Kuwait pushes ahead with PPP programme

24 November 2015

Seven projects in procurement stages and more are planned

Kuwait Authority for Partnership Projects (KAPP) is making progress on its public private partnership (PPP) projects, with $20bn worth of projects currently in the market, according to its general manager, Adel al-Roumi, speaking at MEED’s Kuwait Projects conference in Kuwait City on 24 November.

Seven projects are in the prequalification or bidding stages, including al-Zour North 2 independent power and water project (IWPP) and the Umm al-Hayman wastewater treatment plant.

Bids for the earliest projects are due in late 2015 or early 2016. The request for proposals (RFP) for Al-Khiran IWPP has been delayed slightly to allow KAPP to assess the private sector response to al-Zour North 2 IWPP.

Proposals for Egaila services centre will be invited in around two weeks time.

The future pipeline is also promising, and KAPP expects to begin prequalifying for the first KD6bn ($19.7bn) phase of the metro and even larger national rail project in March 2016.

“In the pipeline we have another two solid waste facilities, multiple power stations, as there is a huge demand for electricity, and more schools packages and services in them,” says Al-Roumi. “Hopefully we can convince the Ministry of Health on hospital projects.”

 The progress comes following major legal changes to Kuwait’s PPP framework.

“Since the new law, we have seen a huge change in the way investors look at, and commit to projects,” says Al-Roumi. “It has created a wide range of interest, which we welcomed, and guaranteed the success of the programme. It is encouraging interaction with developers, there are investor incentive, without which developer won’t receive the projects with interest. This is guaranteed in the documentation. The way we present projects is important. We follow international best practice. Everybody can see incentives clearly, what are the contractual agreements if they are awarded the projects. Most of the documents are in the RFP.”

The reforms include a clear framework for lenders and guarantees, more detailed criteria to award projects, changes in the shareholding structure and rules for companies proposing projects. Al-Roumi helps more flexible, transparent and clear rules will mean the programme is successful.

Low oil prices will not hold back the PPP projects.

“Oil prices have had the opposite effect on our pipeline,” says al-Roumi. “A few projects that the government was trying to do as EPC (engineering, procurement and construction), because of oil prices went through the PPP programme. It has increased demand, not reduced it.”

PPP projects can spread out the government’s project spending over the lifetime of the project.

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