CONSTRUCTION: Making the best of slim pickings

27 February 1998
NEWS

LARGE construction projects in Kuwait are few and far between. While smaller construction firms are content to pick up the routine maintenance contracts, the energies of larger contractors are now directed at winning projects in overseas markets.

That said, there are opportunities in Kuwait. Recent years have seen growth in the number of privately-funded projects in the country. There are also hopes that the recent improvement in state finances will encourage the government to press ahead with projects that had been shelved for lack of finance.

BOT schemes

A number of new projects have either been planned or are being executed on a build-operate-transfer (BOT) basis.

The largest BOT project in Kuwait is the development of the waterfront. Work is nearly complete on the Al-Sharq scheme, the third phase of the waterfront project. National Real Estate Company (NREC) was awarded a contract to develop the site in 1994. NREC is building shops, restaurants, a marina, cinema and fish market on the site (see page 16).

After the success of the Al-Sharq development, the municipality is pressing ahead with phases four and five on a BOT basis. Bids for both schemes were submitted in 1996, but the selection process has been lengthy.

The local United Real Estate Company (UREC) is close to concluding a final agreement on the development of phase five with the Kuwait municipality. UREC is committed to investing about KD 50 million in the project over 24 years, including a four-year construction period. The project includes the construction of 40,000 square metres of commercial space, government offices, a mosque complex and parking and recreational facilities. The project consultant is the local Salem al-Marzouk & Sabah Abi-Hanna.

A consortium led by Kuwait Finance House (KFH) was selected in January to execute phase four. The project involves the development of a 2.5-kilometre stretch of coastline next to Arabian Gulf Street in the heart of Kuwait City. KFH is expected to invest about KD 40-50 million in the project over a 25 year period. Preliminary designs were completed by KEO International with the UK's Wimberley Allison Tong & Goo Partnership.

The municipality is considering extending the BOT method to other projects. It is currently drawing up the terms of reference for the development of a total of eight kilometres of seafront at Fahaheel and Sulaibikhat.

There also rumours that an elaborate KD 600 million scheme to rejuvenate Abdulla al-Ahmed street might be revived. The project involves the development of 100 hectares of land in the centre of Kuwait City. In 1994 a masterplan for the site's development was drawn up and approved by the municipality. The plan includes the construction of a heritage village, shops, offices and housing.

The municipality had wanted the scheme to be implemented in a single BOT package. However, no private firms were prepared to take on such a mammoth proposal. The municipality is now considering splitting the project into a number of packages and implementing them over a 15-20 year period, industry sources say.

Wastewater treatment

Another long-awaited, much needed project, is the Sulaibiya wastewater treatment plant. In 1993 the US' Engineering Science and the local Gulf Consult were awarded the consultancy contract for the scheme. They drew up detailed designs for the 275,000-cubic-metre-a-day plant with an estimated price tag of KD 100 million. In the absence of state funds for the project, the go-ahead was given for it to be executed on a build-own-operate-transfer (BOOT) basis.

Progress has been negligible over the past couple of years, despite the need for the commissioning of a new wastewater treatment facility by the beginning of the next century. However, new life may have been injected into the project. Last November the prime minister's office set up a special commission to oversee the tendering process. The BOT model is still the favoured method of implementation and Gulf Investment Corporation has been given a mandate to draw up the financial arrangements. Interested groups are expected to be invited to prequalify this year.

Kuwait Petroleum Corporation (KPC) HQ

After being on the drawing broad for almost 10 years, construction work on the new KPC headquarters has finally started.

The new HQ is being built on the site of the former salt and chlorine factory owned by the local Petrochemicals Industries Company on Gulf road. The new complex will cover a 54,000-square-metre site and include a 17- storey office tower for KPC and a 14-storey tower for the Oil Ministry. Support facilities include a car park, exhibition hall, auditorium, library, prayer hall, training centre, grand mosque and conference centre. After many months of wrangling, a budget of KD 34 million has been agreed.

The project is expected to be divided into at least nine tender packages. Bids for the first contract, which covers land clearance and site preparation, were submitted in January. The local Mohamed Abdulmohsin Kharafi & Sons was low bidder at KD 1.25 million.

The designers are the local Salem al-Marzhouk & Sabah Abi-Hanna and the US' Arthur Erickson Architects. Project managers are the UK's Bovis International and the Kuwait-based Project Analysis & Control Systems (Projacs). The client is the Ministry of Public Works, which is executing the project on behalf of KPC.

KNPC export piers

Kuwait National Petroleum Company (KNPC) is working to upgrade the export facilities at the Shuaiba and Mina al-Ahmadi refineries.

At Mina al-Ahmadi, the UK's Mouchel & Partners was awarded the front end engineering and design (FEED) contract for a new pier last summer. The new structure will replace the south pier and be about two kilometres long with four-six berths.

The new pier is not expected to be completed for at least four years, so KNPC is renovating the existing south pier to ensure it lasts until the new one is in place. It is also making repairs to the north pier to keep it operational for another 15 years. The Netherlands' Frederic R Harris is completing detailed designs for the renovation of both piers.

China Harbour Engineering Company is working on a $61.2 million contract it was awarded in 1996 to upgrade the export facilities at Shuaiba.

Industrial projects

A number of ambitious industrial projects have been proposed, but none has progressed further than the planning stage.

The local National Industries Company (NIC) and Qatar Steel Company (Qasco) signed a letter of intent in January to build an $80 million steel mill. The companies will each hold a 40 per cent stake in the plant. The remaining 20 per cent will be held by Qatari investors and Gulf Investment Corporation (GIC). Feasibility studies have still to be carried out and the plant will need Commerce Ministry approval.

Two other steel projects have been proposed. The local United Steel Industry Company has announced plans to build a 500,000-tonne-a-year steel reinforced bar mill in Shuaiba in a joint venture with National Iranian Steel Company. The local Kuwait Metal Collecting & Shredding Company is also holding talks with the potential partners about constructing a plant, industry sources say.

The US Raytheon Corporation has drawn up plans to set up a 230,000-tonne- a-year aluminium smelter in order to fulfil offset

obligations stemming from its sale of Patriot missiles. However, discussions with the government have become bogged down over the pricing of power. Raytheon wants to negotiate a power supply deal lasting for up to 12 years at current prices. The government is understood to be unwilling to subsidise the power supplies to the proposed plant.

Other projects

There are a fair number of other construction projects in various stages of planning. The local Salem al-Marzhouk & Sabah Abi-Hanna is completing designs for a new HQ for the Public Institute for Social Security. The project is scheduled for this year and will be tendered in five packages. Consultants have also submitted bids to design a new HQ for Kuwait Investment Authority and a new prisons complex.

Work is close to completion on many of the new facilities at Kuwait University which were tendered in 1995 and 1996. Design work on a multi-purpose hall and amphitheatre at the university's Haldia complex is virtually complete and the project should go to tender later this year.

Design work is continuing on a new campus for the Public Authority for Applied Education & Training (PAAET). KEO International is completing infrastructure designs while local consultant Pan Arab Consulting Engineers (PACE) is designing the institute of technology. Salem al-Marzhouk & Sabah Abi-Hanna is designing the electricity and water institute. Bids for the first construction packages are expected before the end of the year.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.