Iraq’s electricity minister, Raad Shalal, has been dismissed and is under investigation for not following government guidelines in the signing of two deals worth $1.7bn.

The country’s deputy prime minister, Hussain al-Shahristani, said the two deals violated government guidelines requiring a contract to be signed with the manufacturers.

Al-Shahristani said that Shalal signed a $1.2bn contract with the Canadian Alliance for Power Generation Equipment to build ten power stations with a total capacity of 1000 MW, and a $500m contract with the German firm Maschinenbau Halberstadt.

He claimed that neither of these two companies qualify as manufacturers, hence invalidating the contracts. An official for the Iraq Electricity Ministry said an investigation is under way to determine whether there was any criminal wrongdoing.

Al-Shahristani has also claimed that the two companies presented false documents about their financial status and technical capabilities. Both companies have strongly denied that this is the case.

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