What oil price plunge? Kuwait to spend $47 billion on infrastructure projects this year

Published March 4th, 2015 - 02:22 GMT

Kuwait is set to award about KD14 billion ($47.2 billion) worth of projects this year, almost double the value of contracts awarded in 2014 in line with its strategy to develop the country's infrastructure, according to a report.

Last year, Kuwait had awarded KD7.3 billion ($25 billion) worth of contracts. It was almost four times as much as in 2013 and more than the last three years combined, stated MEED Projects in its report.

The total value of Kuwait’s projects market (planned and active projects) is estimated to be in the region of KD64 billion, it said.

Last year, the authorities introduced a new law to regulate all public private partnerships (PPP), which, it is hoped, will accelerate the involvement of the private sector in Kuwait’s projects market.

Under the new law, the Partnerships Technical Bureau (PTB) will be superseded by the Kuwait Authority for Partnership Projects (KAPP), an independent government body that will be vested with greater executive powers in order to more effectively manage all PPP projects, said the report.

The government has also reaffirmed its commitment to deliver on development projects in spite of the oil price decline.

Following the release of Kuwait’s new five-year development plan (2015-2020) in the summer of last year and the recently announced annual plan for the 2015/16 fiscal year, 30 projects of strategic and economic importance have been earmarked for investment spending of KD6.6 billion during the next fiscal year, said the report.

The entire budget for the projects has been estimated to be about KD34 billion over at least five years, it said.

Meanwhile, capital expenditures are likely to increase on the previous budget, albeit marginally, to KD3.1 billion, which also includes capital spending on items unrelated to the development plan and excludes items normally accounted for off-budget, such as capital spending on the oil and gas sector.

Two high profile projects - the KD4 billion New Refinery project (Al-Zour) and the long-delayed KD4.6 billion Clean Fuels project - received the go-ahead, with contracts signed to commence work on some of their constituent packages.

The total contracts awarded in the sector reached KD4.8 billion, which represented more than 60 per cent of all contracts awarded during the year.

More than KD6.5 billion in oil and gas contracts are expected to be signed this year, with packages 1-5 of the New Refinery project (Al-Zour), worth KD3.4 billion, likely to dominate the awards.     

In 2014, KD1.7 billion worth of construction sector contracts were signed, equivalent to 24 per cent of all contracts awarded during the year. It included expansions at Al-Sabah, Farwaniya, and Al-Adan hospitals, the construction of the Jaber Al-Ahmed Cultural Center and the refurbishment of the historic Al-Salam Palace.

Following on from the award of phase 1 of the KD2.4 billion Al-Zour North IWPP in 2013, Kuwait awarded KD283 million worth of power sector-related contracts last year.

The newly formed Kuwait Authority for Partnership Projects (KAPP) is scheduled to roll out several power generation projects over the next two years including the Al-Khiran IWPP, the Al-Abdaliya Integrated Solar Combined Cycle (ISCC) Power Plant (CSP) and phase 2 of the Al-Zour North IWPP.      

Kuwait awarded KD267 million worth of contracts in the transport sector last year, which included the delayed KD147 million  Doha Link project, which will connect Doha port to the Jaber Al-Ahmad Causeway, which is currently under construction.

The country was set to award the contract for a new main terminal as part of the country’s airport expansion project in November but the project was delayed when the lowest bid KD1.38 billion by Turkey’s Limak Construction came in above the KD1 billion budget. The Ministry of Public Works (MPW) has asked the Central Tenders Committee (CTC) to cancel the tender for the main terminal of Kuwait’s airport expansion project.

Kuwait also revived the Metro and National Railroad projects last year, though no award is expected before 2016, said the report.

Kuwait awarded KD79 million worth of contracts in 2014 in the water sector. Under the PPP model, Kuwait is hoping to award the KD442 million Umm Al-Hayman Wastewater Treatment Plant in the fourth quarter of this year. KAPP is also looking to award the desalination plants at Al-Zour North: Phase 2 and Al-Khiran IWPPs by 2016. -

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