Stockholm - Swedish heavy-vehicle maker Scania Wednesday said it has inked a deal to assemble trucks and buses with the government of Iraq.

The deal was announced in connection with a visit to Iraq by Swedish Trade Minister Ewa Bjorling and a delegation of Swedish businesses, including Scania and telecommunications equipment maker Ericsson.

According to Scania, production was due to begin during the third-quarter 2009.

Some 500 trucks were to be assembled at the plant in Iskandariyah, near Baghdad that was to employ 500 people.

"The facility will be designed for the production of 3,000 vehicles per year," Klas Dahlberg, head of Scania's sales in the Middle East, said in a statement.

Bjorling told Swedish radio that the Scania deal was worth some 400 million kronor (49 million dollars).

Scania was also planning to set up a service network with its Iraqi distributor for vehicles that operate in international traffic, the group said.

The company assembled 3,900 trucks in Iskandariyah during the early 1980s.

According to assessments presented to Bjorling, Iraq needs to improve its infrastructure, communication systems and power generation.

In May, Sweden hosted a UN-Iraq conference on the war-torn country's efforts to improve security, human rights and economic development.

Meetings between Swedish government officials and their counterparts in Iraq this week included talks on future trade possibilities. (dpa)