CONSTRUCTION: Scandal rocks ministry, stops most contracts

28 February 1997

The humdrum world of Kuwaiti construction has been shaken up by the corruption scandal enveloping the Ministry of Public Works (MPW). Rumours and intrigue are today's staple diet for consultants and contractors as they await the consequences of the probe being carried out by public prosecutors.

The scandal came to light in December when evidence was handed to the public prosecutor alleging major financial irregularities at MPW. In response, a probe was launched into the goings on at the ministry and a number of its top officials have been suspended pending the outcome. An immediate consequence of the episode has been to slow decision making at MPW, one of the main sources of state-funded contracts.

Scandal aside, contractors are more positive about the Kuwaiti market than they have been for a number of years. There are hopes that the higher oil prices will enable the government to press ahead with new projects. Contractors also report greater confidence in the private sector with developers planning a number of new office and shopping projects.

Housing continues to provide a steady flow of new work for local contractors. With more than 50,000 people waiting to be housed, housing projects are set to remain a government priority. Higher education projects are also moving ahead as the government seeks to accommodate the growing ranks of school leavers.

Major projects include:

Higher education - The biggest concentration of construction work in Kuwait is at the new campus for Kuwait university at Shuwaikh. During 1996, contracts totalling $110 million were awarded for the construction of the sports complex, library, college of social science and law department, computer building, lecture rooms, conference hall and the campus control system. More facilities are expected to be tendered this year, including the engineering faculty.

There are also signs of progress on a new campus for the Public Authority for Applied Education & Training (PAAET), a project budgeted at KD 100 million. The PAAET campus will accommodate 20,000 students and will be located close to Kuwait University's Shuwaikh campus.

In late December, Kuwait Engineers Office (KEO) was awarded the contract for infrastructure design on the 198-hectare site. The local Pan Arab Consulting Engineers (PACE) is designing the institute of technology. The local Salem al-Marzouk & Sabah Abi-Hanna (SSH) is designing the electricity and water institute on the campus.

The Kuwait-based Project Analysis & Control Systems (Projacs) is strongly tipped to be appointed project manager on the PAAET scheme.

Build-operate-transfer (BOT) projects - The most advanced BOT project is the development of Kuwait City waterfront. The Kuwait municipality has divided the project into separate packages. The most advanced is phase three - the Al-Sharq waterfront. Bids have been submitted for phases four and five and a decision is expected soon from the municipality.

Work is well under way on the Al-Sharq scheme. National Real Estate Company (NREC) was awarded the contract to develop the site in September 1994. The company is investing KD 35 million in the scheme over 25 years, when it will be handed back to the municipality. NREC is building shops, restaurants, a marina, a cinema and a new fish market on the 28,800-square-metre site. The design work has been completed by Kuwait Engineers Office (KEO).

The waterfront is due to open in February next year. Work has been divided into 16 separate packages. The local Consolidated Contractors Company (Conco) has almost completed its KD 5.4 million contract to build the marina. The local Ahmadia Contracting & Trading Company has secured three contracts on the project totalling KD 13.3 million. The company will be responsible for civil and infrastructure works and all external finishes.

Other BOT-type projects have been slow to materialise. Last year the Public Authority for Housing Care experimented with tendering infrastructure works on two plots of land at South Jahra and West Glib al-Shiouk on a BOT basis. However, industry sources say the scheme has now been shelved.

Contractors are still waiting for progress on the Sulaibiya wastewater treatment plant. The government remains committed to pressing ahead with the KD 100 million scheme on a BOT basis, but has still to finalise the details.

Oil export facilities - The export facilities at Shuaiba and Mina al- Ahmadi are being upgraded by Kuwait National Petroleum Corporation (KNPC).

China Harbour Engineering Company was awarded a $61.2 million contract last August for work at Shuaiba. Work includes the strengthening and upgrading of both the existing approaches and the northern arms of the loading pier. The southern arms of the loading piers will be demolished and reconstructed. Control systems on the jetty will be upgraded and an extension will be built to accommodate new loading facilities for the Equate petrochemicals complex which comes on stream this summer.

Four international consultants have submitted bids to KNPC to complete detailed designs for the renovation of the north and south piers at Mina al-Ahmadi refinery. Bidders include Netherlands-based Frederic R Harris, Engineers India and the UK's Rendel Palmer & Tritton.

KPC headquarters - One of the most prestigious office complexes planned in Kuwait is the new headquarters for the Kuwait Petroleum Company (KPC). The new complex will be built on a 54,000-square-metre site and will include two 21-storey twin towers.

The first of nine construction packages was expected to be tendered in February. This includes the demolition of existing buildings and land reclamation. The complex is being built on the site of the former salt and chlorine factory owned by Petrochemical Industries Company at the western end of Gulf road.

The remaining construction packages will be tendered after KPC completes a design review. This could involve some cost cutting. KPC has budgeted KD 25 million for the scheme, but industry sources say that current designs have been priced at about KD 36 million.

The complex has been designed by the local Salem al-Marzouk & Sabah Abi- Hanna (SSH) and the US' Arthur Erickson Architects. The project managers are the UK's Bovis International and Kuwait-based Project Analysis & Control Systems (Projacs).

Public buildings - A number of new public buildings are at various stages of construction.

Last summer the local Mussad al-Saleh & Sons won a KD 5.73 million contract to build a new headquarters for the Public Authority for Civil Information. Mohamed Abdulmohsin Kharafi & Sons has picked up two large contracts. In late January, the company submitted a low bid of KD 13.58 million to build the new headquarters for the Kuwait Foundation for the Advancement of Science. In December, it was awarded a KD 9.64 million contract to build a new headquarters for the Chamber of Commerce.

The US' Skidmore Owings & Merrill, with the local Gulf Consult, are understood to be holding talks with MPW for the consultancy contract on the proposed new police academy. A consultant is also expected to be appointed soon for the proposed KD 10 million headquarters for the Public Authority for Minors Affairs.

The construction of the new headquarters for the Public Authority for Social Security should go to tender this year, industry sources say.

Power sector - Kuwait's power contractors had a slightly better year in 1996 with a steady stream of smaller contracts keeping them busy.

Bids were due in early February for the supply and installation of a 33/132-kV Al-Shagaya A sub-station. Eleven international companies were prequalified for the contract which is valued at about KD 15 million. Italy's Ansaldo and France's Merlin Gerin made their first appearance on the prequalification list issued by the Ministry of Electricity & Water. Yugoslavia's Rade Koncra is also applying for prequalification, industry sources say.

Contractors are currently waiting for sub-stations at Hiteen and Umm al-Haiman to be tendered.

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