Public-private partnership (PPP) structures typically describe a situation where a government or public sector authority enters into a long-term agreement with the private sector for the provision of a public service. This usually involves the construction of a new infrastructure project, which is used to deliver the service.

Having historically procured and developed infrastructure by traditional means, funded largely by surplus oil revenues, Kuwait is now taking several positive steps to use PPP as a delivery framework for the procurement of state projects.

Kuwait has acknowledged that by partnering with the private sector, it can exploit private sector skills, knowledge, innovation and technology that it might not otherwise have access to. PPPs also allow the Gulf state to share project risk, provide essential infrastructure and services to its burgeoning population and can aid in better management of its capital investments and fiscal budget.

The PTB coordinates state PPPs, ensuring the process is efficient, transparent and effective

Joss Dare, Ashurst Middle East

Kuwait has announced a series of projects that will be procured through its PPP framework, including a metro system for Kuwait City, a heavy rail network, a new hospital, a series of schools, a wastewater project, a labour city and other projects to develop postal, telecommunications and parks services. These projects are currently moving through the procurement process. They represent the strongest PPP pipeline in the Middle East and have attracted great interest among the international contracting and investment community.

The role of the PTB

In 2008, Kuwait enacted a PPP law to provide a legislative framework its use for all relevant projects being undertaken on state land. The Partnerships Technical Bureau (PTB) was established with the aim of promoting private sector participation in infrastructure development in Kuwait. Several sector-specific legislative instruments have since been passed to aid in the delivery of these projects.

The PTB coordinates and drives forward state PPPs in Kuwait, ensuring that the process is efficient, transparent and effective. Where a promoting entity – usually a specific Kuwaiti ministry or governing authority – puts forward a PPP project, the PTB will ensure that a review and feasibility study is undertaken to assess its viability. Once completed, the approval of the Higher Committee (a group of senior government members and advisors) is sought. The PTB will then work alongside the relevant proposing entity and other key stakeholders to ensure that the project is successfully delivered. 

While the PTB retains significant oversight and remains involved in all phases of a project, it is the ministry or authority promoting the project that will enter into negotiations and inevitably sign the project documentation with the private sector.

Public participation

Where the value of a project is in excess of KD60m ($213m), the Higher Committee ensures that a public joint-stock company (PJSC) is established by the relevant ministry or authority to act as the project company, rather than offering the project for public tender. The shares of the PJSC are then offered as follows:

Forty per cent must be auctioned to companies already listed on the Kuwait Stock Exchange or to qualified private sector participants, such as industry bidders.

Ten per cent must be offered to the ‘proposer’ of the project. This applies to someone who has made an unsolicited proposal for the project. Where this does not apply, which is usually the case for the PTB pipeline, these shares are offered to the auction described above (so to the winning bidder).

The remaining 50 per cent must then be offered to Kuwaiti citizens through an initial public offering (IPO) on the Kuwait Stock Exchange.

Up to 20 per cent of the shares can be allocated to the procuring ministry or public sector authority, in which case, the 40 and 50 per cent shares above are reduced proportionately.

This means that, for Kuwaiti PPPs above the KD60m threshold, private sector bidders are usually bidding for a 40-50 per cent stake in the special purpose project vehicle that enters into the PPP concession with the public authority. The remainder is offered to the Kuwaiti public, so the winning bidder will be a shareholder along with Kuwaiti citizens who have subscribed through the IPO process. This feature allows public participation by locals in the development of the nation’s infrastructure and is an important part of the policy behind the country’s PPP programme.

The PPP law does allow the public tender of some projects deemed to be of a ‘special nature’, where the value does not exceed KD250m. The Higher Committee assesses whether the project should be granted an exception on a case-by-case basis.

Qualifation to participate

To participate in a PPP project in Kuwait, a party must be qualified. Companies listed on the Kuwait Stock Exchange are immediately qualified, while foreign firms or unlisted Kuwaiti companies must seek approval or qualification from the Higher Committee.

This qualification involves satisfying the Higher Committee of a party’s financial and technical standing and ability to undertake and complete the project for which it is seeking to bid. The PTB facilitates this through a pre-qualification process that will be reasonably familiar to experienced contractors. Any company that has been blacklisted by the government or found guilty of fraud or corruption will not be eligible for qualification.


Large PPP projects nearly always include some form of project financing. A critical element for the bankability and viability of such projects is the extent and quality of the security a lender can obtain under the applicable law. Kuwait’s PPP law and related legislation include provisions that regulate the granting of typical security package features, such as share pledges, property mortgages, lender interests in project agreements and assignments of receivables. We expect that as the PPP programme develops through the procurement phases, the financing community will develop a market practice, as has developed in other jurisdictions with a robust pipeline.

Dispute resolution

There is nothing in the PPP law to stop parties choosing international alternative dispute resolution and/or arbitration for the resolution of disputes. International investors can also take some comfort from the fact that Kuwait is already a party to the New York Convention for the Enforcement of Foreign Arbitral Awards, meaning it should recognise and enforce any foreign arbitral award (where valid) issued outside of Kuwait.

Key contact

Partnerships Technical Bureau
Tel: (+965) 2 496 5900

About the writer

Joss Dare is partner and head of law firm Ashurst Middle East in Dubai.
Tel: (+971) 4 365 2000