Government to part-fund Failaka

11 November 2005
In a dramatic turnaround, the government in late October informed the nine prequalified groups for the touristic development of Failaka that it will fund the island's basic infrastructure cost. The government has also made substantial changes to the development of the Bubiyan seaport project.

The government's decision to finance the construction of basic infrastructure on Failaka came just two weeks after all of the nine groups, comprising more than 95 local and international companies, failed to submit proposals for the estimated $3,300 million project. The groups had consistently argued that the 20-year-plus-10 build-operate-transfer (BOT) scheme would be financially unviable if they had to fund the entire project. The government is understood to have relented after it became clear that the development could not go ahead under the original plan.

Under the new arrangement, the government will finance the construction of roads and sewerage and stormwater drainage systems, as well as government buildings. The concession holders will finance the development of tourism facilities, including hotels, chalets, a marina, and retail areas. The government will tender separately the BOT concession to develop the island's electricity and potable water element, which is likely to consist of a 160-MW cogeneration plant (MEED 29:4:05).

The government is also understood to have allowed the concession to be granted to up to three groups instead of one in order to alleviate risk, as well as permitting the prequalifiers to merge if they wish. However, a key sticking point remains the concession period. Local law restricts the concession period to 30 years, but investors would like up to 50 years to guarantee a return on their investment. Problems also persist with the masterplan, which the prequalifiers insist must be made more flexible (MEED 14:10:05).

Some progress has also been made on the estimated $1,500 million development of Bubiyan seaport. Following a meeting of prequalification applicants for the estimated $500 million phase 2 dredging package, the government has informed the interested groups that the project will be tendered on a straightforward construction basis instead of the originally envisaged design-build basis. As a result, the UK's MouchelParkmanwill carry out the design portion.

Mouchel is also carrying out the conceptual study on the phase 1 infrastructure works design-build package, the deadline for which was recently extended to late February. The decision to engage Mouchel and extend the bid deadline follows a heated pre-tender meeting in the summer, when the 19 prequalified companies and groups made it clear that the terms of reference for the estimated $200 million contract were too vague for them to submit viable bids (MEED 12:8:05).

The client on the state's two largest civil infrastructure projects is the Ministry of Public Works' mega projects department, which itself was formed following the dissolution of its two predecessors - the Mega Projects Agency (MPA) and the Divided Zone Agreements & Kuwaiti Islands & Mega Projects Development Team (Dizart). A US/local team of Hill Internationaland System Development & Project Management (SDPM)is the overall programme manager (MEED 16:9:05).

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