August has been one of the busiest months in Kuwaits projects market for the best part of a decade. In addition to the sheer value of contracts awarded or approved, what is noticeable is the diverse nature of the projects, from oil refinery schemes to airport projects.
All within a week of each other, the final package on the $11.5bn Al-Zour New Refinery Project (NRP) was awarded, the $4.3bn contract for the new airport terminal was approved and prequalifiers were announced for the countrys next independent water and power projects (IWPPs).
All these projects have been in the planning and tendering stages for several years. As a result, progress has been welcomed from not just within Kuwait, but throughout the regions business and industry sectors, many of which had started to doubt Kuwaits ability to deliver on its development programmes.
While the $28bn-plus worth of contracts that have been awarded in the country in 2015 to date is impressive and shows a commitment to delivering on long-delayed projects, it is important this momentum continues and progress is made with vital utilities, transport and housing programmes.
The problem facing government clients, which still dominate Kuwaits projects market, is low oil prices, which have fallen even further as a result of the current Chinese currency crisis.
With oil-reliant economies such as Kuwait, it is only a matter of time before the sharp fall in government income forces cutbacks in government spending. However, it is imperative in the short-to-medium term that Kuwait completes what it has planned if it is to meet the needs of its growing population and begin to diversify its economy.
As a result of underinvestment over the past two decades, largely due to slow progress with key infrastructure schemes, the country has built up healthy budget surpluses that it can tap into. This underinvestment has resulted in Kuwait falling behind its GCC neighbours in terms of diversifying its economy.
As the drop in oil prices has shown, diversification is vital for long-term economic development. To ensure it is better placed to deal with future shocks in crude prices, Kuwait must ensure it proceeds with the rest of its vital infrastructure programme now.