Kuwait PPP delays to hit confidence

31 January 2013

A ministerial review that is delaying four projects risks sapping faith in Kuwait’s plan to attract more private sector investment

In mid-January, Kuwait’s Partnerships Technical Bureau (PTB) announced one of its most significant milestones since it was created in 2008. Its first project, the Al-Zour North independent water and power project (IWPP) had finally been awarded and financial close would be coming in the first half of the year.

The deal is a vital first step to energise the PTB’s plans to attract more private sector investment into the country. Confidence in Kuwait’s public private partnership (PPP) programme increased as investors realised the country could rise above the political strife that has so frequently delayed investment plans in the past.

Much work has already been done in preparing the stalled schemes for the private sector

Unfortunately, at around the same time, the country’s new communications minister Salem al-Othaina put four projects on hold while he reviewed whether to develop them in cooperation with the private sector. It is still unclear what the outcome of this review will be. The projects include metro and rail schemes, where a great deal of work has already been done in preparing them for the private sector.

Under Kuwait’s PPP system, the PTB is responsible for managing the process of getting the private sector involved, but ministers from relevant sectors also have to approve the plans. As the new minister, it is wise for Al-Othaina to be aware of the commitments his department is making, especially since those commitments could last 10 years or more. At the moment, the situation is causing small delays to the four stalled projects, and some annoyance among the advisers working on those schemes.

If Al-Othaina decides to halt the PPP process on these projects it will prove a significant blow to confidence that Kuwait is really committed to attracting greater private sector involvement and foreign expertise into the economy.

It also illustrates that the PTB may have more work to do in convincing some ministers that this is the best way forward for the country.


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