Kuwait independent power market to return

28 April 2015

Reforms mean progress is expected, but not without teething problems

The executive regulations for public-private partnerships (PPPs) in Kuwait were released only a month late, a sign of the government’s commitment to pushing through PPP projects.

The Al-Zour North phase 2 independent water and power project (IWPP) is the biggest priority. It will be tendered under a separate 2012 law, but the most recent reforms have reorganised the Kuwait Authority for Partnership Projects (KAPP) and its role.

The step comes at a critical time for Kuwait’s increasingly tight power market.

Kuwait’s peak electricity demand is growing at 8 per cent a year and the Water & Electricity Ministry estimates it will need 10,500MW of generation capacity by 2022 to cope with demand and establish an adequate reserve margin.

But while KAPP is very positive about the simplification and clarification of the PPP tendering process, the response among developers has been muted.

Few believe that Kuwait has entered a new era of smooth and efficient tendering.

Expectations are that tendering for Al-Zour North 2 will go ahead in the near future with only minor delays. Other projects will be pushed further down the line.

The changes are not radical. A number of problematic areas from the 2008 law have been clarified to a certain extent. But KAPP is yet to organise its internal procedures and some teething problems are likely.

A real evaluation on the reforms will only be possible when the first project has passed through the tendering process and reached financial close.

This will test developer and financier interest, and KAPP’s authority and relationships with other Kuwaiti bodies. The biggest test will be KAPP’s ability to get an important project through the tendering process in under six years, the time taken over the Al-Zour North 1 IWPP.

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