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Project activations give momentum to Kuwait’s development plan
March 29, 2015, 11:13 am

Kuwait’s project activity witnessed the fastest growth in the region during 2014, with the country awarding KD7.3 billion (US$25 billion) worth of contracts, as part of its infrastructure development plans. This figure was almost four times as much as the total spent in 2013 and more than the total amount spent during the last three years combined.

The total value of Kuwait’s planned and ongoing projects market is estimated to be around KD64 billion ($220 billion). With at least KD14 billion ($48 billion) of projects due to be awarded in 2015, the authorities are hoping to capitalize on the momentum achieved in 2014 and finally gain some traction on rolling out the country’s on-and-off development plan.

Kuwait’s new 5-year development plan (2015-2020), which was released in the summer of 2014, includes spending KD8.6 billion ($29 billion) on oil and gas industry and roughly the same amount on the transport sector. In addition, around $15.6 billion is projected to be spent on the construction industry and $8.2 billion in the power and water sector. Over the next five years, Kuwait is expected to budget a total of around KD34 billion ($115 billion) for project activities.

Despite prevailing low oil prices, the country’s annual plan for fiscal year 2015/16 (FY15/16), envisages spending KD6.6 billion ($22.4 billion) for 30 projects of strategic and economic importance to the state. Moreover, the official budget for FY15/16, which is still to be approved by parliament, indicates capital expenditure is likely to increase to KD3.1 billion ($11 billion), a marginal increase on the numbers in 2014.

A breakdown of the major projects awarded in 2104 and planned for 2015 reveal that 2014 was a momentous year for the country’s all-important oil and gas sector. The KD4 billion ($13.6 billion) New Refinery Project (Al-Zour) and the long-delayed KD4.6 billion ($15.6 billion) Clean Fuels Project, received the go-ahead in 2014. 

Total contracts awarded in the oil and gas sector reached KD4.8 billion ($16.3 billion), which represented more than 60 percent by value of all contracts awarded in 2014. Additionally, more than KD6.5 billion ($22.1 billion) in oil and gas contracts are expected to be signed in FY15/16.

In 2014, Kuwait also signed KD1.7 billion ($5.8 billion) worth of contracts in the construction sector, which accounted for 24 percent of all contracts awarded during the year. This included KD678 million ($2.3 billion) for expansion of Al-Sabah, Farwaniya and Al-Adan hospitals, as well as a contract of KD287 million ($976 milion) directly awarded by the Amiri Diwan.

The contract from the Amiri Diwan was for refurbishment of the historic Al-Salam Palace and for construction of the Jaber Al-Ahmed Cultural Center, which will comprise of a 2,000 seat world class theatre.

In the power sector, the first phase of the KD2.4 billion ($8.1 billion) Al-Zour North Independent Water and Power Project (IWPP), which was awarded in 2013, was followed with contracts worth KD283 million ($962 million) in 2014.

This included KD13 million ($44 million) for phase 1 of the Shagaya Renewable Energy Complex, designed to produce 70W of renewable (solar and wind) energy. In addition, the newly formed KAPP is now expected to roll out several power generation projects over the next two years in collaboration with the private sector.

Kuwait also awarded KD267 million ($908 million) worth of contracts in the transport sector in 2014, including KD147 million ($500 million) for Doha Link project, which will connect Doha Port to the Jaber Al-Ahmed Causeway, which is currently under construction.

In the water sector, Kuwait awarded KD79 million ($268 million) worth of contracts in 2014 and is looking to award a further KD442 million ($1.5 billion) for Umm Al-Hayman Wastewater Treatment Plant in Q4 of 2015, through the PPP model. The Al-Khiran IWPP project as well as the phase two of the desalination plants at Al –Zour North IWPP are expected to be awarded by KAPP by 2016.

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