Contracts for the development of the proposed Kuwait Metro scheme could be split into several different public-private partnership (PPP) deals to make the project easier for the private sector to develop and finance.
The plan, which is due to be considered by the Kuwaiti government, would entail splitting the $7bn-8bn project into four or five separate PPP agreements, each with its own performance metrics and payment schedules. The hope is doing so will make it easier for private-sector developers to raise debt funding for several smaller packages rather than one large contract.
“Doing it as one contract is probably going to be too big and too complex,” says a source close to the scheme.
With many European banks currently struggling with liquidity problems, their ability to participate in future project finance deals in the region is uncertain. The hope is that by splitting large projects into several smaller schemes the deals will be easier to finance.
A similar proposal is also being evaluated for the development of the Mecca Metro project, which is expected to cost a total of about $5bn-6bn.
No decision has yet been made on whether to go ahead with the proposals to split the two transport projects into several smaller deals.