Back in Iraq
By Karol Chlipalski
Representatives of a consortium of 20 domestic oil and gas companies headed by oil concern Nafta Polska are planning to go to Kuwait City this week to discuss their future involvement in the reconstruction of Iraq with American oil concern Kellogg Brown & Root. The consortium is among 500 firms that have submitted applications to the National Chamber of Commerce (KIG) to be considered for contracts in Iraq.
Krzysztof Mering, spokesman for Nafta Polska, declined to give any further details concerning the precise subject of talks. Rafineria Gdańska (RG), a Nafta Polska subsidiary, was the first domestic company to declare its interest in returning to Iraq after a 13-year absence. RG spokesman Marcin Zachowicz also declined to discuss the potential involvement of his company in Iraq.
Domestic companies operated on the Iraqi market prior to 1990 and are thus familiar with the country. Until 1990, Iraq was one of Poland's major commercial partners, and trade between the two countries totaled €183 million-€229 million ($200 million-$250 million) a year.
Despite the initial progress of local companies desiring to enter or return to the Iraqi market, procedures for companies that want to participate in tenders for the reconstruction of postwar Iraq are not yet clear. Meanwhile, government representatives, trying to calm companies' enthusiasm for the contracts, say that no formal procedures for any companies to participate in the tenders will likely be available until after U.S. and provisional Iraqi authorities have named the eight main contractors who are to handle reconstruction.
Jerzy Kubacki, director of the international bilateral cooperation department at the economy ministry, said that while there are no formal intergovernmental talks being held about the participation of domestic companies in Iraq's reconstruction, the government is trying to promote local firms during its meetings with U.S. representatives. He added that authorities here would support the companies' participation as soon as the new Iraqi government was formed.
To support domestic companies that apply for the contracts, the government has put into place a special inter-ministerial team, presided over by economy minister Jerzy Hausner, consisting of representatives from seven ministries and the KIG. Kubacki oversees the day-to-day functioning of the team.
Washington has declared that firms from countries that participated in the war coalition along with the U.S. - Poland, the United Kingdom and Australia - would be considered for tenders awarded by the American government for the reconstruction of Iraq.
The first stage of Iraq's rebulding will be financed by the U.S., which has allocated €2.3 billion ($2.5 billion) for reconstruction activities, though the projects would be managed by eight American companies that would receive orders from the U.S. Agency for International Development.
"The U.S. administration will not be the one giving out the money," said Piotr Ogrodziński, director of the North American department at the ministry of foreign affairs.
The first allotment of funds will be for purchasing food and medicine and rebuilding infrastructure. The KIG estimates that total spending to rebuild infrastructure and oil-exporting capability in Iraq could top €91.5 billion ($100 billion).
Up to now tenders for four areas of activity have been held and the winning companies are to hire subcontractors.
"U.S. firms have a clear view that domestic subcontractors should receive a positive handicap," Ogrodziński said, explaining that although the country's participation in the coalition during the war in Iraq would give it some preferential treatment, it would not be the main determining factor. "If there are no competitive offers from Polish companies, nothing is going to help them."
KIG general secretary Marek Kłoczko agreed, saying: "Neither the ministry of economy nor the KIG will have any influence on the fact that local companies receive any orders. The most important (factor) is competitive offers."
The economy ministry expects to receive more applications from domestic companies in the next few weeks.
"There are certainly more applications, as all those that were sent via mail have not yet arrived," said Mirosław Zieliński, undersecretary of state at the ministry of economy, labor and social policy, who is part of a special government team promoting Polish companies in Iraq.
Ogrodziński said that the country's relatively cheap labor force and the fact that local companies use American technologies are two other factors that could help domestic companies obtain contracts in Iraq.
Kubacki said that the list of 500 companies would be very useful in helping to reestablish commercial cooperation in the future.
"When organizing (trade) fairs, we will have at our disposal data about firms that should be invited to take part," he said.
KIG vice president Bogdan Golik advises smaller companies to form consortiums to participate in the reconstruction of Iraq, citing the Nafta Polska consortium as an example.
"Consortiums will save money on promotion and make (their bids) more efficient," Golik said. "It will also show greater financial strength (on the part of the bidding companies) and expand the companies' reference lists."
