Kuwait tenders three PPP deals

15 November 2015

Private sector gears up to play leading role in infrastructure development

  • KAPP tenders three PPP deals
  • Projects cover municipal waste, schools, and a solar power plant
  • Governments are turning to the private sector as oil prices remain low

The Kuwait Authority for Partnership Projects (KAPP) has tendered three public-private partnership (PPP) schemes as the private sector gears up to play a crucial role in the development of Kuwait’s infrastructure.

KAPP has already progressed with projects in the power and water sector, and it now tendering contracts covering the development of a municipal solid waste facility and schools, as well as more power capacity with an integrated solar combined-cycle (ISCC).

For the municipal solid waste project, KAPP has issued request for proposals (RFPs) to five prequalified groups. The submission date for proposals is 24 March next year.

The waste-to-energy (WTE) scheme will be developed using a design, build, finance, operate and transfer model.

The proposed facility will be located in the Kabd area, about 25 kilometres from Kuwait City, and will occupy an area of about 500,000 square metres. The project is planned to have an initial capacity of 3,275 tonnes a day (t/d) and will treat up to half of the country’s municipal waste.

Municipal solid waste prequalifiers:

  • Constructions Industrielles de La Mediterranee (CNIM) (France), Gulf Investment Corporation (GIC), Al-Mulla Group (local)
  • EVN Umweltholding and Betriebs (Austria), International Financial Advisors (IFA) (local) / KCC Engineering & Contracting (local) / Steinmuller Babcock Environment (Germany)
  • Urbaser (Spain) / Babcock & Wilson (US) / Veolia Proprete (France) / National Cleaning Company (local)
  • Suez Environnement (France) / Itochu Corporation (Japan) /Kharafi National (local)
  • FCC Medio Ambiente (Spain) / Acwa Power (Saudi Arabia) / Beatona (Saudi Arabia) / Fouad Alghanim & Sons General Trading & Contracting (local)

KAPP, formerly known as the Partnerships Technical Bureau (PTB), invited companies to prequalify for the Kabd scheme in May this year. This was the second time the prequalification process was conducted for the project, with companies originally invited to prequalify for the scheme in March 2014. Once formed, KAPP decided to reopen the prequalification process.

In the second quarter of 2013, the PTB awarded the transaction advisory services deal for the project to a consortium led by the UK’s PwC. The contract involves reviewing, updating and finalising the feasibility study for the scheme, and includes a waste composition characterisation study. The adviser will also be in charge of reviewing, updating and finalising tender documents, and providing assistance in all procurement procedures until the financial close of the project.

The electricity generated by the plant will be purchased by the Ministry of Electricity & Water (MEW) through a power purchase agreement (PPA). The PPA is expected to last for 25 years, in addition to four years for design and construction of the scheme.

The Kabd project is part of the Kuwaiti government’s efforts to increase power generating capacity in the country, from the current 14,000MW in 2015 to 31,000MW by 2023.

For schools, KAPP has requested proposals from three consortiums for its Kuwait schools public-private partnership (PPP) development programme by 14 February next year.

Schools prequalifiers are:

  • CCC - Consolidated Contractors Company (Athens-based), Privatisation Holding Company (local), National Industries Group Holding (local) and Morganti Group (US)
  • Alargan - Alargan International Real Estate (local), KSCP (Germany), Alargan Real Estate Project Management (local), Alargan Gulf Real Estate Service Company (local), Index Trading & Contracting for Precast & GRC (local), Mohammed Abdulkhuder Ibrahim Consultant and KFM Holdings (Malaysia)
  • KSDP - United Real Estate Company (local), Projacs International Project Management Company (Bahrain), Dar SSH International Engineering Consultants (local), United Building Company (local) and United Facilities Management (local)

The project involves the design, build, financing, operation and transfer of nine schools and a ten-lane Olympic swimming pool. The five kindergartens, three elementary schools and one middle school will have a total capacity of 4350 students.

State-owned land has been allocated in Al-Asema, Al-Ahmadi, Hawali and Mubarak al-Kabeer in Kuwait City.

The winning consortium will manage the facilities for 25 years for a monthly fee, depending on their availability and the standard of service. The UK’s Eversheds, PwC and Mott MacDonald are providing advisory services to KAPP.

For the integrated solar combined-cycle (ISCC) plant, KAPP has invited prequalified groups to bid by 17 March.

KAPP, Kuwait’s public-private partnership (PPP) body which was formerly called the Partnerships Technical Bureau (PTB), is overseeing the development of the scheme in partnership with the Ministry of Electricity & Water (MEW).

ISCC prequalfiers

  • Acwa Power (lead; Saudi Arabia) / Al-Mulla Group (local) / Acciona Energia (Spain)
  • Abengoa (lead; Spain) / Sojitz (Japan) / Alghanim International (local)
  • EDF (lead; France) / Toyota (Japan) / Al-Sager (local) / TSK (Spain)
  • Korea Electric Power Corporation (lead; South Korea) / Kharafi National (local) / Aries Energy (US)
  • GDF Suez (lead; now called Engie; France/UK) / Elecnor (Spain)
  • JGC (Japan)
  • RWE (lead; Germany) / Ali Kharafi (local)

The ISCC facility, which will run on a combination of solar power and gas, will have a total capacity of 280MW. The plant will contain a 60MW solar component. The project will be located in Al-Abdaliyah in southwest Kuwait, and will be located on an area spanning 2 square kilometres.

KAPP, in collaboration with the MEW, will oversee the creation of a joint stock project company that will build, operate and transfer (BOT) the project for an investment period of 25 years. The project company will sign an Energy Conversion and Power Purchase Agreement (ECPA) with the MEW, with the ministry being the offtaker for the electricity generated by the plant.

The UK’s HSBC was appointed as financial consultant for the scheme in September 2013.

As with the other PPP projects planned in Kuwait, the Al-Abdaliyah scheme has faced several delays as the government reformed its PPP implementation body and amended the PPP legislation in 2014.

There now appears to be a strong commitment from KAPP and the MEW to push ahead with major utility projects, following the announcement of prequalified groups for the Al-Zour North 2 and Al-Khiran 1 independent water and power projects (IWPPs) earlier in August.

Kuwait’s first IWPP is currently under construction, with the developer contract awarded to a consortium led by GDF Suez in December 2013.

PPP projects outside the utilities sector have struggled to move forward in the GCC. Falling oil revenues have put the model back into focus, and Kuwait has the most ambitious programme.

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