2014: the make it or break it year for Kuwait's development efforts
2014 may be the year of Kuwait’s economic revival as the government (finally) gears up to begin implementing the Five Year Development Plan. Approved by parliament in 2013, the $130 billion plan aimed to modernize Kuwait’s aging state infrastructure – especially in the revenue-earning oil sector – and bolster the private sector through a series of joint stock private partnership initiatives.
Three years in, the majority of the projects remain on the drawing board and implementation of the plan has largely languished due to domestic political turmoil. The election of a largely progovernment parliament in July 2013 (made possible by the breakdown of the opposition movement) has helped restore some level of political cooperation. As a consequence, the government has also begun to move forward with the development plan projects.
Three major projects have taken small but important steps forward in recent weeks. In early December, the government reached an agreement with a consortium led by French firm GDF Suez for the financing of the $1.8 billion Al Zour North Independent Water and Power Project (IWPP). The consortium, which owns 40 percent of the project, comprises of GDF SUEZ (17.5 percent), Sumitomo (17.5 percent) and A H Al Sagar & Brothers (5 percent), was selected as successful bidder by Kuwait’s Partnerships Technical Bureau (PTB). It will build a gasfired combined cycle power plant of 1,500 MW and an associated water desalination plant with a capacity of 107 MIGD (486 thousand msq/day). All of the plant’s output will be purchased by the Kuwait Ministry of Electricity and Water under a 40-year long-term Energy Conversion and Water Purchase Agreement (ECWPA).
The plant is expected to start commercial operation in the fourth quarter of 2016. At the end of the month, the PTB invited interest in plans for a similar project in Al-Khairan and has also accepted the submission of bids for the $12 billion Clean Fuels Project that aims to overhaul the country’s ageing oil infrastructure.
The project is expected to be awarded in the first half of 2014. Plans are also moving forward with the $2.6 billion Sheikh Jaber Causeway and several other projects including the expansion of the Kuwait International Airport, the completion of the new Kuwait University campus in Shadadiya and several new hospitals and outlying cities. Though investors in Kuwait remain skeptical, there is growing optimism that the new political climate will allow for greater momentum of awarding of contracts. The early part of 2014 will provide a glimpse of the government’s desire to push forward with not only the development plan but the overall reformation of Kuwait’s economic landscape.
By Bader Khaled
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