire project. “KBR is a world leader in programme and project management in challenging and austere environments. WORLD CLASS CAPABILITIES As one of the world's premiere engineering. In Iraq we have developed a robust and fully integrated service model that is tailored to contract with any number of local. on time. time and performance in a fully coordinated manner. together with our constant focus on quality and health and safety. logistics. Working side by side with the petroleum. We can provide a range of solutions from renting secure accommodation in Basrah to the operation and maintenance of facilities and bases across an entire region. During the programme we manage a wide range of activities and contractors including security. This. operating. energy and infrastructure sectors in Iraq. quality. infrastructure and logistics support. Davey is responsible for supporting the petroleum. INTEGRATED APPROACH We have an integrated approach which adheres to a simple project delivery strategy: innovation. Davey Kirk. Iraq. energy and infrastructure sectors in and around Basrah. we deliver fully integrated construction. efficiency of delivery and depth of support provides significant savings over the full lifecycle of our projects”.regardless of the size or complexity of the programme. training. transactional support. FACILITATION ON THE GROUND We have extensive experience and credibility in Iraq and strive to make the running of your operation as easy as possible. There is real value and coherence in this approach as it addresses all of our client’s requirements on cost. procurement and construction companies. regional and international suppliers.com .We deliver HELPING TO BUILD TOMORROW’S IRAQ TODAY KBR has been playing a significant role in the rebuilding of Iraq since 2001. KBR offers a suite of world class capabilities spanning the entire lifecycle of a project from design and engineering to supply chain management. To discuss you requirements in Iraq contact Davey Kirk: Tel: +971 56 68 38167 Email: davey. maintenance and essential life support services. facility operation and maintenance and life support services. on budget .kirk@kbr. KBR SUSTAINABLE SOLUTIONS We work in partnership with all stakeholders involved in a project to develop coherent and sustainable solutions that balance infrastructure investment with local requirements.

substantial investment was made during the 1970s and 1980s. with both passenger and freight traffic reinstated between the north and south of the country. While the First World War saw this crumble into decay and ended big projects. theft and sabotage. ravaged by war. that will see connections from the Gulf to Europe through Syria and Transport . deferred maintenance.000 employees. However. Some US$60 billion worth of rail projects have been outlined. Iraq’s railway system. Iran and beyond.Railways 85 . This resulted in a system of almost 2. barely 5% of its locomotives serviceable and staff unpaid the system was a sad epitaph to Iraq’s wasted decades. track maintenance. Iraqi Republic Railways has seen substantial investment made in new telecommunications. In particular.000 kilometres of track. staff training as well as refurbishment of rolling stock and locomotives. further lines were built during the twentieth century. international sanctions. With its signalling defunct. auxiliary power systems. A new phase is now planned that will expand and transform the network into one of the Middle East’s most important railway systems with links to Turkey. 300 locomotives and extensive rolling stock served by some 12. A fully operational railway system has been recognised by all as a key component of Iraq’s economic recovery and future development.Future of track in Iraq Iraq’s railway story had a glittering start more than 100 years ago when Imperial German engineers built a trunk line stretching from Istanbul through to Baghdad and into Arabia. computerisation. had ground to a virtual stop by 2003. Putting the system back into service has been one of the country’s success stories since 2003.

Much faster and efficient transit times will also permit containers to be transported from the Gulf to Europe overland. “A new phase is now planned that will expand and transform the network into one of the Middle East’s most important railway systems with links to Turkey.Railways Turkey. Erbil and Mosul. Karbala and Najaf will be connected by rail with phosphate mines in Akashat. One of the new lines is intended to link the capital with Baquba. The ambitious plans for a circular network and the eventual implementation of metro and monorail projects will see Baghdad transformed into a much more liveable urban environment as the capital’s and country’s heavy goods traffic is redirected from road to rail. as well as into Pakistan via the Iranian rail network. inland container depots as well as twin track high speed lines. Iran and beyond”. forming links between established and new communities through Iraq’s heartland. This year has already witnessed the start of services between Mosul and Gaziantep in Turkey. The strategy envisages extensive new track. while another line is planned to link Musaib to Samawah via Karbala and Najaf. Kirkuk. 86 .Transport . Al Kut and Al Amarah to Basrah. After a long dormant period those ambitions are being rekindled. These will connect Salahaddin province in the north through Baghdad. A new line will also link the planned new Basrah Grand Port at Al Faw with the national rail network. Plans for a 284 kilometre loop line to serve Baghdad include a new central passenger station as well as a new station on the east side of the city. rail bridges across the Tigris and Diyala rivers. Iraq’s railway story started with big aspirations.

As part of its commitment to the brand. Sardar Group covers the diversified needs of the Iraqi market. has expanded into Iraq. which started in 1980 and was envisioned in 2005 to utilise the synergies of the existing operations. “We are already present in 19 markets in the Middle East and North Africa region and now with Sardar Group. as the exclusive representative of the Land Rover brand. Speaking at the motor show in Erbil in January 2010. this venture marks the SUV manufacturer’s first official entry in Iraq. Sardar Trading Agencies is a member of Sardar Group. The Group’s automotive business to date is one of the leading suppliers of new vehicles in Iraq. Robin continued “We are bringing a strong Land Rover products portfolio to the market and the motor show and we expect the vehicles to be well received by consumers here just as they have been across the globe and the Middle East region”. The demand of its customers for Transport . Whilst the appointment of Sardar Trading Agencies will heighten Land Rover’s market presence with premium sales and after service. it will also tap into the potential of luxury car sales in the Kurdistan Region and the rest of Iraq. a name which is synonymous with trust and customer care. two branches in Jordan. Sardar Group became the most valued name in its field. where a substantial number of vehicles and equipment have been supplied throughout Iraq. a state of the art showroom in Dubai and one on the border of Syria-Jordan Free Zone. With ten showrooms and three aftersales service centres inside Iraq. a premium SUV manufacturer. we will be better poised to service the northern region of Iraq“. The 2. other such facilities are expected to be inaugurated within 2011 in different Iraqi cities. Land Rover. covering various business activities and to diversify these activities in a systematic and streamlined manner. The company appointed Sardar Trading Agencies Ltd. commented Robin Colgan. Sardar Trading Agencies has invested in a new state of the art facility for Land Rover vehicles.Automotives 87 .Automotives Case study: Sardar Trading Agencies Ltd. Managing Director of Jaguar Land Rover.700 square metre after sales centre is located on Gulan Street in the city of Erbil and marks the first integrated facilities that showcase the Land Rover and Range Rover vehicles and provide after sales support for existing fleets as well as new sales. not only in the local Iraqi market but also across the region.400 square metre showroom and 1. With 30 years of experience in the automotive industry. Middle East and North Africa.

Automotives fully fledged vehicle sales. accessories. 88 . ranging from spare parts.Transport . the automotive business group is committed to support its existing and future customers. Volvo Construction Equipment. Sardar H. we aim to provide customers with the most complete automotive product portfolio in the industry” said the Group’s Chairman. Hasan. product knowledge and customer focus are second to none. With a great desire for presence in every area of the automotive sector. Sardar Group is also the official dealer for Jaguar. Mr. service and spare parts facilities has led the group to expand its operations to now include these disciplines in various cities all under one roof. “Through these businesses. Mitsuoka and Rida in Iraq. Nissan. Sardar Group’s most valued asset are the professional teams whose passion for the automotive industry. batteries. in addition to the various facilities that are fully equipped with the latest machinery from industry leading manufacturers. lubricants and tyres to fitment centres with integrated workshops.

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Adding to this success. these passenger numbers and volume of daily flights are set to increase significantly. Iraq’s Ministry of Transport (MoT) and National Civil Aviation Authority (NCAA) are working towards achieving the International Standards set out by the International Civil Aviation Organisation’s (ICAO) Annex 17 Standards and Recommended Practices (SARPs). Annex 17 sets out that each individual airport shall write and implement their own Airport Security Programme (ASP). Since G4S assumed responsibility for security at BIAP in January 2010. Aside from the number of passengers arriving and departing from the airport. Etihad commenced a daily service in April 2010 and a number of European airlines such as Lufthansa. As well as Gulf Air’s regular service from Bahrain and Royal Jordanian’s service from Amman. this represents a significant volume of traffic. equating to nearly 650. Although there continues to be the occasional security incident across Iraq. Certainly that is the hope of the Iraqi Ministry of Transport. BIAP is now seeing 1. has reopened and is now utilised on a daily basis. Baghdad International Airport (BIAP) is poised to become a central hub of activity for the Middle East. This will in turn increase the number “In choosing G4S to secure BIAP. As investment in Iraq increases. there are approximately 800 G4S staff providing security at the facility. The hope is that achieving this standard will lead to more international airlines flying into and out of Baghdad. . which G4S has worked closely with the MoT and NCAA to develop. are the international airlines now offering flights into and out of Baghdad.Transport . in addition to Terminal D – known as Nineveh. cleaning and staff operating retail outlets as well as representatives from government agencies.800 passengers per day pass through its doors.000 people work at the airport providing services such as catering. the Iraq Government was placing its trust in an organisation that has an unrivalled knowledge of the air 90 transport industry”. Terminal C – known as Babylon.Air Travel Air travel security Case study: G4S Risk Management As more and more companies look to setup operations in Iraq and with international staff moving in and out of the country on an increasingly regular basis. With 42 flights on average arriving and departing every day. are planning to follow suit. Another 2.000 passengers each year. particularly from the oil & gas industry.

achieving the ICAO standard is the ultimate goal. Securing over 74 airports and 81 airlines across the world. with only passengers holding valid tickets and travel documents being able to enter the terminal buildings. BIAP will increasingly become a focal point for facilitating the success of these activities. G4S offers a thorough understanding of the local operating environment as well as a vested interest in the future success of both the country and the airport itself. businesses such as G4S and the number of international organisations that are looking to build their businesses in Iraq. However. It may take many years before BIAP rivals the 180. As Iraq becomes a more stable operating environment and more and more businesses look to contribute to the economic development of the country through establishing and growing their operations. the Iraq Government was placing its trust in an organisation that has an unrivalled knowledge of the air transport industry. security screening of passengers and their cabin baggage. With the aim of increasing the number of airlines and establishing BIAP as an internationally recognised transport hub. security passes. G4S’ predominantly local staff work tirelessly to move passengers through the various checkpoints and screening areas as quickly as possible.260 flight arrivals and departures that London’s Heathrow Airport faces every day. which includes the organisation of the airport. Transport .of passengers arriving in Iraq via BIAP and eventually lead to the reopening of Terminal B – known as Samarra. BIAP is well on its way to becoming an internationally recognised facility. the Iraqi people and their Government will ensure their future triumphs. However. Through the accomplishment of providing a safe and secure environment for all. The key to achieving this standard is the development and implementation of the ASP. members of airport staff and representatives from other agencies to make this happen and ensure the facility runs as smoothly as possible.000 passengers or the 1. G4S provides a level of expertise that is vital to helping achieve the ICAO standard. G4S is able to offer more than just knowledge of the air transport industry. All of this is achievable through the hard work and dedication of the six different agencies who work together. Operating in Iraq since 2003 and employing over 80% local Iraqi nationals. are all helping to achieve this. with the desire to achieve the ICAO’s Annex 17 standards.Air Travel 91 . The combined efforts of the Iraq Government and associated agencies. access control to restricted zones. In choosing G4S to secure BIAP. the MoT and ICAA hope to exceed this standard and provide the Iraqi people as well as local and international passengers. with a safe and secure experience. Beyond simply achieving the standard. G4S rely heavily on the cooperation of passengers. ensuring the smooth operation of the airport on a daily basis. contingency and business continuity plans and security training. Whilst security is tight.

G4S – a trusted partner for a successful operation.g4s. as well as your risk and security planning? How will you develop local partnerships and understand local trading conditions? G4S.g4siraq.com Or visit: www. a blue-chip multi-national with a footprint in over 115 countries.G4S Secure Solutions (Iraq) How will you protect your people. Operating in Iraq? Is your business safe? For more information contact us Tel: +964 (0) 7905 993616 Email: securesolutions@iq.com . assets and property whilst building a successful business in Iraq? How will you manage your ‘Duty of Care’ responsibilities for your staff. understands the requirements of entering a new market – especially in a country with limited infrastructure.

6 million. The airline currently offers daily flights to Baghdad and Erbil and operates direct flights to Basrah and Sulaymaniyah.7 million passengers in 2009 and registered a net profit of JD28. A319. Royal Jordanian was transformed from a public to a private sector company at the end of 2007 and has a capital of JD84. technology and service as well as excellence. Its headquarters are located in the Jordanian capital Amman and its home base is Queen Alia International Airport. Royal Jordanian’s vision is to be the airline of choice connecting Jordan and the Levant with the world. Route network Royal Jordanian flies to 57 destinations on four continents from Chicago in the West to Bangkok in the East. The airline inaugurated Transport .Royal Jordanian Royal Jordanian has been flying to Iraq since 1975 and was the first airline to relaunch services there in 2003. with a fleet comprising 30 modern Airbus A330. A310 as well as Embraer 195 and 175 aircraft. Fleet Royal Jordanian operates one of the youngest fleets in the world.Air Travel 93 . Amman. A340. The airline carried 2.4 million. A321. The airline is committed to providing optimal comfort to its passengers in terms of seat pitch and legroom as well as the latest in-flight entertainment. Royal Jordanian has won awards in the fields of strategic transformation. Royal Jordanian Airlines was established by a Royal Decree issued by His Majesty the late King Hussein in 1963 as Jordan’s national carrier and is today one of the leading airlines in the region.

flight schedules as well as fare information.rj. information regarding its Royal Plus frequent flyer programme. Royal Jordanian is continuously updating and adopting systems to simplify the passengers’ travel experience such as e-ticketing. internet booking and self service check-in system (CUSS). For more information about Royal Jordanian. Royal Jordanian has 11 Boeing 787 dreamliners on order and will introduce seven new A320 and A321 aircraft to its fleet to replace six of the current Airbus fleet.Transport .com 94 . The airline’s 24 hour call centre offers customers from all over the world reservation services. Future plans As part of its endeavour to ensure that it has one of the youngest fleets in the industry. Royal Jordanian is a member of the oneworld airline alliance and has code share agreements with several international airlines. Services In addition to its use of the latest in technical systems to conduct its core activities.Air Travel a direct service from Amman to Medina in Saudi Arabia in May and resumed direct service to Kuala Lumpur in June 2010. please visit our website: www.

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300 kilometres of high capacity fibre optic cable. with the restoration of telephone switches and international gateway communications via satellite”.20% of revenues into expanding its network in Iraq over the next three years.” says Farouq Abdelqadir Abdulrahman. The nurturing of the telecoms sector has been assisted by the restructuring of the regulatory system. “Modernisation of Iraq’s communications infrastructure is as important to us as the contracts Iraq has recently signed with international companies to develop the oilfields. The Ministry of Communications operates two state owned companies. The emphasis is now on developing the network. Undoubtedly access to mobile services is a huge benefit to business and ordinary Iraqis. the largest mobile provider in the country and the first to offer the Blackberry device in Iraq announced a 10% increase in revenue to US$723. the Iraqi Telecommunications and Post Company (ITPC) and State Company for Internet Services (SCIS).3 million mobile phone subscribers in Iraq. with the national regulator launching a tender for wireless local loop licences. there were an estimated 20. while revenues for 2009 went up 4% to US$1. It is charged with defining regulations. The biggest innovation and catalyst has been the establishment and rapid growth of mobile services. For the three main providers. The Iraq telecoms market has undergone much repair and development since 2003. CEO of Zain Iraq is quoted as saying the company intends to invest 16% .342 billion.25 billion for their 15 year licences. “The Iraq telecoms market has undergone much repair and development since 2003. It is a technology only made available to the trusted elite under Saddam Hussein but since the dictator’s overthrow the market has boomed. At the end of 2009. Iraq’s Minister of Communications. The latter provides for reliable telephony via wireless from dense urban environments to trunk exchanges obviating the complicated and expensive need to excavate and install cable connections. The next step he says is introduction of third generation (3G) services. promulgating policy for frequency management and licencing wireless and telecommunications services. The latter is the country’s first independent media and telecoms regulator. the investment has proved to be highly successful.9 million for the first half of 2010. 96 . The Ministry of Communications and the Communications and Media Commission oversee telecommunications licencing in Iraq. Zain.Telecommunications Telecommunications revolution takes off Development of telecommunications is one of the big business success stories of post war Iraq. Emad Makiya. New digital switches have been installed as well as 1. with the restoration of telephone switches and international gateway communications via satellite. who each agreed to pay US$1.

There are considered to be particularly good prospects for implementation of wireless local loop technology. particularly by US forces in the strategy to prevent bombs detonating. Cellular providers have blamed the reception problems experienced by customers on the jamming of their frequencies. In January 2010. owned 30% by Qatar’s Qtel. expects to have increased its subscriber base from 7. the mobile market continues to expand. There is still much to be done to expand and modernise the country’s wider telecommunications. it has not all been plain sailing. however. raised questions of whether a conflict of interest arises in regulation. The plan for the Ministry of Communications to have a 35% shareholding in the venture has. wireless internet and internet telephony services in 2011. Korek.5 million. accompanied by a rapidly increasing mobile subscriber base”. Info2Cell launched three new SMS-based services for its subscribers in Iraq via Zain Iraq. Zain is looking at an increase of 1. This is expected to significantly improve telecommunication speeds across Iraq. Asiacell. projects to repair Iraq’s legacy network. the Government approved a plan for a fourth cellular operator. All of the operators have faced considerable difficulties in terms of security issues.5 million to 10 million by the end of 2010.All providers are aiming at further increases in their subscriber base. In July 2010. Kalimat Telecom says it aims to provide a nationwide fixed wireless network providing broadband. the Government and universities demand greater speed and capacity. expand the existing network and supply and construct new telephone exchanges. Links to more developed networks in the region are also likely to accelerate introduction of advanced services. Opportunities include. The advantages of advanced mobile messaging technology are already apparent. the lowest in the Middle East but penetration is growing. It is not just voice traffic that is being aided by mobile telephony. a US$445 million deal was signed with Qatar based Gulf Bridge International for a landing party agreement providing Iraq’s first international fibre optic cable connection. Telecommunications 97 . Only 1% of the population have access. However. Residential demand will not be far behind these institutions and is likely to expand considerably once competition drives prices down. power needs and not least official criticism and contentious fines for interrupted services. During the summer. There is significant potential for broadband growth in Iraq as the security situation gradually improves and businesses. The internet in Iraq is still a tool of the privileged few.2 million when it starts operations in Kurdistan in 2011. based in the Kurdistan Region. “Iraq’s mobile market segment is currently experiencing excellent growth rates. Bashar Dahabra.000. Nevertheless. According to Info2Cell’s CEO. aims to expand its subscriber base to 3 million from 2. Wireless internet provider Itsaluna saw its subscriber base double in 2009 to 256.

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police and senior civil servants.000 physicians were registered with the Iraqi Medical Association in the 1990s. X-ray. is now the primary emergency unit in the area. a trend that has yet to be reversed. there are hospitals exclusively serving military personnel. Babil Hillah.5% on the previous year.000 clinics. Sanctions. This commitment was reflected in the increase in the MoH’s budget allocation to some US$4 billion in 2009. training and organisational reform. By 2008. A new specialist paediatric hospital has been completed in Basrah to accommodate 94 beds. many institutions were extremely run down lacking medicines.5 million project. The UK’s MJ Medical is designing hospitals planned for Diyala and Diwaniyah. compounded by military conflict. Basrah. It also has its own power and water supply and is equipped with a helicopter landing pad. the World Health Organisation rated health outcomes in Iraq amongst the poorest in the region. with a huge number of professional people from all sectors leaving the country for economic and security reasons during the years of conflict. Conditions in the country’s 208 state run hospitals vary but by 2003. In addition. led to a steady deterioration and by 2006. There has been a tangible improvement. The system’s collapse is reflected in the country’s number of doctors. Iraq’s healthcare provision has been bolstered to some extent by 80 privately administered hospitals and some 2. providing a total of 2. an increase of 2. The news agency Aswat al-Iraq reported in September that the country’s 2010 federal budget allocates 6. The Ministry of Health’s (MoH) focus is on developing capacity and infrastructure as well as seeking to build relations between the private and public sectors and encourage the participation of private doctors in state run institutions. Around 34. The Government recognises the priority of reversing the decline in standards for the bulk of the population through investment across the board in new hospitals. that number had dwindled to 16. Missan and Nasiriyah. The US$12. A new trauma hospital including a burns unit has been completed in Erbil equipped with nine operating theatres. CT-scan and MRI facilities.000 beds at a reported cost of US$750 million. equipment and personnel. A decline in nursing personnel and technicians has been as dramatic. Turkey’s Acarsan Group is discussing building five new hospitals to be located in Karbala.000.9% to the health sector. Iraq was looked on as one of the Middle East’s leading healthcare providers. built by the US Army Corps of Engineers. A steady increase in funding commitment is continuing.Healthcare needs are immense 35 years ago. Healthcare 99 . Substantial increases in salaries for physicians has helped to draw some back but it will take time to fully reverse the loss of medical skills over the last three decades.

to train managers. In the 1980s about 30% of the country’s pharmaceutical needs were produced domestically. much more is needed.Healthcare However. principally from five plants operated by Samarra Drugs Industries. The number of beds in specialised areas such as intensive care and dialysis is still very limited. observes Iraq’s Health Minister. Salih al-Hasnawi. is needed for the State Company for Importation and Distribution of Drugs and Medical Appliances (KIMADIA). equip them with modern diagnostic equipment together with auxiliary power supplies. Iraq’s health facilities have not seen any development for 35 years and the process of developing them to reach international standards is a long and complicated one. which would have export potential and help to meet domestic requirements. Iraq also requires coordinated emergency response and ambulance support services. governorate and district warehouses. a highly centralised organisation which operates a distribution network of specialised central. However. for example. 100 . laboratory technicians as well as provide many more nurses in addition to doctors and specialist physicians. A sustained and huge commitment is required to build facilities. Most medicines in pharmacies that are run by unqualified people are not analysed or registered to check for corrupt and contaminated supplies. A more immediate need is an up to date nationwide logistical system for pharmaceuticals and medical equipment and other supplies. A lack of properly managed inventories allows widespread pilfering of drugs in hospitals that end up in the black market. There is also a long term need to re-establish pharmaceutical manufacturing in Iraq. The MoH is keen to promote private sector involvement in the running of healthcare facilities as well as pharmaceutical and medical device manufacturing and to attract consultancy providers to assist in this. There is also a need to ensure stocks of reliable medical supplies. while shortages of experienced nurses and paramedical staff mean that some hospitals continue to rely on relatives to provide care to patients and obtain drugs. Modernisation. the standard of Iraq’s health system will not be too far from others in the region. modernisation of the system is underway and the Minister believes the country’s health system has turned a corner and that after contracts already awarded are fulfilled.

who specialise in their fields.00 Joint Membership £30.uk . art. including its history.co.00 Corporate Members £150.co. For all enquiries please contact: British Iraqi Friendship Society PO Box 572 London KT17 9GQ Email: info@britishiraqi. Commercial and other organisations may become Corporate Members. including a variety of cultural presentations and talks by well-known and experienced speakers.www. language and traditions. The Society arranges a programme of events.uk The British Iraqi Friendship Society’s objective is to inform the British public about all aspects of Iraqi life and culture.00* *Corporate members may nominate up to four employees as Society members. Membership gives inclusive access to a programme of regular events throughout the year and advance notice of any special events which may be of interest to members. cultural or other interests.britishiraqi. performing arts. heritage. The annual subscriptions are as follows: Individual Membership £20. Membership of the Society is open to anyone interested in learning about Iraq and its association with Britain or with specific commercial.

The vast majority (92%) were pilgrims from Iran. ancient monuments are being restored and entrepreneurs are recognising the opportunity offered by tourism. Basrah.000 years of history is the History of the World. tour operators and independent travellers will find fares becoming more competitive. Karbala. Iraq’s Rafidain Travel & Tourism is heading up Iraq’s private sector delegation to WTM 2010. The last few decades have been but a blink in the story of a land that is rightly known as the ‘Cradle of Civilisation’. civilian support staff and official trade delegates. With the demise of Iraqi Airways and the imminent entry of leading European airlines. Erbil and Sulaymaniyah. the Tourism Board of Iraq will for the first time ever exhibit at World Travel Market (WTM) in London. which will also comprise leading hotels and some of the 494 tourism companies operating in Baghdad. In 2009. British Airways is expected to return in 2011. Najaf and Karbala. Kufa.6% in 2009. When Hammurabi adopted Babylon as the capital of his empire in 1782 BCE. Etihad. The proud and hospitable people of Mesopotamia have been building and rebuilding their magnificent cities since before Stonehenge and Skara Brae appeared. there is no shortage of airlines to get you to Iraq. Even though the number of Western visitors remains only a small proportion.Travel & Tourism Building recovery on 10.3 million visitors. all of which are also extraordinary destinations and deserve to be on every tourist’s radar. Several operators in the UK and across Europe are exploring opportunities and some are already taking groups to the Kurdistan 102 . eager to reach the Shia shrines to which access was denied throughout years of war. Lufthansa.000 years of history Whilst global tourism contracted by 4. Royal Jordanian and Turkish Airlines. this was just another chapter in the history of a settlement that had been established at least five millennia earlier. This figure excludes military and diplomatic personnel. In November 2010. Across the country new hotels are being built. Although some of the airport security measures remain laborious. the numerous sites include those in Najaf. Gulf Air. its 10. Middle East Airlines. Every month between the middle of 2009 upto the summer of 2010. Samarra and in and around Baghdad. Iraq’s visitor economy grew by 31%. especially with the new Global Distribution System being established for Iraq by Sabre Travel Network in partnership with Kanoo Travel. Iraq received 1. Austrian Airlines. this volume of business has produced some very experienced and capable local tour operators. another airline announced additional capacity or another route into Iraq. Airlines already offering connecting flights between the UK and Iraq include: Air Berlin. These operators have the capability to become destination management companies and key partners for groundbreaking operators from Europe and North America. There is a growing number of international flights to Mosul and Najaf but the four main gateways remain Baghdad.

visitors are spoilt for choice. Hatra and Samarra (although two of these are on the World Heritage in Danger list) but at least nine more candidates have been identified – an overwhelming list that includes Babylon. which remains the only current guide to Iraq. in a post-conflict situation. Hinterland’s Geoff Hann has pioneered the return of tourism and in 2008 co-authored Bradt’s Iraq Then and Now: A Guide to the Country and its People. The security situation ensured that we could see almost all of the important sites but for the foreseeable future all visitors should pack some patience and flexibility!” Apart from pilgrims and the vast Iraqi diaspora. much like postconflict tourism. Ur and the Mesopotamian Marshes.000 historic sites in the Kurdistan Region alone. “All Iraqis have pride in our shared heritage” confirming that it has a role in reconciliation. he commented. Airport projects have been a first priority to facilitate access. An important future market will be veterans and their families. embracing national identity and celebrating heritage. science and education are tools to support this vision. vibrant and improving daily. it is in the minds of men that the defences of peace must be constructed”. Ninewah. United Nations Educational. Iraq’s immediate target markets are ‘Young Adventurers’ and ‘Culture Vultures’. Iraq’s Minister of Culture observes that. Security companies are considering options for transforming their Travel & Tourism 103 . Scientific & Cultural Organisation (UNESCO) has so far only inscribed three World Heritage Sites: Ashur. Nimrud. Erbil. Following his most recent tour. which promotes itself as ‘The Other Iraq’ but Yorkshire based Hinterland Travel is the only European tour operator with a full Iraq programme. remarking. Cruise operators are devising plans to return to Basrah. “the mood in Iraq was upbeat. Both the Tourism Board of Iraq and National Investment Commission are focused on the sustainable development of tourism. the city from which the legendary Sinbad set sail in The Thousand and One Nights and which has temporarily lost its moniker ‘Venice of the East’. “tourism is in its infancy after the problems of recent years but the sites are worth seeing and this really is where civilisation began”.Tigris River in Baghdad © Dunira 2010 Region of Iraq. A leading authority on Iraq. Cultural heritage. its Constitution drafted in 1945 declared “That since wars begin in the minds of men. It is also about helping to establish a common understanding and supporting sustainable livelihoods. It should be remembered that UNESCO is not primarily a heritage organisation but exists to promote peace. perhaps best exemplified by two sites associated with Saddam Hussein: the town of Halabja and his grave in Al-Awja. With more than 3. All tourism development is about communication. whilst the ethically complex phenomenon of ‘Dark Tourism’ attractions is already apparent. Renovating some of the 794 hotels and interpreting the thousands of cultural and natural heritage sites will ensure tangible tourism product that can be marketed.

Travel & Tourism

“The

last few decades have

been but a blink in the story of a land that is righty known as the ‘Cradle of Civilisation’; its 10,000 years of history is the History of the World”.
networks of secure villas into comfortable guesthouses. Oil & gas companies are exploring how supporting community based tourism can contribute to their corporate social responsibility plans. The Tourism Board is keen to speak to investors who share its vision and ambition and is also seeking assistance with hospitality and other training. Tourism is a very open industry and Iraq wants its fair share of the 220 million jobs supported internationally by the US$9 trillion of global annual travel and tourism activity. British expertise in the field is well recognised. The British Museum has for some time been leading the way in supporting the research and interpretation of Iraq’s cultural heritage, which is such a key part of the country’s emerging tourism product. Dunira Strategy was commissioned to arrange the Tourism Board’s fact finding mission to WTM in 2009, which achieved global network coverage and led to Iraq’s decision to exhibit in 2010. Board Chairman Hmud al-Yakobi commented, “we decided to come to London because we recognise that WTM is the world's premier travel fair and we already know how much expertise there is in the UK”, adding “we look forward to sharing our hospitality with visitors from Europe and working with British tour operators and experts to help realise Iraq’s tourism potential”.

Roof of the ‘Tomb of Ezekiel’ at El-Khifal © Dunira 2010 104

Rock formation outside the city of Najaf © Dunira 2010

Many potential visitors are concerned by the UK Government’s Travel Advice, which (with the exception of the Kurdistan Region, which is considered safe and received 60,000 visitors in 2009) is almost invariably “against all but essential travel” and assume that it is not possible to get insurance. In fact, fully comprehensive insurance (including war and terrorism cover) can be arranged for a modest premium for travellers that choose to travel responsibly against official advice. The insurance market is even becoming more competitive and user friendly. Emerging markets specialist AAIB Insurance Brokers has launched the first online travel insurance service for professionals and individuals travelling to Iraq and needing instant and reliable cover. William Wakeham, CEO of AAIB said, “There has been a marked increase in incoming business traffic but we must not forget leisure travel, religious tourism and VFR (‘Visiting Friends & Relatives’) are growing segments. Whilst we don’t expect to see huge numbers of

holidaymakers flocking to Iraq for some time to come, more adventurous travellers will not be able to resist the opportunity to visit”. With sensible planning, all of Iraq’s most important sites are accessible. Recalling his most recent visit to Baghdad, Benjamin Carey of Dunira Strategy commented, “Security remains the greatest challenge but tourism in Iraq has the potential to be transformational, contributing to national identity, helping to rebuild confidence, tackle some of the sectarian scars and creating enduring social and economic opportunities, especially for young Iraqis. Although Iraq will for some time be for specialists and intrepid travellers, it is a destination waiting to be discovered by tour operators and individual tourists.” Tourism in Iraq represents an outstanding opportunity for investment and development.

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DUNIRA STRATEGY
Sustainable Business Solutions in Tourism
Dunira Strategy has a focus on the sustainable development and environmental management of tourism with vast international experience, especially in less established destinations, including those emerging from conflict. Clients include public and private sector as well as international agencies such as UNDP, UNEP, UNESCO, World Bank, World Tourism Organisation and WWF Our services include: • Feasibility studies and master plans • CSR strategies for international companies • Market access and representation • Strategic plans and product development • Capacity building and training • Project management and implementation

Contact: Benjamin Carey; benjamin@dunira.com; +44 (0) 845 370 8076

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info Atconz Real Estate Development: www.com China National Offshore Oil Corporation: www.com.uk 107 B Baghdad Tonight: www.britishairways.al-mashriq.crsworldwideinc.baghdadtonight.dayen.com Acarsan Group: www.duhokchamber.com Al-Mashriq: www.amec.azzaman.allurentis.atconz.com British Airways: www.airberlin.cma-cgm.com AsiaCell: www.: www.albawaba.chevron.britishiraqi.cmc.tr Al-Bawaba: www.org Basrah Gas Company: www.iq Consilium Risk Strategy: www.com Communications & Media Commission: www.net D Dahuk Chamber of Commerce: www.tv Air Berlin: www.cnpc.alsumaria.com Contacts Featured contacts .net Austrian Airways: www.com Dar Es Salaam Investment Bank: desiraq.com Commercial Bank of Iraq: www.uk C Central Bank of Iraq: www.com AMEC: www.ahliunited.arcelormittal.asiacell.com Chevron Business Development Inc.com Al-Zaman: www.chartisinsurance.cnoocltd.net Al-Moosawi Group: almoosawigroup.com ArmorGroup Iraq: www.dfid.com.cn CMA CGM: www.armorgroup.com British Iraqi Friendship Society: www.bp.com ArcelorMittal: www.austrian.almadapaper.cbi.net Bank of Baghdad: www.mansourbank.com BP: www.aaib-insurance.com Allurentis: www.com Avicenna Capital: www.com Alsumaria: www.kubba-group.com Dayen Dis Ticaret: www.net Al-Mansour Bank: www.A AAIB Insurance Brokers: www.controlrisks.com Al-Sabah: www.avicenna-capital.alsabaah.co.gr Control Risks: www.aswataliraq.com Crescent Petroleum: www.tr Department for International Development: www.ccc.com Al-Mada: www.acarsan.bankofbaghdad.crescent.azmarairline.com.com Consolidated Contractors International: www.com China National Petroleum Corporation: www.com Aswat al Iraq: www.basrahgas.gov.iq Chartis Insurance: www.ae Credit Bank of Iraq: www.com Azmar Air: www.

com Honeywell: www.com KCA Deutag: www.com HSBC: www.imf.exxonmobil.com DLA Piper LLP: www.iraqrailways.deutschebahn.impregilo.com Gazprom: www.com Gulf Air: www.ergo.iraqembassy.com Iraq Civil Aviation Authority: www.iraq.com Gulftainer Group: www.net Iraq Republic Railways: www.org Erbil International Airport: www.eiu.iraqinsurance.org Iraq Stock Exchange: www.erbilchamber.net Erinys: www.youshouldtravel.info2cell.gazprom.iraq-businessnews.iraqcaa.com Etihad: www.com E Economist Intelligence Unit: www.uk Eni: www.erinys.com Dijla & Furat Bank: www.int Iraq Business News: www.com Iraq Daily: www.com I IBBC-Iraq Britain Business Council: www.hsbc.igi.giionline.dlapiper.com G G4S: www.g4s.kalimattelecom.org.org Impregilo: www.com KBR: www.eni.com H 108 Harlow International: www.com Gulf Bridge International: www.gulfair.Contacts Deutsche Bahn: www.harlowinternational.icao.com International Civil Aviation Organisation: www.webuildiraq.jp K Kalimat: www.kcsdeutag.com Erbil Chamber of Commerce: www.iraq-travelinsurance.com Hinterland Travel: www.gulfsands.org IGI Insurance: www.kbr.com Khoshnaw Company: www.com .uk IKB Travel & Tours: www.com Kanoo Travel: www.fwc.com Exxon Mobil: www.net Ernst & Young Iraq: www.honeywell.com F Foster Wheeler: www.ey.iraqdaily.it Info2Cell: www.net Ergo: www.net Gulfsands Petroleum: www.etihadairways.co.com Iraq Net: www.com J Japex: www.gulfbridgeinternational.iraqstockx Iraq Travel Insurance: www.com Iraqi Insurance Diwan: www.co.kanootravel.dfdi-bank.erbilairport.gulftainer.com Gulf Insurance Institute: www.hinterlandtravel.japex.com Embassy of the Republic of Iraq: London: www.com Dunira Strategy: www.com IMF: www.dunira.khoshnawgroup.

mofa.iq Ministry of Municipality & Public Works: www.com Land Rover: www.gov.gov.kurdistantv.oil.iq MJ Medical: www.molsa.com OPEC: www.: www.kr Korek Telecom: www.motrans.com.lb Ministry of Agriculture: www.uk KIMADIA: www.gov.kier.iq Ministry of Culture: www.org Kurdistan Regional Government: www.modm-iraq.krg.com Ministry of Communications: www.moch.com PricewaterhouseCoopers: www.opec.kurdsat.com National Investment Commission: www.com Lukoil: www.org Ministry of Science & Technology: www.com 109 Contacts .landrover.gov.gov.com Occidental Petroleum Corp.gov.com Ministry of Oil: www.most.lukoil.investpromo.or.mop-iraq.iq Ministry of Interior: www.iq Ministry of Water Resources: www.com Lufthansa: www.iq Ministry of Electricity: www.moagr.gov.humanrights.tv Kuwait Energy: www.gov.iq Ministry of Industry and Minerals: www.Kier Construction: www.industry.gov.com Penspen Group: www.com Kogas: www.com Petronas: www.mbih.gov.net Ministry of Construction & Housing: www.gov.petronas.pwc.moi.gov.iq Ministry of Higher Education & Scientific Research: www.nbirq.lafarge.com M MCE plc: www.oxy.com L Lafarge: www.kw Ministry of Health: www.iq Ministry of Displacement & Migration: www.gov.gov.mot.mmpwirq.kurdistaninvestment.com Mott MacDonald: www.iq O Olive Group: www.com Kurdistan Board of Investment: www.gov.iraqimoc.moh.net Ministry of Education: www.mceplc.mjmedical.korektel.moedu.org P Parsons Brinckerhoff: www.mottmac.iq Ministry of Transport: www.iq Ministry of Planning & Development Cooperation: www.kec.iq Ministry of Labour & Social Affairs: www.iq Ministry of Trade: www.iq Ministry of Foreign Affairs: www.mowr.kogas.penspen.iq Ministry of Finance: www.gov.moelc.moheiraq.iq N National Bank of Iraq: www.org Kurdistan TV: www.com MerchantBridge: www.com Middle East Airlines: www.pbworld.lufthansa.co.ministryofculture.com.kimadia-iraq.mof.net Kurdsat: www.org Ministry of Human Rights: www.mea.gov.olivegroup.

com S Sabre Travel Network: www.shell.rotana.int Z Zagros Company: www.tpic.net Zain: www.com Rasheed Bank: www.org Rafidain Travel & Tourism: www.slb.uktradeinvest. Turkish Petroleum International Company: www.tr R Rafidain Bank: www.who.sinopec.com Sardar Group: www.technital-spa.swagelining.statoil.org UOP: www.com Turkish Airlines: www.unesco.net Rotana: www.weatherford.com Royal Dutch Shell: www.sociraq.zain.com SKA Air & Logistics: ska-arabia.co.total.sabretravelnetwork.Contacts Q Qatar National Bank: www.com Sinopec: www.com Statoil: www.com.com T Tata Steel: www.com World Bank: www.com Technital: www.com State Company for Agriculture: iraqiscas.com Royal Jordanian: www.rafidain-bank.turkishairlines.com Swagelining Limited: www.rj.saracen-inc.tatasteel.zagros-group.com Saracen Trade & Investment Inc: www.com U UK Trade & Investment: www.com W Weatherford: www.com Turkish Petroleum: www.com Trade Bank of Iraq: www.uop.rasheedbank.com Sheraton: www.qnb.worldbank.gov.ao South Oil Company: www.org World Heath Organisation: www.com 110 Total: www.al-rafidain.vitol.sheraton.gov.com Schlumberger: www.com Sonangol: www.com V Vitol: www.sardargroup.com .sonangol.tpao.uk UNESCO: www.tbiraq.

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