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Iraq: Amec Deal Saves UK from Embarrassment

by Terry MacalisterGuardian (London)
March 25th, 2004

Amec has won part of a $1bn (550m) contract to rebuild water and sewerage networks in Iraq. The deal is the biggest so far by a UK company for reconstruction work in the war-torn country, but otherwise British firms have lost out.

Despite fierce lobbying in Washington by the Labour government, the UK's contribution through this and previous contracts won by Amec is worth $750m out of a total of $10bn. Mowlem, another UK hopeful, confirmed yesterday it had failed to clinch any deals; Carillion said it was still waiting to hear.

But British trade and investment minister Mike O'Brien seized on the Amec deals as proof that his efforts in the US had been successful.

"We have said all along that UK firms have the skills and capabilities to make a significant contribution to the reconstruction of Iraq's essential infrastructure. These awards along with earlier ones to UK firms confirm this," he argued.

The Amec deal, worth 300m to the UK company, was won in partnership with US engineer Fluor and is the second for the Anglo-US consortium in a matter of weeks.

The first, a power contract, was worth $500m to the joint venture. The combined successes sent Amec's share price up 3% to 305p. It is still in the running for two more pieces of work, one in transport, the other related to justice and security, which could be worth up to $1.2bn.

"This [new] award confirms Amec's role as the leading UK company involved in the reconstruction of Iraq," said Sir Peter Mason, its chief executive.

"Our wide experience of managing sensitive and critical projects on this scale worldwide will have been an important factor in this award."

Amec already has a team of managers in Iraq working with Fluor and this will be beefed up in the weeks ahead. The western firms will use a variety of Iraqi contractors and subcontractors to help with the work.

Amec used to be a British-based construction firm but is keen to reposition itself as an international project management and services business. It holds a 49% stake in the Fluor joint venture, which was established specifically to bid for Iraqi reconstruction contracts.

Foster Wheeler, another British firm, is understood to have won a relatively small Iraqi management contract but government sources admitted they could not name any other big British wins.

John Gains, chief executive of Mowlem, said his group had not been successful despite being paired with US firm KBR, part of Halliburton. "We have not won anything so we must move on," he said, adding that the firm was so busy in Britain it did not need Iraqi work.

Brian Wilson, the prime minister's special envoy in Iraq who lobbied in Washington with Mr O'Brien, said: "This is a US-funded contract and I have no doubt that, as funding sources diversify, British companies will play an even bigger part in rebuilding Iraq."

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