Kuwait’s projects market has seen a pickup in activity in recent months in the wake of a new-found determination within the government to execute infrastructure projects.
Many of these are traditional infrastructure schemes such as roads, railways and airports, but increasingly, contracts are also being tendered and awarded for social infrastructure projects, including hospitals, schools and universities. This year, the state is expected to tender a series of multi million-dollar social infrastructure projects to meet the needs of its rapidly growing population.
Key fact on Kuwait construction
The Public Works Ministry has been allocated $10.8bn for infrastructure development until 2013
Kuwait’s population has shown a steady growth of 2.5-3 per cent in recent years. Its population is expected to rise from the current 3.4 million to 5.4 million by 2030.
To accommodate [the rise in Kuwait’s population], the existing urban structures can’t cope
Sandy Macmillan, Langdon Wilson International
“To accommodate all these people, the existing urban structures can’t cope. So they are developing new areas and new cities, and when you put new areas and new cities in you need infrastructure,” says Sandy Macmillan, Kuwait country manager for US architecture firm Langdon Wilson International.
With its large oil reserves and a production rate of about 2.3 million barrels a day, Kuwait has readily available capital to direct into building new infrastructure. The Public Works Ministry has been allocated $10.8bn for infrastructure development until 2013.
The funding includes $1.3bn for 2009-10, $1.7bn for 2010-11, $3bn for 2011-12 and $4.8bn for 2012-13, Sadhel Jafar, minister for public works and municipal affairs, told state media in March.
Top of the ministry’s list of priorities is the construction of the 479,360 square-metre Sheikh Jaber al-Ahmed al-Sabah Hospital.
In November 2009, a joint venture of Kuwait Arab Contractors Company and Egypt’s Arab Contractors (Osman Ahmed Osman & Company) was awarded a KD 304m ($1.1bn) contract to build the hospital in Surra district in Kuwait City. It is one of the largest building projects in Kuwait. The hospital will have 1,050 beds and is scheduled to open in 2013.
Jaber al-Ahmed al-Sabah is one of nine new hospitals scheduled to be built in Kuwait by 2016, at a cost of more than $4.5bn.
Kuwait Oil Company is currently tendering a contract to build the new Ahmadi Hospital and surrounding residential buildings. The prequalified contractors have until 27 July to submit bids for the project, which will be located in the Ahmadi oil township, some 40 kilometres south of Kuwait City.
The Public Works Ministry is planning to build four hospitals at the Al-Sabah medical area in Shuwaikh, which is located just west of Kuwait City.
The Razi Hospital, the Physical Medicine Hospital and the Ibn Sina Hospital will each have 500 beds, while a planned maternity hospital will have 600-beds. Construction of these hospitals is expected to be started and completed between 2011-2016.
As part of its plans to improve the provision of public health services in Kuwait, the ministry is also planning to build an 800-bed hospital at Al-Jahraa, and two 600-bed units at Al-Adan and Al-Ameri within the next five years.
Kuwait is not just increasing the capacity of its healthcare facilities by building new hospitals, it is also upgrading and expanding existing medical establishments. In June, the Health Ministry announced plans to build nine towers to be added to current hospitals over the next four years at a total cost of $160m. The towers will add 2,000 new beds.
Similar investment is being directed to improving and expanding the country’s educational facilities.
Kuwait has a young population. The World Bank estimates that 23.4 per cent of the population is aged between 0-14 years of age, while 74.5 per cent are between 15 and 64 and just 2.1 per cent are aged over 65.
The government is aware that a rapidly growing young population requires a comprehensive education sector and so it is putting significant investment into developing its educational infrastructure.
The largest project in the pipeline is multi-billion dollar-expansion of the national university, which has witnessed an increase in student and staff numbers of more than 40 per cent over the past five years.
Kuwait University was founded in October 1966, and was established with four colleges: the College of Science, the College of Arts, the College of Education and the College for Women. The university currently has more than 26,000 students and this figure is expected to rise to more than 40,000 in the next decade.
“We expect these figures to double in the next 10 years and so Kuwait will require a substantial number of new educational facilities for its own population,” Rana al-Fares, director of projects at Kuwait University, tells MEED.
A new $3bn Sabah al-Salem integrated campus is being built at Shadadiyah, 20km west of Kuwait City.
“The current university facilities are spread across Kuwait in seven separate campuses and some are 40 years old. The new university will have all of these upgraded and integrated into one unified and futuristic campus,” says Al-Fares. “There are already a number of infrastructure projects under way to support the planned campus facilities. These include utility plants, roads and services buildings.”
The tender process for several of the main campus buildings has already begun. The $400m construction contract for the College of Engineering and Petroleum was the first to be issued. Designed by the local Gulf Consult and US-based Cambridge Seven Associates, the new facility will accommodate eight engineering departments, as well as the university’s department of architecture. The submission deadline for bids is 11 July, and construction is expected to be completed in 2014.
Kuwait University has also invited contractors to submit bids by 12 September for a contract to build the faculty of arts and the faculty of education at the new campus.
The $400m College of Business, the $500m Women’s College and the $140m College of Science are expected to be tendered later this year. “By the first quarter of next year we are planning to tender the College of Social Sciences, College of Law and College of Sharia and Islamic Studies,” adds Al-Fares.
When completed, the new university campus will comprise more than 25 faculty buildings. It will include a 600-bed hospital, car parks with space for more than 32,000 vehicles, dormitories, sports facilities, and auditoriums.
A noticeable feature of Kuwait’s social infrastructure development programme is the absence of private investment. None of the current hospital and university projects are to be financed through public-private partnerships (PPP). This is in spite of the government pushing ahead with plans for a number of PPP initiatives in other areas.
In February, Kuwait’s National Assembly (parliament) approved a $100bn five-year economic development plan, at the heart of which lies an increased role for the private sector.
This is intended to be achieved through the privatisation of existing government assets and a series of multibillion-dollar PPP initiatives, led by the country’s Partnerships Technical Bureau (PTB). The PTB was set up in 2008, following the passage of the country’s first PPP law. Its largest scheme planned to date is the 1,500MW Al-Zour independent water and power plant, for which the main contract is expected to be awarded later this year.
The PTB is also working on financing plans for 23 other projects worth a total of $20.6bn, which include the $7bn Kuwait metro, the $3bn Failaka Island tourism development and a $10bn rail network.
The government believes private investment has an important contribution to make to the country’s economy. Those involved with social infrastructure projects are investigating the possibility of developing social infrastructure in partnership with the private sector.
“The current university projects are public ventures, but we are evaluating certain future projects that are based on PPP or PFI [private finance initiatives],” says Al-Fares.
However, sources within Kuwait are sceptical whether any private involvement in social infrastructure projects will be forthcoming in the near future.
“There have been some positive developments in the area of PPP in the power sector, but it will be a while before there are any large social infrastructure projects built using PPP,” says a building consultant based in Kuwait. “The current Kuwait legal system doesn’t encourage it … it makes it very difficult.”
Futhermore, the volatile nature of politics in Kuwait has the potential to derail privatisation plans. Several groups within the National Assembly have consistently voted against increasing the role of the private sector.
The pickup in project activity in Kuwait will be welcome news to the region’s contractors, which have been hit hard by the collapse of the Gulf’s real estate market. State-funded social infrastructure projects in Kuwait provide attractive and secure opportunities for the construction industry.
As Macmillan says: “There is a difference between Kuwait’s development plans and what happened in the UAE – Kuwait is undertaking the development to satisfy its population’s requirements. There is not the same speculative development on housing or things like that. These are projects for local people.”