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Contracts worth over $4.6 billion awarded
May 13, 2017, 4:57 pm

With oil price hovering in the US$50 to $55 range and the government remaining committed to its development plan, the projects pipeline in Kuwait has witnessed sustained capital spending on infrastructure contracts since early January. In the first-quarter of 2017, the government awarded projects worth $4.6 billion, with a further $20 billion worth of contracts likely to be awarded in the latter half of this year.

According to a report by the National Bank of Kuwait, the country’s top commercial bank, although the oil sector continued to dominate the contracts awarded in the first quarter, a significant portion of projects were also awarded in the housing sector.

The oil sector witnessed eight projects, worth a combined total of $2.2 billion, being awarded in the first-quarter of 2017, including the $1.3 billion Kuwait Oil Company’s Gathering Center 32 project, which was awarded to Petrofac. Work on Gathering Center 32, which is expected to commence soon and is slated to be completed by mid-2020, will have the capacity to produce about 120,000 barrels per day of oil and will be the first sour gathering center to be developed in the Burgan field.

KOC awarded another three projects pertaining to water facilities at Gathering Centers in the south, south-east and east of the country. The three contracts, which averaged $225 million each, are expected to be completed between the fourth-quarter of 2019 and first-quarter of 2020.

The report from the country’s top lender also showed that China Gezhouba Group won the $708 million contract for the second of four infrastructure contracts in South Mutlaa city, a strategic development plan project by the Public Authority of Housing Welfare (PAHW). The project is scheduled to be completed by March 2019.

As per a development plan follow-up report for the fourth quarter of 2016, work on South Mutlaa project is 12 percent complete. The PAHW has so far distributed most of the 30,000 plots that it held to applicants; however, construction permits for the distributed plots will not be available until road and infrastructure construction is complete.

Project awards during the first-quarter also included work on Kuwait’s airport. The Directorate General of Civil Aviation (DGCA) awarded one of the eleven sub-projects pertaining to the expansion of Kuwait airport. The project has been awarded to a joint venture of Avic International & HOT E&C for a value of $489 million and completion is expected by March, 2022.

This project includes construction of new runways in addition to extending existing ones and enhancing supportive infrastructure.

Analysts with Kuwait’s top bank remain optimistic on the construction sector in the country and expect it to remain health throughout 2017.

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