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Lawmakers call for speeding up pending projects
April 15, 2017, 3:54 pm

Last week, while approving the estimated capital expenditures in the general budget for fiscal year 2017-18, lawmakers called on the government to speed up the projects under construction. Giving their nod to nearly KD2.9 billion of expenses for construction projects and maintenance, as well as for purchase of equipment and machinery, the legislatures pointed out that it was now incumbent on the government to ensure projects were completed without any further delay.

Speaking on the legislative approval, the Budgets and Final Accounts Committee Chairman MP Adnan Abdul Samad noted that since parliament had given an early approval, the government needed to immediately complete all pending projects. He called on the relevant authorities to purchase the needed equipment and machinery to complete projects, especially given that over the past five years the cost of renting such equipment and machinery had reached over KD296 million. Revealing that there were 524 projects in various stages of implementation, the lawmaker said people had a right to see the benefits of capital expenditures, which accounted for around 14 percent of the general budget.

Kuwait, which is home to the largest per capita oil reserves and fourth-largest total reserves of crude oil within OPEC, has seen its public finances suffer due to rapid decline in oil revenues since mid-2014. Oil income, accounting for nearly 90 percent of Kuwait’s revenues, dropped from KD33 billion ($108.6bn) in 2013 to KD16 billion ($51.8bn) in 2015. This prompted the government to table its first budget deficit in over 15 years.

Nevertheless, considerable financial buffers built in the years leading up to 2014 are helping cushion budget deficits, and giving the government enough leeway to push ahead with spending on key public investments. The government’s 2015-2020 Kuwait Development Plan, which received an allotment of KD47 billion ($155bn) from Parliament last year, is designed to include several developments in infrastructure, utilities and housing projects. A key focus of this mega-development plan is to enhance integration of the private sector into traditionally state-controlled areas of the economy and develop Kuwait into a financial and commercial center that attracts foreign investments.

Contribution to the five-year development plan is projected to come from the government (49.3%), oil sector (33.8%) and private sector (16.9%), and is envisioned to raise the non-oil sector’s contribution to the GDP from 45 percent in 2010-2013 to 64 percent by 2020. A crucial ingredient to the success of this plan is developing the country’s construction industry, which is already among the strongest performers in the GCC region.

Several mega-construction projects, worth an estimated total of KD70 billion ($230bn), are currently underway or in various phases of planning in Kuwait. In August 2016, the government approved investments totaling KD4.8 billion ($15.75bn) as part of the development plan for the period 2017 to 2018. Disclosing this, the Secretary-General of country’s Supreme Council for Planning and Development Khaled Mahdi said that the state budget would contribute KD1.6 billion of this total.

Aside from construction developments in the oil sector, several strategic projects in the health, transport and sewage sectors include the Sheikh Jaber Al-Ahmad Hospital in South Surra, in the health sector; and the expansion and development of Kuwait International Airport (Terminal 2), as well as, the Sheikh Jaber Al-Ahmad Causeway across Kuwait Bay, in the transportation sector.

In a further boost to the construction industry, a consortium of South Korean construction companies was recently awarded the contract to build the KD1.2 billion ($4bn) eco-friendly, smart, residential city in Kuwait. In early April, Kuwait’s Minister of State for Housing Affairs and Minister of State for Services Yasser Abul, signed a KD12. 5 million ($41m) contract with representatives from Korea Land and Housing Corporation for the design and planning of South Saad Al-Abdullah City.

The project, which is expected to accommodate between 25,000 and 40,000 households, is headed by the South Korean consortium of Posco A&C, and Hyundai Architects and Engineers Associates Company. The consortium of urban architects and builders plans to build the smart city so that it is environmentally friendly, efficiently organized and well-connected. The South Korean Ministry of Land, Infrastructure and Transport, which is behind the project, will help put together the consortium by 2018 and set up a special-purpose company to oversee the start of the project by 2019. The South Koreans are pinning great hopes on this project, as they plan to use it as a showcase for winning similar eco-friendly city construction projects in other countries in the Middle East.


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