Kuwait has proven to be a tricky market for foreign investors to access in recent years, and the power sector has been no exception. While demand for contractors and engineering companies has never been stronger, rarely has implementation of projects been more difficult.

There is no doubting the potential of the power sector for contractors and suppliers to the industry. Demand for electricity is growing at about 8 per cent a year, and the Electricity & Water Ministry proposes to more than double installed capacity to some 26,000MW by 2020.

The ministry has also been continually revising its capital investment forecasts upwards. In early 2009, the ministry said it planned to tender $11.2bn worth of power generation and desalination projects by the end of the following year. The size of the utilities programme has since risen to an estimated $17.4bn, and involves building 14,260MW of new production capacity by 2017.

Selected major power projects in Kuwait
Plant Capacity (MW) Estimated cost ($ million)
Subiya 2,000* 2,400
Al-Zour North 1 1,500 1,800
Al-Zour North 2 1,500 1,800
Al-Zour North 3 800 968
Al-Zour North 4 900 1,090
Al-Zour IWPP 1,500 na
Jelaiaa 1,000 na
Shuwaikh 1,000 na
Doha East 2,300 na
Shuaiba South 1,400 na
*To be determined; na=not available
Source: MEED; Electricity & Water Ministry

Troubled history

Despite its considerable oil wealth, Kuwait’s national infrastructure falls behind the standards of most of the other Gulf states. This is partly due to the sclerotic political process, which has held up public funds in a long-running stand-off between parliament and the government.

Traditionally most utility schemes in Kuwait have been publicly funded, but the country is now pushing ahead with its first independent power and water project (IWPP), a 1,500MW plant at Al-Zour. Two groups are still in the running to advise the government on the scheme, which will involve bringing in a private developer to design, build, finance operate and maintain the plant.

Interest in the project has been strong, with more than 10 consultancy groups bidding for the advisory contract. But enthusiasm has disappeared for other power schemes in the past year as a result of continued delays and revisions. Two projects in particular have been affected by delays: a 2,000MW scheme at Subiya, which was first tendered more than four years ago, and a clutch of projects at Al-Zour North that would add a combined 4,700MW of capacity.

The Al-Zour IWPP will be seen as an important test case for foreign investment in the country

The main contract for the Subiya plant was originally awarded in 2006, but subsequently retendered after the winning consortium failed to sign the contract. The scope has also been changed. It is currently envisaged as a 2,000MW scheme, of which 1,320MW was originally due to come on line in 2011. However, the need for the State Audit Bureau of Kuwait to ratify the new contract award, made in August to a team of the US’ GE and South Korea’s Hyundai Heavy Industries, has further delayed the project.

The state-funded project at Al-Zour North has also had a troubled history. The project was initially tendered as a 2,500MW steam plant and seven companies were prequalified in late 2005. After a poor showing at the bidding phase, the scheme was expanded and broken up into four parts.

The first phase of the project, which involves installing 1,500MW of power and 102 million gallons a day (g/d) of desalination capacity, was finally tendered in early March. Interested parties will have until 30 May to submit bids following a consultation meeting due to be held in mid-April. The first phase of the plant is now scheduled to start up in April 2012. 

Kuwait is planning 11 power projects in total, seven of which will be combined with desalination plants. New plants will be built at Shuaiba South, Al-Zour South, Jelaiaa, Shuwaikh and Doha East.

The first phase of a 600MW plant at Shuaiba North was recently completed by a consortium of Mitsui & Company of Japan, Hyundai Engineering & Construction and Italy’s Fisia Italimpianti. An additional 200MW of capacity will be added this year. 

This year will also see the incremental expansion of several existing power and water plants. During 2010, the ministry plans to add 560MW of capacity from steam turbines to an existing power plant at Al-Zour South and it will commission 30 million g/d of new desalination capacity at Shuwaikh in the east of the country. Major future projects include a new 2,300MW plant at Doha East and a facility at Shuaiba South, which will have a capacity of 1,400MW. Both plants are due to come on line in 2017.

The Al-Zour IWPP will be seen as an important test case for foreign investment in the country. If successful, the future phases of the neighbouring Al-Zour North project could be tendered as independent projects.

The advisory contract for the Al-Zour IWPP is expected to be awarded imminently. Two groups are competing to advise the government on the financial, legal and technical aspects of developing the project: French bank BNP Paribas, with US law firm Chadbourne & Parke and Germany’s Lahmeyer International; and HSBC of the UK, with UK law firm Norton Rose and Germany’s Fichtner.

The Al-Zour IWPP will be seen as an important test case for foreign investment in the country. If successful, the future phases of the neighbouring Al-Zour North project could be tendered as independent projects.

The advisory contract for the Al-Zour IWPP is expected to be awarded imminently. Two groups are competing to advise the government on the financial, legal and technical aspects of developing the project: French bank BNP Paribas, with US law fi rm Chadbourne & Parke and Germany’s Lahmeyer International; and HSBC of the UK, with UK law firm Norton Rose and Germany’s Fichtner.