Kick-starting a market revival

17 January 2013

Kuwait’s projects market gains much-needed momentum after political bureaucracy is pushed to the wayside

The award of Kuwait’s first independent water and power plant contract on 8 January is the latest sign that Kuwait may be turning its projects market around after a difficult period.

Following long delays, the new parliament took swift and decisive action with the Al-Zour North scheme, the first public-private partnership (PPP) project in Kuwait. This kind of consensus has eluded Kuwait for years, but will be essential if the projects sector is to realise its potential.

A key foundation of [Kuwait’s] PPP programme is to attract and build expertise

In June 2012, the National Assembly voted to scrap the Al-Zour North plans following a period of political indecision and bureaucratic tendering processes that has stalled vital infrastructure schemes. With more than $124bn of projects in the planning or bidding stage, Kuwait should be offering significant opportunities for the region’s contractors, but has so far failed to live up to expectations.

In 2008-11, Kuwait awarded $30bn of contracts across all sectors. It was more than 23 per cent lower than the $39bn awarded in Qatar, the GCC’s third-largest projects market.

With Kuwait’s population expected to rise from the current 3.7 million to 5.4 million by 2030, the government needs to invest heavily in infrastructure schemes to keep pace.

A crucial feature of Kuwait’s $110bn economic development plan announced in 2010 is to increase the role of the private sector with PPP projects at its core. Kuwait could easily carry out many of its power and infrastructure projects on an engineering, procurement and construction basis, but a key foundation of the PPP programme is to attract and build expertise.

Since the 2 December elections were boycotted by opposition MPs, there has been no real dissent in parliament to stop the government pressing ahead with its development plans. It must now build on the momentum it has gained the past few weeks, as the mood outside parliament is just as tense as before.

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