Renewed hope for contractors

01 November 2012

Construction firms prepare to capitalise on the unexpected vigour with which Kuwait’s government is now awarding contracts

Contractors are renowned for complaining about clients that are slow to make decisions and about the dearth in work being awarded. In Kuwait at least, they have a point.

Kuwait should be one of the world’s most lucrative markets for construction firms. Vast oil reserves and a small population mean that the government can afford to move ahead with schemes that others can only dream of.

However, despite plans to develop vast projects, Kuwait’s delivery record is poor. The level of construction activity in the country has understandably been dwarfed by its much larger neighbour Saudi Arabia, but it has also been left behind by the UAE and Qatar and is on par with Oman, which does not have the same hydrocarbons wealth to fund all its ambitions.

Political wrangling, environmental issues, the global financial crisis and budgets are some of the factors that have delayed major schemes that were expected to move ahead. Perhaps the best example of a project that struggled to move forward was the proposed causeway connecting Kuwait City to the Subiya promontory.

In mid-October, the long-delayed deal for the construction of the Subiya causeway was signed

That is no longer the case. In mid-October, the deal for the construction of the causeway was signed and the project should now move ahead. Given the difficulties Kuwait has faced in awarding the contract, it may seem odd to many that a deal with such a controversial history was signed during a period of political turmoil. For now, the joint venture that secured the estimated $2.6bn scheme will not care. Neither will the other firms hoping that without a parliament interfering, the authorities can start awarding other major construction contracts.

It is feared that the ability to move ahead with projects is only temporary and eventually Kuwait’s projects market will once again be hamstrung by politics. Until that happens, contractors will hope to capitalise on the unexpected vigour that the government has found.

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