U.S. OKs Bechtel’s Blueprint for Iraq, Which Puts Electricity First

Federal officials have approved Bechtel Group’s blueprint for Iraq’s reconstruction, making restoration of electric power the top priority in a $680-million budget that authorities concede will just scratch the surface of what needs to be done.

The spending plan, approved last week by the U.S. Agency for International Development, clears the way for Bechtel to hire subcontractors to do everything from repairing bridges to fixing schoolroom toilets.

“The money is now spoken for,” said Cliff Mumm, Bechtel’s project director in Iraq. “We’re moving ahead to implementation.”

About a third of the money, $230 million, is devoted to restoring electricity -- which officials say is critical because little else can be done without it. The plan also earmarks $53 million to repair 1,300 schools and health clinics and sets aside $45 million for water purification and sanitation.

Any one of these areas could easily have eaten up the entire $680 million, which USAID awarded Bechtel on April 17 under an 18-month contract.

In a survey conducted in April and May, Bechtel engineers found there was practically no end to Iraq’s needs. The country’s power, sanitation and water plants had been patched together for years, and postwar looting in many cases provided the final nudge toward collapse.

Ross Wherry, USAID’s senior reconstruction advisor, said the $680 million is “just enough to get the country rolling again.” Though Bechtel has awarded some subcontracts on an emergency basis over the last three months, the implementation plan covers the bulk of the work and the money.

Under the spending plan, about $50 million will be used to make airports operational and $30 million will go toward fixing bridges. An unexpected dent in the budget came from telecommunications, which will cost $50 million and which were deemed essential by coalition authorities at the last minute. The budget also includes $45 million to reopen the deep-water port at Umm al Qasr, and much of that has already been spent.

San Francisco-based Bechtel, the largest construction and engineering company in the U.S., will get $80 million from the budget to cover its administrative costs.

The process of deciding where the money should go, Wherry said, was akin to emergency room triage, in which doctors and nurses choose whom to treat first depending on the severity of the injuries and the chances for survival. “We passed the various needs through a sieve of how much does it cost, how much can be done, and how do we get the most benefit for the most Iraqis quickly,” Wherry said.

Ultimately, it will take billions of dollars to repair and replace Iraq’s power plants. In the meantime, Bechtel is concentrating on getting power to Baghdad’s homes as well as some industrial plants in the capital. The loser in that calculation is the “Sunni triangle,” north and west of the capital, the part of the country most loyal to deposed leader Saddam Hussein. Bechtel says the area is too dangerous for repair crews until order is restored.

Looting also influenced decisions about reconstruction. In May, Mumm, the Bechtel project director, flew over the main power transmission line, which runs from Baghdad to the southern city of Basra. Thirteen of the power line towers were down. A couple of weeks later, he flew over it again. This time, 65 towers were down, and looters were burning the cables to harvest the copper wires. The latest count this month showed 80 towers felled.

“It’s slowed down,” Mumm said by phone from Baghdad. “But instead of relying on the grid, because they were systematically taking the grid down, we’re recommending point generation.” That means putting diesel generators in critical facilities such as waste-treatment plants, where the power source can be guarded.

Most of the damage, however, wasn’t the result of the war or sabotage, Mumm said. “It was years and years of neglect. All the money was skimmed off. It was a serious ‘thugocracy’. Take the water in the south -- it’s just absolutely contaminated. None of the water treatment plants are working. In fact, some of the tanks were being used for diesel storage.”

As for the schools, “there were no windows, the toilets were backed up, the walls were coming down, there were no lights. I don’t know how these kids were learning anything,” he said.

At the height of the assessment period in May, 76 Bechtel employees were kicking the tires on the entire country. They visited 20 power plants, rat-choked grain elevators and many schools.

Bechtel is hiring Iraqi companies to rebuild the schools. Originally, it expected to contract with other multinational firms that would employ Iraqis as laborers. The hope of getting some of the work led nearly 9,000 companies, most of them based in the U.S. or Britain, to register on Bechtel’s Web site.

Instead, Bechtel is cutting out the middlemen. Of the 11 subcontracts Bechtel awarded in the first half of this month, 10 went to Iraqi companies. The sole exception was a British company.

“There isn’t a Yellow Pages to go look up Iraqi companies, but this is obviously the way to get the most bang for the buck,” Mumm said. He noted that it’s also politically expedient: “The Iraqis were pretty adamant that they’ll rebuild Iraq. The big issue is not finding capability, it’s finding equipment.”

Ultimately, Bechtel expects to employ as many as 25,000 Iraqis through dozens if not hundreds of subcontracts