Kuwait’s moment of truth arrives

08 November 2010

The Al-Zour North scheme will be a litmus test for Kuwait’s experiment with private finance initiatives

Kuwait is in desperate need of new infrastructure. During the past five years, few projects were launched in the country as much-needed investment was held back by continued infighting between the government and parliament.

That political impasse has now gone and since elections were held in May 2009, there has been a drive to push ahead with a KD30bn ($102bn) four-year infrastructure development plan. A new body, the Partnerships Technical Bureau has also been set up to help execute the plan and to attract private capital to fund the schemes.

One of the first projects to be launched by the PTB is an independent water and power project (IWPP) at Al-Zour North. It is the first time that Kuwait has approached the private sector to provide equity for a power and water project. The scheme will act as a litmus test for appetite among private companies to invest in Kuwait. The country has a bad track record for implementing projects and some firms are now wary of working in Kuwait.

If any private project should get off the ground and be completed in Kuwait, it should be an IWPP. Many IWPPs have been successfully tendered and built in the GCC over the past decade.

The schemes always attract healthy interest as they provide stable, long-term returns. They are widely considered the most cost-effective way of building new capacity in the Gulf.

By the same token, should the project fail in some way, it would sound the death knell for Kuwait’s experiment with private finance initiatives. The request for qualification deadline has been set for 28 November.

In less than a month’s time, Kuwait will know whether its long-standing reputation for failing to see projects through will hinder the implementation of its four-year plan.

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