Security is a key concern of Western firms in Iraq

The Germany company is building a power generation facility in the northern city Kirkuk and a mobile phone network to cover northern Iraq.

"If you look at the security situation over the last few weeks, things have got worse," a Siemens spokesman told BBC News Online.

Dozens were killed in bomb attacks in the southern city of Basra this week.

GE concerns

General Electric, another leading contractor in Iraq, has also taken "security measures" which the firm told the BBC had "caused some delays".

"We continue to work on all our projects - shipping equipment and so on - and are working to mitigate the impact of the security situation on our activities," a spokeswoman said.

"GE intends to fulfil our contractual obligations."

There are fears a slow down of operations will delay work on power plants needed to meet an expected surge in demand for electricity before the summer.

Jim Hicks, a senior adviser for electricity at the provisional authority, told the New York Times that the plants had been expected to be operational by at least early May but now they might not be up and running until June.

Siemens insists its projects are not suspended but refused to give numbers of how many staff are staying on.