30 July 1999

IN early 1999, the outlook for the Kuwaiti construction sector was bleak. With the oil price close to a 25-year low and the government at odds with a recalcitrant National Assembly, contractors warned of dire consequences for an industry trapped between austerity and indecision. Six months on, the picture is considerably brighter. The oil price rally has raised hopes that the squeeze on public spending will be relaxed. The early-July parliamentary elections and the subsequent formation of a new cabinet hold out the prospect that after months of bickering, ministers and MPs will be able to work together and get down to the serious business in hand.

For contractors, the most pressing issue for the new government and the national assembly is to clear the backlog of projects, stalled by six months of political stalemate. The largest contract pending is for the expansion of the technical studies college at Shuwaikh. The local Al-Ghanim International is frontrunner for the Public Authority for Applied Education & Training order, having submitted a low bid of KD 17.9 million ($58.8 million) in March.

A contract award is also awaited for the reconstruction of the northern and southern oil jetties at the Mina al-Ahmadi refinery. The local Mohamed Abdulmohsin Kharafi & Sons is low bidder at KD 11.8 million ($38 million) for the Kuwait National Petroleum Company (KNPC) project.

Last year's oil price crash has given the government added incentive to pursue alternative financing routes for infrastructure projects. Build- operate-transfer (BOT) is the favoured method, having been successfully pioneered by Kuwait Municipality and National Real Estate Company on phase three of the Kuwait waterfront project. Further BOT contracts are expected from the municipality for seafront and leisure schemes. Bids are under evaluation from six local consortia for the development of a one-kilometre stretch of seafront at Fahaheel. The project calls for the construction of a new fish market and commercial and recreational facilities under a 20-year concession.

The municipality is also due to issue in early autumn bid documents for the development of a 100-hectare area on the Abdullah al-Ahmed street in old Kuwait city. Divided into three phases, phase one involves the construction of a heritage village and refurbishment of old buildings, houses and commercial space.

The second phase, due to be tendered in October, will involve the construction of new houses for nationals at a cost of up to KD 80 million ($258.1 million). The third phase will entail the construction of retail and office space and entertainment areas.

Other government departments are looking to follow the municipality's lead. In June, the BOT approach was expanded to take in new infrastructure work at Kuwait International Airport, when the local Kuwait United Project Management signed up to a 20-year contract, worth KD 11 million ($35.5 million), for the construction and operation of new facilities at the arrivals terminal.

The largest BOT project planned is the estimated $350 million Sulaibya wastewater treatment plant, for which five local/international consortia were prequalified earlier this year. Although tender documents were originally due to be issued to prequalified contractors in late June they failed to materialise. The latest reports suggest that the Finance Ministry will now release the tender in September with a four-month bidding schedule. The project involves the construction of a wastewater treatment plant with capacity of at least 250,000 cubic metres a day, and a reverse osmosis unit to produce non-drinkable water. The successful contractor will sign a 30-year lease.

Activity in the oil and gas sector has been subdued recently, although there are now some signs of an upturn. Petrochemical Industries Company is planning three major projects at its Shuaiba fertiliser complex, as part of plans to move into higher value-added products. KNPC has recently issued for tender a new vacuum distilling plant for Mina Abdulla refinery. The same client is also expected to release for bid in late 1999 a tender calling for the construction of a two-kilometre south pier at Mina al- Ahmadi. Once completed, it will replace the existing south pier, which is to be taken out of service.

Tender documents are awaited for the third construction package on the new headquarters for Kuwait Petroleum Corporation (KPC). The package involves the construction of foundations, structure, roof and car parking on the 54,000-square-metre office complex. The first two packages on the estimated KD 34 million ($112 million) project have already been awarded and at least six other packages are planned. Other projects in the design stage include an estimated KD 8 million ($25.8 million) office and commercial development planned by the Kuwait Real Estate Company in Fahaheel.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications