EXCLUSIVE: Kuwait to seek adviser for two major IWPPs

18 March 2018
Single firm will be appointed to provide transaction advisory services for both projects

The Kuwait Authority for Partnership Projects (KAPP) is planning to appoint a transaction adviser to work on both the planned Al-Zour North phase 2/3 and Al-Khiran independent water and power projects (IWPPs).

According to sources close to the planned projects, KAPP is seeking to appoint a single transaction adviser to work on both projects to expedite the procurement process for its next major utilities projects, with both having faced heavy delays to date. The tender for the advisory role is expected to be issued in the next 1-2 months.

The next phase of the Al-Zour IWPP site, currently known as phase 2&3, will replace the previously planned Al-Zour North 2 IWPP scheme following the cancellation of the tender in 2017. KAPP had received bids from three developers for the Al-Zour North 2 IWPP in June 2016, and subsequently invited two of the three bidders for clarification meetings and further negotiations. The remaining bidders were asked in March last year to extend bid bonds by six months from April to October before the tender was cancelled in August.

The next phase will merge the previously planned second and third phases, and is planned to have a generation capacity of 2,700MW and a desalination capacity of 165 million imperial gallons a day (MIGD). A new transaction adviser is being sought due to the significant change in scope for the next phase of the Al-Zour site.

The proposed Al-Khiran IWPP has also faced numerous delays. Seven developers were prequalified to bid for the proposed IWPP in August 2015, with KAPP having originally aimed to have tendered the project in early 2016. However, the project stalled due to the delay and cancellation of the Al-Zour North 2 IWPP and discussions over feedstock for the planned Al-Khiran scheme. According to sources close to the scheme, KAPP and the Ministry of Electricity & Water (MEW) have decided to switch the feedstock for the plant from low sulphur fuel oil (LSFO) to gas. As a result of the switch, a new transaction adviser is required.

The Al-Khiran 1 IWPP is planned to have a generation capacity of 1,500MW and a desalination component of 125 million imperial gallons a day (MIGD).

Kuwait’s first IWPP, Al-Zour North 1, was fully commissioned in late 2016. Following a number of delays with the tendering of the country’s first IWPP, the government amended the PPP law in 2014 and reformed the PPP body, changing its name to KAPP from the Partnerships Technical Bureau (PTB).

It introduced Law 116/2014 (the PPP Law), which superseded the previous law for PPP projects in Kuwait. The law restructured the PPP programme and codified some of the methods used in the procurement of the Al-Zour North IWPP to provide a comprehensive structure for procuring major projects. The executive regulations were published in March 2015.

However, the reformed PPP body and legislation has so far failed to award and execute any further projects since Al-Zour North 1. Success with tendering and awarding contracts for the next IWPPs is viewed as critical if Kuwait’s public-private partnership (PPP) programme is to regain the interest and support of international developers and financiers.

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