Daewoo fulfills Iraq’s Faw Port despite obstacles

Iraqi government voted for signing a contract with the Korean company Daewoo to finish Faw Port project.

al-monitor Oil tankers dock at a floating platform on Sept. 21, 2014, offshore from the southern Iraqi port city of Al Faw, 90 kilometers south of Basra. Photo by HAIDAR MOHAMMED ALI/AFP via Getty Images.

Jan 8, 2021

The head of Iraqi Ports in the Ministry of Transportation signed a contract Dec. 30 with the South Korean company Daewoo for the completion of the Faw Port project in Basra.

Faw Port is considered a strategic national project for Iraq, as it will be the only Iraqi port capable of receiving large ships, enabling Iraq to become part of a new silk road via the transference of goods from east to west through its lands from the Persian Gulf to the Mediterranean Sea.

The project was raised for the first time in 1978, but due to internal and external controversy, it only began after the regime change in 2003. Kuwait later launched the construction of the Mubarak megaport, which raised Iraq's concern as the two ports are close in distance and competition could negatively affect Faw Port. Kuwait announced recently it stopped building Mubarak Port until any further announcement to assure it does not affect its neighbors and also due to economic hardship caused by the coronavirus pandemic. 

Daewoo — a leader in building ports — completed the first two stages of the port. Then controversy erupted over which company might complete the next stages of the port, and demonstrations supported by Shiite militias took place in Basra, most recently on Dec. 18, calling for Daewoo to be replaced by the Chinese company CMEC. 

The obstacles facing Daewoo began Oct. 9 when the body of its manager was found hanged in Basra. Suspicions at that time revolved around political parties and armed groups being involved in his death, along with other assumptions.

A source from the Ministry of Transport who requested anonymity told Al-Monitor, “The Chinese company is not specialized in engineering the construction of ports, which prevents it from winning the contract, while there is political and parliamentary support for Daewoo, which is specialized in such projects.”

Iraqi Minister of Transport Nasser al-Shibli said in a Dec. 19 statement that “Faw Port will be the alternative economy for oil, and the ministry will continue to work with Daewoo if it is authorized during the Cabinet session.”

Mudhar al-Azirjawi, a member of the Parliamentary Services and Reconstruction Committee, told Al-Monitor that “political forces want to impose their vision in the construction of the port and even want to determine the executing company itself."

Parliament member Abdul Amir al-Taiban, from the Sadiqun bloc representing Asaib Ahl al-Haq, which is close to Iran, said Dec. 14, “An agreement between Faw Port and the Chinese company is a general public demand.” On the same day, channels affiliated with the militias in Iraq reported protests in front of the Ministry of Transport that demanded “signing with the Chinese company to complete the project.”

Reports on Dec. 14 accused the pro-Iranian parties of mobilizing protests in front of the Ministry of Transport in central Baghdad in order to pressure the government into assigning the remainder of the port project to the Chinese company.

On Dec. 19, Hadi al-Amiri, head of the Fatah Alliance, sounded more moderate when he called for “resorting to investment since Chinese companies need four years to open the port with very limited management and very limited berths.”

For his part, Nouri al-Maliki, head of the State of Law Coalition, on Dec. 15 called for “a transparent contract that opens the door for companies to submit their offers and removes suspicion of negative judgment about this or that company.”

Wael Abdul Latif, the minister of provincial affairs and a former deputy governor of Basra, told Al-Monitor, “The Chinese company made offers and its representatives met with the Ministry of Oil in November, and it does not require advance payment, while the Koreans require that and have submitted six projects for completion but do not operate the ports. The Chinese company has promised seven projects, including power and desalination stations, railways and roads.”

Meanwhile, General Director of Iraq Ports Farhan Muheisen al-Fartousi told Al-Monitor, “Daewoo will reduce the cost to $25 million, and it will also implement free projects for the port after introducing amendments to the contract in the interest of Iraq.”

On Dec. 19, John Huang, Daewoo’s director in Iraq, said, “The company did not stop the work assigned to it even when the Islamic State invaded Iraqi areas in 2014. The breakwater is complete, and the port basin is almost 40% done, while the Mina Street project is 80% finished.”

Mazhar Saleh, economic adviser to Prime Minister Mustafa al-Kadhimi, told Al-Monitor, “It is important to choose the appropriate companies that are able to implement all stages of the Faw Port project and its other annexes as an investment force to accelerate the making of Basra the economic capital of Iraq, according to Law No. 66 of 2017."

Saleh added, “I expect the project to lead to regional maritime economic integration and make the northern Gulf region, Basra, and the free zone in Iraqi ports an area of economic prosperity full of international investments.”

He called for “expediting the completion of the Faw Port so it can finally become the central port of the northern Gulf region and also to facilitate connecting Iraq to Europe and the developed northern countries.”

As the government has already gone with giving the project to the South Korean company, this means that this strategic project will be completed in 2023 and according to plan.

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