The Partnerships Technical Bureau (PTB) was set up to help privatise state assets under plans to boost the role of the private sector in the economy. According to Adel al-Roumi, president of the bureau, it could help drive a 35 per cent increase in the participation of the private sector in the Kuwait economy.
The bureau is effectively a clearing-house for PPPs. It works on initial feasibility studies for new projects, and in 2008 took over the management of a series of PPP projects being developed by state agencies including the transport and power ministries. The agency is also keen to ensure that international firms are aware it is open to working on projects proposed by non-government actors, and has been in talks with several companies on renewable projects that were pitched directly to the government.
The PTB works with local and international law firms and consultants (whose services are procured through public tenders) to thoroughly review potential issues affecting the feasibility and legality of new schemes. The aim is to ensure new projects are watertight and can be developed with a minimum of fuss. Most observers believe that, in many cases, the transaction advice is also to ensure that new schemes will be passed by parliament.
If a project moves beyond the feasibility study stage, the PTB oversees tenders for consultancy contracts and design studies. Eventually, it tenders the deals to build and operate new schemes, from railway lines and metro networks to port developments. The bureau is also in charge of setting up joint-stock companies in cases where the projects in question lead to joint-venture partnerships.
A crucial part of the bureau’s work is ensuring the development and construction process is proceeding smoothly and that, once each project has been commissioned, it meets the criteria set by the government’s strategic plans and the agreements signed by the partners. It presents an annual report to the higher committee for planning and the finance ministry, and makes a separate report publicly available.
Major projects being overseen by the PTB include the development of Failaka Island into a tourism resort at a total cost of $3bn; the development of Kuwait’s railway system, which will later be integrated into the wider GCC rail network at a total cost of $10bn; and the redevelopment of Kuwait International Airport.
The bureau is also in charge of privatising flag carrier Kuwait Airways, helping to build new hospitals and schools, and renewing the leases on a series of government-owned properties. It has even been tasked with finding a new private sector partner to run the country’s postal system.
Assessing the success of the PTB to date is tricky. Although it was established in 2008, it only really became a force in 2010, helped by the passage of Kuwait’s five-year development plan, which contained a series of provisions for public-private developments. The expectation was that, with parliament on board with the plan, new developments would progress quickly.
However, the PTB has had trouble finding partners for a new private health insurance company and is battling to pass plans for the privatisation of Kuwait Airways through parliament. The bureau has also struggled to find a partner interested in working with the loss-making carrier. A significant problem for potential investors in privatised assets is a clause that would see the government retain a ‘golden share’ in any privatised firm, which would include veto powers at board level. In July, the bureau dropped plans to tender deals worth $700m to provide services at Kuwait International airport, under advice from Deutsche Bank.
The PTB also lost one of its major supporters and architects, former finance minister Mustapha al-Shamali, when he resigned in May 2012 to avoid a vote of no-confidence during a parliamentary hearing. Finance minister since 2007 and a political veteran, he had led a push to increase government efficiency and to better include the private sector in the economy.
The PTB goes on without the minister, however, and continues to look for new projects to work on – it is currently advocating for private sector firms to approach it with new schemes. In its favour are the government’s huge cash reserves. Whereas many countries in the region that are advocating public-private partnerships, such as Morocco, Jordan or Egypt, lack the financial resources required to get major new industrial or infrastructure projects off the ground, the Kuwaiti government has ample capital.
The Central Tenders Committee
All major tenders in Kuwait are passed through the Central Tenders Committee, which checks that the bid process, document preparation and assessment has been completed in line with the letter of the law. This process can be lengthy and it can take months for major new deals to be confirmed.
Website: www.ctc.gov.kw (Arabic only)
Tel: (+965) 2 240 1200