Wikileaks: 'US Embassy lobbies Gamal Mubarak for Bechtel in Egypt's energy sector'

UNCLAS CAIRO 000862 
 SENSITIVE BUT UNCLASSIFIED.  PLEASE HANDLE ACCORDINGLY. 
 
¶1. (SBU) KEY POINTS: 
 
--Bechtel's tender offer to provide consultancy in developing  Egypt's first nuclear power plant has been excluded by the  Ministry of Electricity and Energy (MoEE). 
 
--The Ambassador met with Bechtel and Minister of Electricity  and Energy Hassan Younes to voice our concerns and to seek an  explanation of the GOE's decision. Younes said Bechtel  repeatedly refused to comply with the tender agreement. ...
 
--It is unclear whether Bechtel will seek further USG  advocacy on this issue. 
 
¶2. (SBU) COMMENT:  It appears to us that the GOE was  genuinely interested in working with Bechtel on this project  and was disappointed that an agreement could not be reached.  During our discussions with Bechtel, it seems that Bechtel  feels that they may have overplayed their hand during the  pre-contract negotiation process and that their negotiating  tactics were not as effective as they intended.  In order to  manage the fallout, Bechtel plans to write to the MoEE and  NPPA to express Bechtel's regrets over the outcome and convey  their strong desire to work with the GOE on future projects.  The negative outcome of this case may prove costly in terms  of future nuclear energy projects in the Middle East.  U.S.  businesses that might have otherwise been included in later  phases of this project had Bechtel won, may now be excluded  in favor of international firms.  According to Rames Khalil,  the Regional Power Manager at WorleyParsons responsible for  Egypt and Africa, WorleyParsons plans to have large U.S.  content in the project, including employing U.S. engineers to  build local capacity and transfer technology to the Egyptian side. END COMMENT. ... ... ... 
 
¶6. (SBU) After the Ambassador raised the issue with National  Democratic Party Assistant Secretary General and Presidential  son Gamal Mubarak, Minister of Electricity and Energy Hassan  Younes asked to meet the Ambassador on May 6.  Minister 
Younes explained that throughout the four months of  pre-contract negotiations, Bechtel had repeatedly refused to  comply with the terms of the tender agreement.  Bechtel was 
notified of the GOE's decision to exclude Bechtel on April 11  and was given until April 28 to appeal.  Bechtel sent their  appeal in a letter dated May 1, and did not seek USG  assistance until April 29.  By that point it appears that the  GOE had firmly decided to move on with negotiations with the  second place finisher, WorleyParsons.  Parsons has been  invited to enter tender negotiations and the GOE expects an  agreement to be reached within the next few days.  We will be  in contact with Bechtel to see if they require further USG advocacy on this issue. 
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