Kuwait, Iran agree to $2 billion water pipeline

Published June 20th, 2001 - 02:00 GMT

Kuwait and Iran have agreed to build a two-billion-dollar pipeline that will transport fresh water from northern Iran to Kuwait, a London-based company spearheading the project said Monday, June 18. 


Multinational group Gulf Utilities said the Kuwaiti cabinet had finally approved the deal after more than a year of talks on the pipeline, which would ship water from the Karkeh dam in northern Iran to Kuwait some 650 kilometers (400 miles) to the south. 


The pipeline will extend 330 kilometers across Iranian territory and then via a 210-kilometer pipeline under the Gulf to the Kuwaiti shoreline, thus avoiding Iraqi territory. 


The deal could serve as a model for other water pipeline projects in a region where water plays an often critical geo-strategic role, a spokesman for Gulf Utilities told AFP


"The key here is the dam," said the spokesman, Byron Ousey. "The ability to store the water is the critical aspect of this. Iran has built a very large number of hydroelectric projects all of which have got storage reservoirs behind them. You can just release it through a pipeline. Iran has an abundance of water which has been carefully trapped, so this could be the forerunner of other projects," he said. 


Gulf Utilites, a British-led company, which has Iranian and Kuwaiti stakeholders, said that the Kuwaiti cabinet had formally approved the proposals, and were setting up bodies to work on the project and would soon dispatch officials to Tehran to finalize the deal. 


A major international group will soon be appointed to co-develop the pipeline, with financing from a number of backers from Iran, the Middle East and international capital markets, Ousey said. 


"Gulf Utilities and the co-developer will build, manage, operate and run the pipeline over a 30-year period, providing an income stream to investors because the Kuwaitis will pay a tariff for the water," he said. 


For Kuwait, the pipeline could help reduce dependency on costly, environmentally suspect desalination plants. For Iran, the deal could help drum up new foreign investment to develop resources and expand their economy beyond the oil and gas sector on which it heavily relies. 


Ousey denied that the channeling of water away from Iran could have repercussions for the Iranian population. "Less than one percent of all the needs of Iran is involved," he said. "What this project might do is help to reintroduce greater diversification into Iran's exporting capabilities and therefore there will be an opportunity to finance internal schemes." 


Gulf Utilities said it would sign preliminary contracts with Iran and Kuwait within the next six months. The pipeline, which will cost about two billion dollars (€2.3 billion) to build, will be completed in 2005, it said. ― (AFP, London) 


© Agence France Presse 2001

© 2001 Mena Report (www.menareport.com)

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